• Asure Announces First Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 10 May 2021 16:05:01   America/New_York

    AUSTIN, Texas, May 10, 2021 (GLOBE NEWSWIRE) -- Asure (NASDAQ: ASUR), a leading provider of cloud-based Human Capital Management (HCM) software solutions, reported results for the first quarter ended March 31, 2021.

    “Although the COVID-19 pandemic continues to impact our top line, our focus on helping small and mid-sized businesses grow is paying off, driving first quarter revenue up 20.5% sequentially, including recurring year-end W2/ACA revenue, and 4.5% year-over-year in a challenging environment. We are cautiously optimistic that momentum with our business will continue as economic conditions improve. Furthermore, visibility into our business outlook has improved to a point where we are comfortable reintroducing quarterly guidance. Our strategy has not changed, and we are still striving to generate 10% organic and 10% acquired revenue growth,” said Chairman and CEO Pat Goepel.

    First Quarter 2021 Key Highlights

    • Total Revenue of $19.8 Million, up 20.5% from fourth-quarter 2020 and 4.5% year-over-year
    • Recurring Year-End W2/ACA Revenue* of $3.6 Million, up from $0 in fourth-quarter 2020 and $3.2 Million year-over-year
    • EBITDA of $2.6 Million, up from $(1.6) Million in fourth-quarter 2020 and $2.0 Million year-over-year
    • Non-GAAP EPS of $0.12, up from $0.00 in fourth-quarter 2020
    • Small-business bookings increased more than 90% year-over-year and total booking increased over 20% year-over-year

    First Quarter 2021 Financial Summary

     For the Three Months Ended For the Three Months Ended
    In thousands, except per share data3/31/20 3/31/21 YoY (%) Change 12/31/20 3/31/21 Seq (%) Change
    REVENUE           
    GAAP Revenue$18,947 $19,802 4.5% $16,430 $19,802 20.5%
                
    GROSS PROFIT           
    GAAP Gross Profit$11,107 $12,492 12.5% $9,806 $12,492 27.4%
    GAAP Gross Margin58.6% 63.1% 7.6% 59.7% 63.1% 5.7%
                
    Non-GAAP Gross Profit$12,146 $13,655 12.4% $10,911 $13,655 25.1%
    Non-GAAP Gross Margin64.1% 69.0% 7.6% 66.4% 69.0% 3.8%
                
    EARNINGS           
    GAAP Net Income (Loss)$(1,767) $(1,598) NM $(5,842) $(1,598) NM
    Non-GAAP Net Income (Loss)$3,315 $2,242 (32.4)% $(69) $2,242 NM
    GAAP Net Income (Loss) per share$(0.11) $(0.08) NM $(0.36) $(0.08) NM
    Non-GAAP Net Income (Loss) per share$0.21 $0.12 (44.0)% $0.00 $0.12 NM
                
    EBITDA           
    EBITDA$2,002 $2,593 29.5% $(1,559) $2,593 NM
    EBITDA Margin10.6% 13.1% 23.9% (9.5)% 13.1% NM
    Non-GAAP EBITDA$4,285 $3,421 (20.2)% $1,143 $3,421 199.3%
    Non-GAAP EBITDA Margin22.6% 17.3% (23.6)% 7.0% 17.3% 148.3%

    *Notes:

    • Non-GAAP financial measures are reconciled to GAAP in the tables set forth in this release.
    • NM indicates Not Meaningful Information
    • Note that first quarters are seasonally strong as Recurring Year-End W2/ACA revenue is recognized in this period.

    Financial Commentary

    “First quarter’s financial results were encouraging. While our view on the overall U.S. economy’s impact on small business remains tempered, Asure has a clear strategy for growth and we remain focused on its execution. We feel that we are well positioned for growth as the economy transitions back to normal conditions," said CFO John Pence.

    Asure delivered the following results for its first quarter ended March 31, 2021:

    Revenue: Total revenue for the first quarter of 2021 was $19.8 million, an increase of 4.5% from $18.9 million in the year-ago period and an increase of 20.5% from $16.4 million in fourth-quarter 2020. Recurring year-end W2/ACA revenue of $3.6 million was up from $0 in fourth-quarter 2020 and $3.2 million year-over-year. Revenue mix for the quarter was comprised primarily of recurring revenue, which represented 97% of total revenue with professional services, hardware and other revenue representing the remaining 3%.

    Gross Profit: GAAP gross profit for the first quarter of 2021 was $12.5 million (63.1% margin), an increase from $11.1 million (58.6% margin) in the year-ago period. Non-GAAP gross profit for the first quarter of 2021 was $13.7 million (69.0% margin), an increase from $12.1 million (64.1% margin) in the year-ago period.

    Earnings (Loss) per Share: GAAP loss per share was $(0.08), compared with $(0.11) in the year-ago period. Non-GAAP earnings per share were $0.12, compared with $0.21 in the year-ago period.

    EBITDA: EBITDA was $2.6 million (13.1% margin), representing an increase from $2.0 million (10.6% margin) in the year-ago period. Non-GAAP EBITDA was $3.4 million (17.3% margin), representing a decline from $4.3 million (22.6% margin) in the year-ago period.

    New Customer Initiative:

    Employee Retention Tax Credit (ERTC) Solution: As part of our efforts to help our 80,000 SMB clients maximize the COVID stimulus available to them, we recently introduced an ERTC solution so they can begin growing again. ERTC became law as part of the CARES Act and included tax credits for businesses to retain employees during the pandemic. The  ERTC is a refundable tax credit that can be claimed when eligible employers report their total qualified wages for purposes of the ERTC for each calendar quarter on their federal employment tax returns. Due to new legislation, employers can now retroactively claim the ERTC even if they previously received PPP funds.

    For more information, please visit www.asuresoftware.com/ERTC.

    Second Quarter 2021 Guidance

    We are providing the following guidance after delivering our first quarter results. This outlook reflects our current view regarding the speed and timing of the economic recovery from the COVID-19 pandemic.

    2Q21 Guidance Range  
    Revenue$16.50   Million to$17.00  Million
    Non-GAAP EBITDA$0.70  Million to$0.90  Million
    Non-GAAP EPS$(0.03) to$(0.01) 

    Conference Call Details

    Asure management will host a conference call today, Monday, May 10, at 4:30pm Eastern time (3:30pm Central time). Asure Chairman and CEO Pat Goepel as well as CFO John Pence will host the conference call, followed by a question and answer session.

    U.S. dial-in: (877) 853-5636
    International dial-in: (631) 291-4544
    Conference ID: 8369970

    The conference call will be broadcast live and available for replay via the investor relations section of the company's website.

    *Non-GAAP Financial Measures. This press release includes information about non-GAAP Net Income (Loss), non-GAAP Net Income (Loss) per share, non-GAAP tax rates, non-GAAP gross profit, EBITDA, EBITDA margin, non-GAAP EBITDA, and non-GAAP EBITDA margin (collectively the "non-GAAP financial measures"). These non-GAAP financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. Non-GAAP financial measures are reconciled to GAAP in the tables set forth in this release.

    EBITDA differs from GAAP Net Income (Loss) in that it excludes items such as interest, tax, depreciation, and amortization. Asure is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort.

    Non-GAAP EBITDA differs from EBITDA in that it excludes share-based compensation, and one-time expenses. Asure is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort.

    Non-GAAP Net Income (Loss) per share differs from GAAP Net Income (Loss) per share in that it assumes a 0% non-GAAP tax rate, uses diluted share counts, and excludes items such as amortization, share-based compensation, and one-time expenses.

    Non-GAAP gross profit differs from GAAP gross profit in that it excludes amortization, share-based compensation, and one-time items.

    Management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company's performance.

    The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the company's results in the same way management does.

    Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the company's operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the company's business. Further, to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the company's relative performance against other companies that also report non-GAAP operating results.

    Specifically, management is excluding the following items from its non-GAAP earnings per share, as applicable, for the periods presented in the first quarter 2021 financial statements:

    Share-Based Compensation Expenses. The company's compensation strategy includes the use of share-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, share-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

    Amortization of Purchased Intangibles. The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, and acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.

    Income Tax Effects and Adjustments. Beginning in first quarter 2018, the company started using a fixed projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of items such as changes in the tax valuation allowance and non-cash tax effects of acquired goodwill and amortization, since each of these can vary in size and frequency. This tax rate could be subject to change for a variety of reasons, such as significant changes in the acquisition activity or fundamental tax law changes in major jurisdictions where the company operates. The company re-evaluates this tax rate on an annual basis or when any significant events that may materially affect this rate occur. The non-GAAP tax rate is currently projected to be approximately zero (0.0) percent.

    Amortization of Capitalized Internal-Use Software, Acquisition-Related, and One-Time Expenses. The company’s non-GAAP financial measures exclude amortization of internal-use capitalized software costs and acquisition-related expenses as well as one-time expenses, such as material tax credits, material interest-expense credits, severance, recruitment, proforma adjustments of the impact of post-sale HCM restructuring, and relocation.

    About Asure

    Asure (NASDAQ: ASUR) sees Human Capital Management (HCM) through the lens of entrepreneurs and executives with an owner’s mentality. We help more than 80,000 small and mid-sized businesses develop their “Human Capital” to get to the next level, stay compliant, and allocate their time, money and technology toward growth. Asure HCM solution includes Asure Payroll & Tax, Asure HR, and Asure Time & Attendance. Our Asure HR Services offering ranges from online compliance tools to a fully outsourced HR department. Visit us at asuresoftware.com.

    "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about our financial results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, deferred revenue growth, expected revenue run rate, expected tax rates, share-based compensation expenses, amortization of purchased intangibles, amortization of debt discount and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements we make.

    This press release contains forward-looking statements about our financial results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, deferred revenue growth, expected revenue run rate, expected tax rates, share-based compensation expenses, amortization of purchased intangibles, amortization of debt discount and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include -- but are not limited to -- risks associated with possible fluctuations in the company's financial and operating results; the company's rate of growth and anticipated revenue run rate, including impact of the current environment, the spread of major epidemics (including Coronavirus) and other related uncertainties such as government-imposed travel restrictions, interruptions to supply chains and extended shut down of businesses, reductions in employment and an increase in business failures, specifically among our clients, the company's ability to convert deferred revenue and unbilled deferred revenue into revenue and cash flow, and ability to maintain continued growth of deferred revenue and unbilled deferred revenue; foreign currency exchange rates; errors, interruptions or delays in the company's services or the company's Web hosting; breaches of the company's security measures; changes in the forgiveness provisions for loans under the Paycheck Protection Program; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; the financial and other impact of any previous and future acquisitions; the nature of the company's business model, including risks related to government contracts; the company's ability to continue to release, gain customer acceptance of and provide support for new and improved versions of the company's services; successful customer deployment and utilization of the company's existing and future services; changes in the company's sales cycle; competition; various financial aspects of the company's subscription model; unexpected increases in attrition or decreases in new business; the company's ability to realize benefits from strategic partnerships and strategic investments; the emerging markets in which the company operates; unique aspects of entering or expanding in international markets, including the compliance with United States export control laws, the company's ability to hire, retain and motivate employees and manage the company's growth; changes in the company's customer base; technological developments; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; unanticipated changes in the company's effective tax rate; factors affecting the company's outstanding convertible notes, term loan, and revolving credit facility; fluctuations in the number of company shares outstanding and the price of such shares; collection of receivables; interest rates; factors affecting the company's deferred tax assets and ability to value and utilize them; the potential negative impact of indirect tax exposure; the risks and expenses associated with the company's real estate and office facilities space; and general developments in the economy, financial markets, credit markets and the impact of current and future accounting pronouncements and other financial reporting standards. Further information on these and other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Information section of the company's website at investor.asuresoftware.com. Asure Software assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

    Further information on these and other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Information section of the company's website at investor.asuresoftware.com

    Asure assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

    © 2021 Asure Software, Inc. All rights reserved.

    ASURE SOFTWARE, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Amounts in thousands)

     March 31, 2021 December 31, 2020
     (unaudited) 
    Assets   
    Current assets:   
    Cash and cash equivalents$24,290  $28,577 
    Accounts receivable, net of allowance for doubtful accounts of $1,909 and $2,194 at March 31, 2021 and December 31, 2020, respectively3,873  3,354 
    Inventory349  449 
    Prepaid expenses and other current assets3,372  3,284 
    Total current assets before funds held for clients31,884  35,664 
    Funds held for clients254,492  321,069 
    Total current assets286,376  356,733 
    Property and equipment, net8,662  8,281 
    Goodwill73,958  73,958 
    Intangible assets, net61,646  64,552 
    Operating lease assets, net6,354  6,450 
    Other assets, net4,107  3,953 
    Total assets$441,103  $513,927 
    Liabilities and stockholders’ equity   
    Current liabilities:   
    Current portion of notes payable$11,901  $12,310 
    Accounts payable750  1,288 
    Accrued compensation and benefits3,610  2,916 
    Operating lease liabilities, current1,985  1,833 
    Other accrued liabilities1,064  1,380 
    Contingent purchase obligation3,880  3,880 
    Deferred revenue1,605  4,343 
    Total current liabilities before client fund obligations24,795  27,950 
    Client fund obligations254,241  320,577 
    Total current liabilities279,036  348,527 
    Long-term liabilities:   
    Deferred revenue86  111 
    Deferred tax liability985  888 
    Notes payable, net of current portion10,683  12,225 
    Operating lease liabilities, noncurrent5,076  5,366 
    Other liabilities586  1,157 
    Total long-term liabilities17,416  19,747 
    Total liabilities296,452  368,274 
    Commitments   
    Stockholders’ equity:   
    Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding—  — 
    Common stock, $0.01 par value; 44,000 and 22,000 shares authorized; 19,405 and 19,354 shares issued, 19,021 and 18,970 shares outstanding at March 31, 2021 and December 31, 2020, respectively194  193 
    Treasury stock at cost, 384 shares at March 31, 2021 and December 31, 2020(5,017) (5,017)
    Additional paid-in capital420,561  419,827 
    Accumulated deficit(271,552) (269,954)
    Accumulated other comprehensive income465  604 
    Total stockholders’ equity144,651  145,653 
    Total liabilities and stockholders’ equity$441,103  $513,927 



    ASURE SOFTWARE, INC.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    (Amounts in thousands, except share and per share data)

     Three Months Ended
    March 31,
     2021 2020
    Revenue:   
    Recurring$19,242  $18,436 
    Professional services, hardware and other560  511 
    Total revenue19,802  18,947 
    Cost of Sales7,310  7,840 
    Gross profit12,492  11,107 
    Operating expenses:   
    Sales and marketing3,611  3,575 
    General and administrative6,498  5,522 
    Research and development1,124  1,174 
    Amortization of intangible assets2,528  2,349 
    Total operating expenses13,761  12,620 
    Loss from operations(1,269) (1,513)
    Other expenses   
    Interest (expense) income and other, net(224) (235)
    Loss from operations before income taxes(1,493) (1,748)
    Income tax expense105  19 
    Net loss(1,598) (1,767)
    Other comprehensive income:   
    Unrealized gain on marketable securities(139) 65 
    Comprehensive loss$(1,737) $(1,702)
        
    Basic and diluted net loss per share   
    Basic$(0.08) $(0.11)
    Diluted$(0.08) $(0.11)
        
    Weighted average basic and diluted shares   
    Basic19,007,000  15,727,000 
    Diluted19,007,000  15,727,000 

    ASURE SOFTWARE, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts in thousands)

     Three Months Ended March 31,
     2021 2020
    Cash flows from operating activities:   
    Net loss$(1,598)  $(1,767) 
    Adjustments to reconcile loss to net cash (used in) provided by operations:   
    Depreciation and amortization3,862   3,516  
    Amortization of operating lease assets421   386  
    Amortization of debt financing costs and discount30   75  
    Provision for doubtful accounts1   75  
    Provision for deferred income taxes98   8  
    Gain on modification of debt—   (36) 
    Share-based compensation626   438  
    Changes in operating assets and liabilities:   
    Accounts receivable(210)  806  
    Inventory44   84  
    Prepaid expenses and other assets(552)  (900) 
    Accounts payable(538)  (982) 
    Accrued expenses and other long-term obligations(195)  (1,392) 
    Operating lease liabilities(462)  (405) 
    Deferred revenue(2,762)  (3,309) 
    Net cash used in operating activities(1,235)  (3,403) 
    Cash flows from investing activities:   
    Acquisition of intangible asset—   (1,823) 
    Purchases of property and equipment(48)  (241) 
    Software capitalization costs(1,233)  (844) 
    Net change in funds held for clients66,439   27,714  
    Net cash provided by investing activities65,158   24,806  
    Cash flows from financing activities:   
    Payments of notes payable(1,981)  (1,784) 
    Debt financing fees—   (20) 
    Net proceeds from issuance of common stock108   106  
    Net change in client fund obligations(66,337)  (27,751) 
    Net cash used in financing activities(68,210)  (29,449) 
    Net decrease in cash and cash equivalents(4,287)  (8,046) 
    Cash and cash equivalents at beginning of period28,577   28,826  
    Cash and cash equivalents at end of period$24,290   $20,780  


    Reconciliation of GAAP to Non-GAAP
    (In thousands, except for per shared data)

     Q1Q2Q3Q4TotalQ1
      202020202020202020202021
    Total Revenue$18,947$14,115$16,015$16,430$65,507$19,802
            
    GAAP to Non-GAAP Gross Profit      
    GAAP Gross Profit$11,107$8,107$9,073$9,806$38,093$12,492
    GAAP Gross Margin58.6%57.4%56.7%59.7%58.2%63.1%
     Share-based Compensation$22$21$33$24$100$23
     Depreciation$495$537$787$703$2,522$762
     Amortization - intangibles$431$397$397$379$1,604$379
     One Time Product Royalties$91$67$0$0$158$0
    Non-GAAP Gross Profit$12,146$9,130$10,290$10,911$42,477$13,655
    Non-GAAP Gross Margin64.1%64.7%64.3%66.4%64.8%69.0%
            
    GAAP NI to Non-GAAP EBITDA      
    GAAP Net Income (Loss)$(1,767)$(3,944)$(4,759)$(5,842)$(16,311)$(1,598)
     Interest Expense & Other, Net$235$164$408$279$1,086$224
     Taxes based on a 0% tax rate$19$377$(325)$266$337$105
     Depreciation$735$793$1,043$934$3,504$956
     Amortization - intangibles$2,780$2,746$2,821$2,804$11,151$2,907
    EBITDA$2,002$136$(812)$(1,559)$(232)$2,593
    EBITDA Margin10.6%1.0%(5.1)%(9.5)%(0.4)%13.1%
     Share-based Compensation$438$588$707$631$2,365$626
     One Time Expenses$1,845$685$1,117$2,071$5,718$202
    Non-GAAP EBITDA$4,285$1,409$1,012$1,143$7,850$3,421
    Non-GAAP EBITDA Margin22.6%10.0%6.3%7.0%12.0%17.3%
            
    GAAP NI to Non-GAAP NI      
    GAAP Net Income (Loss)$(1,767)$(3,944)$(4,759)$(5,842)$(16,311)$(1,598)
    Share Count15,72715,77915,87316,25815,91019,007
    GAAP EPS$(0.11)$(0.25)$(0.30)$(0.36)$(1.03)$(0.08)
     Share-based Compensation$438$588$707$631$2,365$626
     Amortization - intangibles$2,780$2,746$2,821$2,804$11,151$2,907
     One Time Expenses$1,845$685$1,117$2,071$5,718$202
     Taxes based on a 0% tax rate$19$377$(325)$266$337$105
    Non-GAAP Net Income (Loss)$3,315$452$(439)$(69)$3,260$2,242
    Share Count15,91415,89915,87316,25816,01319,200
    Non-GAAP EPS$0.21$0.03$(0.03)$0.00$0.20$0.12

    Investor Relations Contact:
    Jeff Houston
    Corporate Development
    (512) 437-2349
    Jeff.Houston@asuresoftware.com

     


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