Asure Software Inc.
Nov 14, 2016

Asure Software Reports Strong Third Quarter 2016 Financial Results

Company Reaffirms Guidance for Full Year

AUSTIN, Texas, Nov. 14, 2016 (GLOBE NEWSWIRE) -- Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, reported results for the third quarter ended September 30, 2016. The company also reported pro forma unaudited results, which included results from the acquisition of Mangrove Software as if it was completed on January 1, 2015.

Third Quarter 2016 Financial SummaryActual Results Pro Forma Results
(in millions except per share data and percentages)Q3 2016Q3 2015Change (%) Q3 2016Q3 2015Change (%)
Revenue$   9.4  $6.7  42% $   9.4  $8.9  6%
        
Gross Margin$   7.4  $4.9  51% $   7.4  $6.8  8%
Gross Margin (as a % of revenue) 78.5% 73.7% 7%  78.5% 76.6% 3%
        
EBITDA (excluding one-time expenses)$   2.3  $0.8  199% $   2.3  $1.3  77%
        
Net Income (Loss)$   0.3  $(0.6) 155% $   0.3  $(0.7) 147%
Net Income (Loss) per Diluted Share, Excluding one-time expenses$   0.10  $(0.09) 211% $   0.10  $(0.10) 200%
 
Year to Date 2016 Financial SummaryActual Results Pro Forma Results
(in millions except per share data and percentages)YTD 2016YTD 2015Change (%) YTD 2016YTD 2015Change (%)
Revenue$   25.8  $20.1  28% $   28.0  $26.3  6%
        
Gross Margin$   19.9  $14.9  34% $   21.6  $19.9  8%
Gross Margin (as a % of revenue) 77.0% 73.8% 4%  77.1% 75.7% 2%
        
EBITDA (excluding one-time expenses)$   5.3  $3.1  70% $   5.8  $4.1  43%
        
Net Income (Loss)$   (1.1)$(1.0) -15% $   (0.3)$(1.9) 85%
Net Income (Loss) per Diluted Share, Excluding one-time expenses$   0.15  $(0.09) 267% $   0.17  $(0.23) 174%

Third Quarter 2016 Operational Highlights

Third Quarter 2016 Financial Results

Financial Outlook

On a pro forma basis, including the company's acquisition of Mangrove on March 21, 2016 and under the condition that Mangrove and Asure had been combined as a single company on January 1, 2016, Asure management reaffirmed its previously raised guidance for fiscal 2016 ending December 31:

2016 Financial GuidanceFiscal 2016 (vs. Fiscal 2015)
Revenue$37.75 million to $38.75 million (+40.3% to +44.0% vs. YTD 2015 actual)
EBITDA, excluding one-time items$7.75 million to $8.25 million (+107.6% to +120.9% vs. YTD 2015 actual)
Net income per share, excluding one-time items  $0.22 to $0.30 (vs. a loss of $0.17 YTD 2015 actual)

Management Commentary

"After an important quarter defined by wide-scale integration, cost reductions, and efficiency realizations, Q3 represented the beginning of a ‘new normal' for Asure—a period where our unified platform and expanded market focus led us to realize many of the benefits we expected in this new stage of growth," said company CEO, Pat Goepel. "Not only did we continue to see a year-over-year increase in many of our key metrics, such as pro forma revenue, gross margin, and EBITDA, but we also produced another quarter of profitability, demonstrating the strong demand for both our established and new solutions, as well as the continued near-term realization of some of the synergies from the Mangrove acquisition.

"While our cloud bookings were down for the quarter, due to a large win we experienced in Q3 of last year, total bookings were up 19% year-over-year and 39% year-to-date, and are expected to continue increasing as more customers begin to purchase the newest versions of our products, which we recently released. In addition, we realized significant growth in our cloud revenue, professional services revenue, and on premise revenue—which, when combined with how we've streamlined our backlog conversion process over the first half of 2016, speaks to how we're able to quickly and sustainably scale our revenue base. In fact, we experienced a strong conversion of enterprise clients from backlog to revenue during Q3, despite seeing a healthy increase in our overall backlog, which was primarily due to securing a new three-year deal with PSSI, one of our largest clients to-date."

Brad Wolfe, CFO of Asure Software, added: "The increase in backlog and the addition of new products and cross-sell opportunities has set up the company for a strong 2017. In addition, the investment in infrastructure and process is increasing both the leverage and scalability of our business, which enables us to achieve higher throughput and lower operational costs. This, in turn, allows us ramp up our investment in our sales and marketing initiatives and product portfolio, which we believe will accelerate our expansion and growth goals."

Goepel continued: "In summary, Q3 was another strong and encouraging quarter for us. From an operational standpoint, we experienced a considerable amount of progress from where we were just a quarter ago, having built the foundation for a stronger level of growth in the months and quarters ahead. Given this progress and the fact that our sales pipeline is shaping up to be promising in the near future, we believe we can achieve our financial guidance for 2016, which we raised in Q2."

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. Asure CEO Pat Goepel and CFO Brad Wolfe will host the presentation, followed by a question and answer period.

Date: Monday, November 14, 2016
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
U.S. dial-in: 877-853-5636
International dial-in: 631-291-4544
Conference ID: 2876476

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) is headquartered in Austin, Texas with regional headquarters in London, England. Asure helps companies better manage their global, mobile workforces with cloud-based and mobile solutions that bring people, time, space and assets together in a meaningful way. The company serves approximately 7,000 clients worldwide with workplace and workforce management solutions that offer innovative ways to help meet the needs of an agile workforce. 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)
 
  
  September 30,
2016
(Unaudited)
  December 31,
2015
 
Assets      
Current assets:      
Cash and cash equivalents $289  $1,158 
Accounts and note receivable, net of allowance for doubtful accounts of $136 and $145 at September 30, 2016 and December 31, 2015, respectively  6,599   4,671 
Inventory  616   784 
Prepaid expenses and other current assets  1,441   1,072 
Total current assets before funds held for clients  8,945   7,685 
Funds held for clients  12,264   - 
Total current assets  21,209   7,685 
Property and equipment, net  1,764   2,212 
Goodwill  26,263   17,436 
Intangible assets, net  12,779   6,026 
Other assets  42   458 
Total assets $62,057  $33,817 
Liabilities and stockholders' equity        
Current liabilities:        
Current portion of notes payable, net of debt issuance cost $5,099  $909 
Accounts payable  2,542   2,670 
Accrued compensation and benefits  1,180   715 
Other accrued liabilities  1,960   1,181 
Deferred revenue  8,905   10,803 
 Total current liabilities before client fund obligations  19,686   16,278 
Client fund obligations  12,264   - 
Total current liabilities  31,950   16,278 
Long-term liabilities:        
Deferred revenue  844   947 
Notes payable, net of debt issuance cost  25,464   12,384 
Other liabilities  315   490 
Total long-term liabilities  26,623   13,821 
Total liabilities  58,573   30,099 
Stockholders' equity:        
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding  -   - 
Common stock, $.01 par value; 11,000 shares authorized; 6,916 and 6,674 shares issued, 6,532 and 6,290 shares outstanding at September 30, 2016 and December 31, 2015, respectively  69   67 
Treasury stock at cost, 384 shares at September 30, 2016 and December 31, 2015  (5,017)  (5,017)
Additional paid-in capital  280,374   279,649 
Accumulated deficit  (272,006)  (270,903)
Accumulated other comprehensive income (loss)  64   (78)
Total stockholders' equity  3,484   3,718 
Total liabilities and stockholders' equity $62,057  $33,817 


ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands, except share and per share data)
(Unaudited)
 
  
  FOR THE
THREE MONTHS ENDED
SEPTEMBER 30,
  FOR THE
NINE MONTHS ENDED
SEPTEMBER 30,
 
  2016  2015  2016  2015 
Revenues:            
Cloud revenue $5,630  $3,413  $14,881  $10,201 
Hardware revenue  676   835   2,644   2,467 
Maintenance and support revenue  1,078   1,434   3,509   4,541 
On premise software license revenue  754   241   1,352   728 
Professional services revenue  1,302   731   3,440   2,208 
Total revenues  9,440   6,654   25,826   20,145 
Cost of sales  2,026   1,750   5,932   5,281 
Gross margin  7,414   4,904   19,894   14,864 
                 
Operating expenses                
Selling, general and administrative  5,046   3,866   14,853   10,926 
Research and development  761   786   2,217   2,267 
Amortization of intangible assets  625   505   1,628   1,514 
Total operating expenses  6,432   5,157   18,698   14,707 
                 
Income (loss) from operations  982   (253)  1,196   157 
                 
Other income (loss)                
Interest income  -   -   10   - 
Loss on lease termination  -   -   -   (110)
Foreign currency gain (loss)  (11)  (5)  (9)  (13)
Loss on debt refinancing  -   (4)  -   (4)
Interest expense and other  (609)  (266)  (1,461)  (828)
Interest expense- amortization of original issue discount (OID)  -   (3)  -   (19)
Acquisition costs  -   -   (706)  - 
Total other loss, net  (620)  (278)  (2,166)  (974)
                 
Income (loss) from operations before income taxes  362   (531)  (970)  (817)
Income tax provision  (47)  (43)  (133)  (145)
Net income (loss) $315  $(574) $(1,103) $(962)
Other comprehensive income (loss)                
Foreign currency gain (loss)  26   27   142   (8)
Other comprehensive income (loss) $341   (547) $(961) $(970)
                 
Basic and diluted net income (loss) per share                
Basic $0.05  $(0.09) $(0.17) $(0.16)
Diluted $0.05  $(0.09) $(0.17) $(0.16)
Weighted average basic and diluted shares                
Basic  6,534,000   6,290,000   6,383,000   6,138,000 
Diluted  6,548,000   6,290,000   6,383,000   6,138,000 


ASURE SOFTWARE, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 
  
  FOR THE
NINE MONTHS ENDED
SEPTEMBER 30,
 
  2016  2015 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(1,103) $(962)
Adjustments to reconcile net loss to net cash (used in) provided by operations:        
Depreciation and amortization  2,686   2,324 
Provision for doubtful accounts  50   70 
Share-based compensation  166   335 
Loss on debt financing  -   4 
Other  94   28 
Changes in operating assets and liabilities:        
Accounts receivable  (1,678)  977 
Inventory  169   (530)
Prepaid expenses and other assets  124   (927)
Accounts payable  (189)  542 
Accrued expenses and other long-term obligations  951   354 
Deferred revenue  (2,000)  (222)
 Net cash (used in) provided by operating activities  (730)  1,993 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisitions net of cash acquired  (12,000)  - 
Purchases of property and equipment  (128)  (1,290)
Disposals of property and equipment  -   18 
Collection of note receivable  223   - 
Net change in funds held for clients  4,155   - 
Net cash used in investing activities  (7,750)  (1 272)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from notes payable  16,823   4,250 
Payments on notes payable  (5,173)  (5,527)
Payments on amendment of senior notes payable  -   (75)
Debt financing fees  (438)  - 
Payments on capital leases  (158)  (147)
Net proceeds from exercise of stock options  561   585 
Net change in client fund obligations  (4,155)  - 
Net cash provided by (used in) financing activities  7,460   (914)
         
Effect of foreign exchange rates  151   (5)
         
Net decrease in cash and cash equivalents  (869)  (198)
Cash and cash equivalents at beginning of period  1,158   320 
Cash and cash equivalents at end of period $289  $122 
         
SUPPLEMENTAL INFORMATION:        
Cash paid for:        
Interest $817  $597 
         
Non-cash Investing and Financing Activities:        
Note receivable from customer  -   601 
Subordinated notes payable — Mangrove acquisition  6,000   - 
Accrued purchases of property and equipment  -   17 

*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 items. 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 items 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 Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA)" and the "Reconciliation of GAAP Net Income/(Loss) to Net Earnings Excluding One-Time Items" 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 Earnings Excluding One-Time Items is calculated by combining the company's GAAP Net Earnings, 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.

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.

Non-GAAP Revenue is computed by adding back the deferred revenue fair market valuation to GAAP revenue. 

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

FOR THE THREE MONTHS ENDED

$000sSeptember 30,
2016
September 30,
2015
Net Income (loss)$  315 $  (574)
Interest and amortization of OID 529  269 
Tax 47  43 
Depreciation 249  160 
Amortization 731  611 
Stock Compensation 60  237 
EBITDA 1,931  746  
One-time items   365  21 
EBITDA excluding one-time items$  2,296 $  767 

 FOR THE NINE MONTHS ENDED

$000sSeptember 30,
2016
September 30,
2015
Net Loss$  (1,103)$  (962)
Interest and amortization of OID 1,376  847 
Tax 133  145 
Depreciation 739  492 
Amortization 1,947  1,832 
Stock Compensation 166  335 
EBITDA 3,258  2,689 
One-time items   2,048  436 
EBITDA excluding one-time items$  5,306 $  3,125 

Reconciliation of GAAP Net Earnings to Net Earnings Excluding One-time items

FOR THE THREE MONTHS ENDED

$000s 
 September 30,
2016
September 30,
2015
Net Loss$   315 $  (574)
Legal & Professional Services 136  17 
Severance, Recruitment & Relocation 88  - 
Other one-time items (net) 141  4 
Sub-total excluding Taxes 365  21 
Sub-total one-time items 365  21 
Net Income excluding one-time items$   680 $  (553)

FOR THE NINE MONTHS ENDED

$000s 
 September 30,
2016
September 30,
2015
Net Loss$  (1,103)$  (962)
Legal & Professional Services 982  35 
Severance, Recruitment & Relocation 809  55 
Other one-time items (net) 257  346 
Sub-total excluding Taxes 2,048  436 
Sub-total one-time items 2048  436 
Net Income excluding one-time items$   945 $  (526)

 

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