Asure Software(ASUR) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights Second Quarter 2025 Financial Highlights Asure Software reported a 7% increase in total revenues to $30.1 million for Q2 2025, with recurring revenues growing 6%, while net loss increased and Adjusted EBITDA improved Q2 2025 Key Financial Metrics | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :-------------------------- | :------------------ | :------------------ | :----------- | | Total Revenue | $30.1 | $28.0 | +7% | | Recurring Revenue | $28.6 | $27.1 | +6% | | Net Loss | $(6.1) | $(4.4) | -38.6% | | EBITDA | $1.4 | $1.3 | +7.7% | | Adjusted EBITDA | $5.2 | $4.1 | +26.8% | | Gross Profit | $19.9 | $18.9 | +5.3% | | Non-GAAP Gross Profit | $21.9 | $20.4 | +7.4% | | Non-GAAP Gross Margin | 73% | 73% | 0% | First Half 2025 Financial Highlights For the first half of 2025, Asure's total revenue increased by 9% to $65.0 million, with recurring revenue up 8%, net loss widened, but Adjusted EBITDA showed strong growth H1 2025 Key Financial Metrics | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (YoY) | | :-------------------------- | :------------------ | :------------------ | :----------- | | Total Revenue | $65.0 | $59.7 | +9% | | Revenue (excl. ERTC) | $64.7 | N/A | +11% | | Recurring Revenue | $61.8 | $57.3 | +8% | | Net Loss | $(8.5) | $(4.7) | -80.9% | | EBITDA | $5.6 | $5.7 | -1.8% | | Adjusted EBITDA | $12.6 | $10.9 | +15.6% | | Gross Profit | $44.5 | $41.5 | +7.2% | | Non-GAAP Gross Profit | $48.1 | $44.2 | +8.8% | | Non-GAAP Gross Margin | 74% | 74% | 0% | Recent Business Highlights Asure completed the acquisition of Lathem Time for $39.5 million, expected to enhance its time and attendance business and create cross-selling opportunities for HCM products - Acquired Lathem Time for $39.5 million on July 1, 2025, a company specializing in cloud-based time and attendance solutions[4] - The acquisition is expected to complement Asure's focus on growing businesses by adding to its existing time and attendance business, bringing additional high-margin recurring revenue, and accelerating cross-selling opportunities for HCM products[4][7] Management Commentary CEO Pat Goepel highlighted 7% revenue growth in Q2 2025, driven by Payroll Tax Management and improved HCM product attach rates, and the strategic Lathem Time acquisition - Q2 2025 revenue increased 7% (10% excluding ERTC), driven by strong performance in Payroll Tax Management and improved HCM product attach rates[6] - The acquisition of Lathem Time is expected to add scale to the existing time and attendance business, generate high-margin recurring revenue, and accelerate cross-selling of Asure's HCM products[7] Guidance and Outlook Third Quarter 2025 and Full Year 2025 Revenue Guidance Ranges Asure provided Q3 2025 guidance and increased its full-year 2025 revenue range, reflecting year-to-date results and the Lathem Time acquisition, with a slight adjustment to Adjusted EBITDA margin Revenue and Adjusted EBITDA Guidance | Guidance Range | Q3-2025 | Prior FY-2025 | New FY-2025 | | :--------------- | :-------- | :------------ | :---------- | | Revenue | $35.0M - $37.0M | $134.0M - $138.0M | $138.0M - $142.0M | | Adjusted EBITDA | $7.0M - $9.0M | 23% - 24% | 22% - 24% | - The full year 2025 revenue range was increased based on year-to-date results and the recent acquisition of Lathem Time Corporation[8] Company Information & Non-GAAP Definitions Conference Call Details Asure management hosted a conference call on July 31, 2025, to discuss Q2 2025 results, with broadcast and replay available on the investor relations website - Asure management hosted a conference call on July 31, 2025, at 3:30 pm Central (4:30 pm Eastern) to discuss results[14] About Asure Software, Inc. Asure Software provides cloud-based Human Capital Management (HCM) software solutions, including HR, payroll, time and attendance, benefits, and talent management, integrating AI for compliance scalability - Asure provides cloud-based Human Capital Management (HCM) software solutions, including HR, payroll, time and attendance, benefits administration, payroll tax management, and talent management[15] - The company utilizes AI technology in its HR compliance services to improve scalability and efficiency[15] Non-GAAP and Adjusted Financial Measures This section defines various non-GAAP and adjusted financial measures used by Asure, such as non-GAAP gross profit, EBITDA, and Adjusted EBITDA, to provide supplemental information for evaluating operational performance - Non-GAAP and adjusted financial measures are used to provide supplemental information for investors to evaluate the Company's results in the same way management does, offering a more complete view of operational performance[10][16] - Management believes these measures allow for meaningful period-to-period comparisons and analysis of trends, and facilitate comparison against other companies reporting similar non-GAAP results[10] Definition of Non-GAAP Gross Profit - Non-GAAP gross profit excludes amortization, share-based compensation, and one-time items from GAAP gross profit[17] Definition of Non-GAAP Sales and Marketing Expense - Non-GAAP sales and marketing expense excludes share-based compensation and one-time items[17] Definition of Non-GAAP General and Administrative Expense - Non-GAAP general and administrative expense excludes share-based compensation and one-time items[17] Definition of Non-GAAP Research and Development Expense - Non-GAAP research and development expense excludes share-based compensation and one-time items[18] Definition of EBITDA - EBITDA excludes interest, income taxes, depreciation, and amortization from net income (loss)[18] Definition of Adjusted EBITDA - Adjusted EBITDA excludes share-based compensation, other income (expense), net, and one-time expenses from EBITDA[19] Specific Adjustments for Non-GAAP Measures - Adjustments include Share-Based Compensation Expenses (for employee retention, not operational performance), Depreciation (of fixed assets and capitalized software), Amortization of Purchased Intangibles (from pre-acquisition activities), Interest Expense, Net (accrued interest, debt discounts, deferred financing costs), and Income Taxes[21][22][23][24][25] - One-Time Expenses are excluded to normalize comparable reporting periods, as they are generally non-recurring, not budgeted, and infrequent, including Settlements, Penalties and Interest; Acquisition and Transaction Related Costs; and Other non-recurring Expenses (e.g., asset write-offs, demolition, cybersecurity consultants)[25][26][27][28] - Other (Expense) Income, Net is excluded as it contains items not reflective of underlying operational results, such as loan forgiveness or CARES Act credits[29] Legal & Disclosures Use of Forward-Looking Statements This section outlines that the press release contains forward-looking statements regarding financial results and operational performance, cautioning that actual results may differ materially due to various risks and uncertainties - The press release includes forward-looking statements about financial results and operational performance, identified by words like 'believe,' 'may,' 'will,' 'estimate,' and 'expect'[31] - These statements are based on current expectations and projections, but actual results could differ materially due to various risks and uncertainties[31] - Key risks include security breaches, regulatory developments (privacy, data security, money transmitter laws), impacts of acquisitions, software functionality issues, customer non-renewal, and the expiration of Employee Retention Tax Credits (ERTC)[32] Financial Statements Condensed Consolidated Balance Sheets Asure's balance sheet as of June 30, 2025, shows a significant increase in total assets, primarily driven by a rise in cash and client funds, with total liabilities also increasing and stockholders' equity slightly decreasing Balance Sheet Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Cash, cash equivalents, and restricted cash | $66,000 | $21,425 | +$44,575 | | Funds held for clients | $213,972 | $192,615 | +$21,357 | | Total current assets | $299,575 | $237,277 | +$62,298 | | Total assets | $505,565 | $436,638 | +$68,927 | | Current portion of notes payable | $3,032 | $7,008 | -$3,976 | | Client fund obligations | $214,839 | $194,378 | +$20,461 | | Total current liabilities | $235,307 | $223,636 | +$11,671 | | Notes payable, net of current portion | $64,350 | $5,709 | +$58,641 | | Total liabilities | $311,313 | $239,323 | +$71,990 | | Total stockholders' equity | $194,252 | $197,315 | -$3,063 | Condensed Consolidated Statements of Comprehensive Loss Asure reported a wider net loss for Q2 and H1 2025 compared to prior periods, despite revenue growth, due to increased operating expenses, particularly in sales and marketing and amortization Statements of Comprehensive Loss | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Total Revenue | $30,124 | $28,044 | $64,978 | $59,696 | | Gross Profit | $19,911 | $18,868 | $44,519 | $41,475 | | Sales and marketing | $8,149 | $6,924 | $16,535 | $14,691 | | General and administrative | $10,968 | $10,118 | $22,868 | $20,181 | | Research and development | $1,273 | $1,962 | $3,302 | $3,731 | | Amortization of intangible assets | $4,173 | $4,046 | $8,481 | $7,495 | | Total operating expenses | $24,563 | $23,050 | $51,186 | $46,098 | | Loss from operations | $(4,652) | $(4,182) | $(6,667) | $(4,623) | | Net loss | $(6,123) | $(4,360) | $(8,521) | $(4,668) | | Basic and diluted loss per share | $(0.22) | $(0.17) | $(0.31) | $(0.18) | Condensed Consolidated Statements of Cash Flows For the first half of 2025, Asure generated $5.2 million in cash from operating activities, a significant improvement, while investing activities saw increased cash usage, and financing activities provided substantial cash inflow Statements of Cash Flows | Metric (in thousands) | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | | Net cash provided by (used in) operating activities | $5,151 | $(1,719) | | Net cash used in investing activities | $(17,814) | $(7,359) | | Net cash provided by (used in) financing activities | $73,097 | $(27,935) | | Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | $60,434 | $(37,013) | | Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $206,146 | $140,609 | - Operating activities shifted from a cash outflow of $1.7 million in H1 2024 to a cash inflow of $5.2 million in H1 2025[40] - Significant cash inflows from financing activities in H1 2025 were primarily due to $57.9 million in proceeds from notes payable and a $20.5 million net increase in client fund obligations[40] Non-GAAP Reconciliations Reconciliation of Non-GAAP and Adjusted Financial Measures This section provides detailed reconciliations of GAAP financial measures to their non-GAAP and adjusted counterparts, illustrating adjustments for items like share-based compensation, depreciation, amortization, and one-time expenses Non-GAAP and Adjusted Financial Measures Reconciliation | Metric (in thousands) | Q2 2025 | Q2 2024 | | :-------------------- | :------ | :------ | | GAAP Gross Profit | $19,911 | $18,868 | | Non-GAAP Gross Profit | $21,857 | $20,373 | | GAAP Net Loss | $(6,123) | $(4,360) | | Adjusted EBITDA | $5,242 | $4,057 | | Adjusted EBITDA Margin | 17.4% | 14.5% | - Adjustments for Non-GAAP Gross Profit primarily include share-based compensation, depreciation, amortization of intangibles, and one-time expenses[46] - Adjustments from GAAP Net Loss to Adjusted EBITDA include interest expense, income taxes, depreciation, amortization of intangibles, share-based compensation, one-time expenses (settlements, acquisition costs, other non-recurring), and other expense (income), net[48]