Asure Software Inc.
May 11, 2017

Asure Software Reports Strong 2017 First Quarter Financial Results and Increases Full Year Guidance

AUSTIN, Texas, May 11, 2017 (GLOBE NEWSWIRE) -- Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, reported results for the first quarter ended March 31, 2017.

  
First Quarter 2017 Financial SummaryActual Results
(in millions except per share data and percentages)Q1 2017Q1 2016Change (%)
Revenue$   10.7  $  6.7 60%
    
Gross Margin$   8.3  $  5.0 66%
Gross Margin (as a % of revenue) 77.3% 74.3%3%
    
EBITDA $   0.9  $  (0.5)303%
EBITDA, excluding one-time expenses$   1.8  $  0.4 362%
    
Net Loss$   (1.1)$  (1.6)32%
    
Net Loss per Share$   (0.12)$  (0.25)52%
Net Loss per Share, excluding one-time expenses$   (0.02)$  (0.11)82%
Non-GAAP Net Income (Loss) per Share$   0.09  $  (0.03)400%
         


First Quarter 2017 Operational Highlights

First Quarter 2017 Financial Results

Fiscal 2017 Financial Guidance

Asure management increased its financial guidance for fiscal 2017 ending December 31, 2017:

   
2017 Financial Guidance Fiscal 2017 (versus Fiscal 2016)
Revenue $45.5 million to $47.5 million (+28.2 to 33.8% vs. 2016)
EBITDA, excluding one-time items $9.2 million to $9.7 million (+22.7% to 29.3% vs. 2016)
Net Income per Share, excluding one-time items $0.23 to $0.29 (compared to $0.24)
Non-GAAP Net Income per Share $0.62 to $0.77 (compared to $0.68)
   


Management Commentary

"Our results for the first quarter were up significantly across the board," said Asure CEO Pat Goepel. "Not only did we experience double-digit year-over-year growth across all our major financial metrics, including revenue, gross margin and EBITDA, but we also increased our cloud revenue as a percentage of total revenue to 73%, which was a significant improvement from the 57% we reported in Q1 2016. But more than just surpassing our previous growth threshold, this improvement is more so reflective of Asure's continued progress in migrating existing clients to the cloud, which has been a major initiative for us—and one, we believe, positions Asure for long-term success.

"Q1 also marked the one-year anniversary of our acquisition of Mangrove Software and Asure's entry into the rapidly-growing multi-billion-dollar HCM marketplace. With the product, organization and sales integration complete, we are fully capitalizing on the benefits of our combined organizational structure, particularly around cost-saving synergies and cross-selling activity. Our People Success Platform continues to serve as the industry's only solution linking traditional HCM with workspace solutions. Our recent customer wins, including Procter & Gamble (P&G) Worldwide, Merck & Co., Stinson Leonard, Atmosphere Commercial Interiors and Great Lakes Airlines highlight the increasing need and growing demand for a turnkey and unified solution. In fact, our success selling into Mangrove's customer base resulted in the increase of our average deal size, which is now at approximately $40,000. This growth presents a clear indicator not only of our sales team's execution in driving cross-selling opportunities, but the overall opportunities available with a complete solution to address the full spectrum of today's workforce challenges.

"In addition to our organic growth initiatives, we are continuing to look for attractive and accretive ways to strategically scale our business, as demonstrated by our recent tuck-in acquisitions, which have proven quite effective and have yielded excellent results. Earlier this year, we closed three new deals that ultimately expanded our already-robust payroll services offerings as well as diversified our outsourced HR solutions. With the integration of the three entities essentially complete, we remain focused on further unifying our platform to maximize financial and operational synergies.

"Q1 represented a successful continuation of the strong traction we gained in 2016, which included expanding into a full HCM suite while growing our total addressable market nearly five times over. In that time, Asure evolved into a growth company with a world-class customer base, industry-leading solutions, and a strong financial profile and outlook. Needless to say, these investments in our long-term viability have positioned Asure for success not just in 2017, but also the many years ahead. As we look to the rest of this year, Q2 has already seen a continuation of our success in Q1, which gives us confidence to increase our guidance for 2017. We remain focused on the key initiatives that will continue to drive us forward: improving our financial visibility, accelerating the velocity of our cross-selling opportunities and scaling the business both organically and through strategic acquisitions."
                                                           
Conference Call Details
Asure management will host a conference call today at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss these financial results and outlook. Company CEO Pat Goepel and CFO Brad Wolfe will host the presentation, followed by a question and answer period.

U.S. dial-in: 877-853-5636
International dial-in: 631-291-4544
Conference ID: 8489545

Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

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

About Asure Software  
Asure Software, Inc., (NASDAQ: ASUR), headquartered in Austin, Texas, offers intuitive and innovative technologies that enable companies of all sizes and complexities to operate more efficiently. We help build companies of the future. Our cloud platform has helped more than 7,500 clients worldwide to better manage their people and space for a mobile, digital, multi-generational, and global organization. Asure Software's suite of solutions range from HCM workforce management solutions, time and attendance to workspace asset optimization and meeting room management solutions. For more information, please visit www.asuresoftware.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
 Statements in this press release regarding Asure's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Such risks and uncertainties could cause actual results to differ from those contained in the forward-looking statements.

  
ASURE SOFTWARE, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Amounts in thousands) 
  
  March 31, 2017
(unaudited)
  December 31,
2016
 
Assets      
Current assets:      
Cash and cash equivalents $2,288  $12,767 
Accounts and note receivable, net of allowance for doubtful accounts of $328 and $338 at March 31, 2017 and December 31, 2016, respectively  8,953   8,108 
Inventory  530   487 
Prepaid expenses and other current assets  2,012   1,256 
Total current assets before funds held for clients  13,783   22,618 
Funds held for clients  30,544   22,981 
Total current assets  44,327   45,599 
Property and equipment, net  1,809   1,878 
Goodwill  31,455   26,259 
Intangible assets, net  17,184   12,048 
Other assets  322   39 
Total assets $95,097  $85,823 
Liabilities and stockholders' equity        
Current liabilities:        
Current portion of notes payable $2,971  $5,455 
Accounts payable  2,276   1,576 
Accrued compensation and benefits  1,523   1,192 
Other accrued liabilities  1,433   936 
Deferred revenue  9,265   9,252 
Total current liabilities before client fund obligations  17,468   18,411 
Client fund obligations  30,544   22,981 
Total current liabilities  48,012   41,392 
Long-term liabilities:        
Deferred revenue  611   769 
Notes payable, net of current portion of debt issuance cost and debt discount  28,165   24,581 
Other liabilities  157   835 
Total long-term liabilities  28,933   26,185 
Total liabilities  76,945   67,577 
Commitments (Note 13)        
Stockholders' equity:        
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding  -   - 
Common stock, $.01 par value; 11,000 shares authorized; 9,014 and 8,901 shares issued, 8,630 and 8,517 shares outstanding at March 31, 2017 and December 31, 2016, respectively  90   89 
Treasury stock at cost, 384 shares at March 31, 2017 and December 31, 2016  (5,017)  (5,017)
Additional paid-in capital  296,042   295,044 
Accumulated deficit  (272,934)  (271,875)
Accumulated other comprehensive income (loss)  (29  5 
Total stockholders' equity  18,152   18,246 
Total liabilities and stockholders' equity $95,097  $85,823 
 


  
ASURE SOFTWARE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS 
(Amounts in thousands, except share and per share data) 
(Unaudited) 
  
  FOR THE
THREE MONTHS ENDED
MARCH 31,
 
  2017  2016 
Revenues:      
Cloud revenue $7,836  $3,862 
Hardware revenue  1,088   693 
Maintenance and support revenue  933   1,239 
On premise software license revenue  169   140 
Professional services revenue  701   788 
Total revenues  10,727   6,722 
Cost of Sales  2,438   1,730 
Gross margin  8,289   4,992 
         
Operating expenses        
Selling, general and administrative  7,043   5,033 
Research and development  769   811 
Amortization of intangible assets  847   377 
Total operating expenses  8,659   6,221 
         
Loss from operations  (370)  (1,229)
         
Other income (loss)        
Interest expense and other  (547  (281
Total other loss  (547)  (281)
         
Loss from operations before income taxes  (917)  (1,510)
Income tax provision  (142)  (44)
Net loss $(1,059) $(1,554)
Other comprehensive income (loss):        
Foreign currency translation (loss) gain  (34  35 
Other comprehensive loss $(1,093) $(1,519)
         
Basic and diluted net loss per share        
Basic $(0.12) $(0.25)
Diluted $(0.12) $(0.25)
Weighted average basic and diluted shares        
Basic  8,628,000   6,290,000 
Diluted  8,628,000   6,290,000 
         


  
 ASURE SOFTWARE, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Amounts in thousands) 
(Unaudited) 
  
  FOR THE
THREE MONTHS ENDED
MARCH 31,
 
  2017  2016 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(1,059) $(1,554)
Adjustments to reconcile net loss to net cash provided by operations:        
Depreciation and amortization  1,180   716 
Provision for doubtful accounts  -   10 
Share-based compensation  54   39 
Changes in operating assets and liabilities:        
Accounts and note receivable  (366  723 
Inventory  (43  150 
Prepaid expenses and other assets  (1,004  187 
Accounts payable  598   (798)
Accrued expenses and other long-term obligations  (29)  (748)
Deferred revenue  (516  637 
Net cash used in operating activities  (1,185)  (638)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisitions net of cash acquired  (8,076)  (12,000)
Purchases of property and equipment  (21)  (5)
Collection of note receivable  -   (11)
Net change in funds held for clients  1,540   (12,189)
Net cash used in investing activities  (6,557)  (24,205)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from notes payable  5,000   12,500 
Payments on notes payable  (6,069  - 
Debt financing fees  (100)  (438)
Payments on capital leases  (46)  (53)
Net proceeds from issuance of stock  -   3 
Net change in client fund obligations  (1,485  12,189 
Net cash (used in) provided by financing activities  (2,700  24,201 
         
Effect of foreign exchange rates  (37  37 
         
Net decrease in cash and cash equivalents  (10,479)  (605)
Cash and cash equivalents at beginning of period  12,767   1,158 
Cash and cash equivalents at end of period $2,288  $553 
         
SUPPLEMENTAL INFORMATION:        
Cash paid for:        
Interest $411  $22 
         
Non-cash Investing and Financing Activities:        
Subordinated notes payable- See Note 4 $2,090   $6,000 
Issuance of common stock- CPI Acquisition- See Note 4 $  945  $- 
         

*Non-GAAP Financial Measures
This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA and GAAP Net Income (Loss) excluding one-time expenses. These supplemental financial measures are not required by GAAP, nor is the presentation of this financial information intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the Expenses associated with Asure's earnings results as determined in accordance with GAAP. However, for the reasons described below, management uses these non-GAAP measures to evaluate the performance of Asure's business. Asure's management believes that it is important to provide investors with these same tools, together with reconciliation to GAAP, for evaluating the performance of Asure's business, as it may provide additional insight into Asure's financial results. See the "Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA)" and the "Reconciliation of GAAP Net Income/(Loss) to Net Income (Loss) Excluding One-Time Expenses" tables included in this press release for further information regarding these non-GAAP financial measures. In addition, these measures are presented because management believes they are frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization and stock compensation expense to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of Asure's profitability.

Net Income (Loss) Excluding One-Time Expenses is calculated by combining the company's GAAP Net Income (Loss), or earnings per share, with expenses that are one time in nature and are not expected to recur on a dollar or per share basis.

Non-GAAP Net Income (Loss) is calculated by combining the company's GAAP Net Income (Loss), or earnings per share, with items that are one time in nature and are not expected to recur on a dollar or per share basis. It excludes the impact of purchase accounting adjustments, amortization expense on acquisition-related intangible assets, stock-based compensation expense, and acquisition-related expenses. We have revised our non-GAAP Net Income (Loss) to include acquisition-related amortization, as we believe this will more accurately reflect how we analyze our operations and provide information needed by investors to gain additional insight into our financial results. These expenses have been included in the non-GAAP Net Income (Loss) for all periods presented.

Free Cash Flow is computed by subtracting capital expenditures from cash flow from operations, each as determined in accordance with GAAP and as reflected in the statement of cash flows.

Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA) and EBITDA Excluding One-time Expenses.

FOR THE THREE MONTHS ENDED

 
$000sMarch 31,
2017
March 31,
2016
Net Income (Loss)(1,059)(1,554)
Interest625 292 
Tax 142 44 
Depreciation 227 233 
Amortization   953 482 
Stock Compensation  54 39 
EBITDA942 (464 )
  One-time expenses850 852 
EBITDA excluding one-time expenses1,792 388 
 


 
Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Excluding One-Time Expenses
 
FOR THE THREE MONTHS ENDED 
$000s March 31,
2017
  March 31,
2016
 
Net Income (Loss) (1,059) (1,554 )
Legal & Professional Services 717  671 
Severance, Recruitment & Relocation 118  138 
Other one-time items (net) 15   43 
Sub-total excluding Taxes 850  852 
Sub-total one-time expenses 850  852  
Net Income (Loss) excluding one-time expenses (209) (702 )
  Weighted-average shares of common stock outstanding 8,628  6,290 
Net Income (Loss) per share, excluding one-time expenses$(0.02)$(0.11)
   


 
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
 
FOR THE THREE MONTHS ENDED 
$000s March 31,
2017
  March 31,
2016
 
Net Income (Loss) (1,059) (1,554 )
Amortization expense on acquisition-related intangible assets 953  482 
One-time expenses 850  852 
Stock compensation 54   39 
Sub-total Non-GAAP items 1,857  1,373  
Non-GAAP Net Income (Loss)  798  (181 )
Weighted-average shares of common stock outstanding 8,839  6,290 
Non-GAAP Net Income (Loss) per share$0.09 $(0.03)
   
Company Contact: 
Brad Wolfe, CFO
Asure Software, Inc.
888-323-8835
bwolfe@asuresoftware.com

Investor Relations Contact:
Matt Glover and Najim Mostamand
Liolios Group, Inc.
949-574-3860
ASUR@liolios.com