Asure Software Inc.
Aug 14, 2017

Asure Software Reports Record Second Quarter 2017 Revenue and Increases Revenue and EBITDA Guidance for Full Year

AUSTIN, Texas, Aug. 14, 2017 (GLOBE NEWSWIRE) -- Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, reported results for the second quarter ended June 30, 2017.

 
Second Quarter 2017 Financial SummaryActual Results
  
 For the three months ended
(in millions except per share data and percentages)  June 30,
2017
  June 30,
2016
Change (%)
Revenue$   12.9  $  9.7 33%
    
Gross Margin$   10.1  $  7.5 34%
Gross Margin (as a % of revenue) 78.1% 77.5%1%
    
EBITDA $   0.9  $  1.8 -48%
EBITDA, excluding one-time expenses$   2.2  $  2.6 -18%
    
Net Income (Loss)$   (1.8)$  0.1 -1451%
    
Net Income (Loss) per  Share$   (0.18)$  0.02 -1000%
Net Income (Loss) per  Share, excluding one-time expenses$   (0.06)$  0.15 -140%
Non-GAAP Net Income (Loss) per Share$   0.07  $  0.27 -74%
 
Six Months Ended 2017 Financial SummaryActual Results
  
 For the six months ended
(in millions except per share data and percentages)  June 30,
2017
  June 30,
2016
Change (%)
Revenue$   23.6  $  16.4 44%
    
Gross Margin$   18.3  $  12.5 47%
Gross Margin (as a % of revenue) 77.7% 76.2%2%
    
EBITDA $   1.9  $  1.3 40%
EBITDA, excluding one-time expenses$   4.0  $  3.0 31%
    
Net Income (Loss)$   (2.9)$  (1.4)104%
    
Net Income (Loss) per  Share$   (0.31)$  (0.23)35%
Net Income (Loss) per  Share, excluding one-time expenses$   (0.09)$  0.04 -325%
Non-GAAP Net Income (Loss) per Share$   0.16  $  0.25 -36%

 

Second Quarter 2017 Operational Highlights

Second Quarter 2017 Financial Results

  
Fiscal 2017 Financial Guidance

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

2017 Financial Guidance  Fiscal 2017
Revenue  $54.25 million to $56.25 million (increased from $53.0 million to $56.0 million)
EBITDA, excluding one-time items  $12.2 million to $13.5 million (increased from $11.9 million to $13.2)
Net Income (Loss) per Share, excluding one-time items  $(0.06) to $(0.02) (revised from $(0.02) to $0.02)
Non-GAAP Net Income per Share  $0.50 to $0.56 (revised from $0.50 to $0.59)

For fiscal 2017, Asure expects to achieve between $54.25 million and $56.25 million in revenue, with EBITDA, excluding one-time items, of between $12.2 million and $13.5 million, net loss per share, excluding one-time items, of between $(0.06) and $(0.02), and non-GAAP net income per share of between $0.50 and $0.56.

For fiscal 2018, Asure's objectives are to reach double-digit organic revenue growth with multiple "tuck-in" acquisitions each of approximately $2.0 million of revenue and a purchase price of about two times revenue. In addition, Asure seeks to reach between $70.0 million and $80.0 million of revenue in 2018, with EBITDA, excluding one-time items, of between $16.0 million and $20.0 million. The company plans to issue more formal financial guidance for fiscal 2018 when it reports Q3 2017 results. 

Management Commentary

"Q2 represented a continuation of the same strong growth and operational momentum Asure has achieved over the last several quarters and years," said company CEO Pat Goepel. "This continued strength was demonstrated in the double-digit topline growth we realized this quarter resulting in a record $12.9 million of revenue, along with the continued expansion of our gross margins to more than 78%. These encouraging results were driven by solid contributions across our business, particularly from cloud revenue, which was up 64% year-over-year, as well as a 174% increase in cloud bookings, both metrics validating our success in scaling our cloud business. And despite higher non-recurring and non-cash expenses related to the two acquisitions we completed in the period, we were still able to generate another quarter of profitability on a non-GAAP basis. Our overall performance reflects the increasing demand for our solutions as well as the continued realization of synergies from the strategic acquisitions we have completed this year.

"Following the one-year anniversary of our acquisition of Mangrove Software, which enabled us to more rapidly enter the multi-billion-dollar HCM market, we completed two more strategic acquisitions during the quarter: iSystems and Compass HRM. Like Mangrove, our acquisition of iSystems is consistent with our strategy of purchasing businesses with a proven technology and robust service bureau customer base, presenting us with significant opportunities to upsell and cross-sell our solution suite. In less than three months, we have made significant strides toward integrating the business and selling into its base of more than 100 service bureaus. Concurrently, we have already integrated Compass HRM, a regional service bureau and longstanding reseller of our HCM solutions, and begun to realize revenue and EBITDA improvements similar to what we achieved with the PSNW and CPI ‘tuck in' acquisitions earlier this year. In fact, we have begun to implement cost optimization measures for our recent acquisitions that will take out approximately $4 million in costs annually. We expect to complete most of these measures in Q3 with the reminder by year end.

"As a result of our continued success, we entered the second half of 2017 with strong financial and operational momentum, a bolstered balance sheet, and industry-leading solutions. These dynamics have favorably positioned Asure for success in 2017, and have also put us well on track to achieve our mid-term goal of surpassing $100 million in revenue with double-digit EBITDA margins excluding one-time items. We remain focused on the key strategic initiatives that will continue to drive us forward, including accelerating the velocity of our cross-selling opportunities and the scaling of our 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. Asure CEO Pat Goepel will host the presentation, followed by a question and answer period.

Date: Monday, August 14, 2017
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: 53032843

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. In particular, there is no assurance that Asure will achieve any particular level of revenues or income, consummate any additional acquisitions or successfully integrate any future acquired businesses.



ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
  June 30,
2017
(Unaudited)
  December 31,
2016
 
Assets      
Current assets:      
Cash and cash equivalents $30,419  $12,767 
Accounts and note receivable, net of allowance for doubtful accounts of $495 and $338
at June 30, 2017 and December 31, 2016, respectively
  13,050   8,108 
Inventory  491   487 
Prepaid expenses and other current assets  2,273   1,256 
Total current assets before funds held for clients  46,233   22,618 
Funds held for clients  28,427   22,981 
Total current assets  74,660   45,599 
Restricted cash  200   - 
Property and equipment, net  3,065   1,878 
Goodwill  75,510   26,259 
Intangible assets, net  34,576   12,048 
Other assets  477   39 
Total assets $188,488  $85,823 
Liabilities and stockholders' equity        
Current liabilities:        
Current portion of notes payable, net of debt issuance cost and debt discount $8,094  $5,455 
Accounts payable  1,892   1,576 
Accrued compensation and benefits  1,929   1,192 
Other accrued liabilities  2,051   936 
Deferred revenue  11,029   9,252 
 Total current liabilities before client fund obligations  24,995   18,411 
Client fund obligations  28,427   22,981 
Total current liabilities  53,422   41,392 
Long-term liabilities:        
Deferred revenue  1,408   769 
Notes payable, net of current portion of debt issuance cost and debt discount  68,239   24,581 
Other liabilities  161   835 
Total long-term liabilities  69,808   26,185 
Total liabilities  123,230   67,577 
Stockholders' equity:        
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding  -   - 
Common stock, $.01 par value; 22,000 shares authorized; 12,754 and 8,901 shares issued, 12,370 and 8,517 shares outstanding at June 30, 2017 and December 31, 2016, respectively  128   89 
Treasury stock at cost, 384 shares at June 30, 2017 and December 31, 2016  (5,017)  (5,017)
Additional paid-in capital  344,970   295,044 
Accumulated deficit  (274,771)  (271,875)
Accumulated other comprehensive income (loss)  (52)  5 
Total stockholders' equity  65,258   18,246 
Total liabilities and stockholders' equity $188,488  $85,823 



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
June 30,
  FOR THE
SIX MONTHS ENDED
June 30,
 
  2017  2016  2017  2016 
Revenues:            
Cloud revenue $8,826  $5,389  $16,662  $9,251 
Hardware revenue  1,560   1,275   2,648   1,968 
Maintenance and support revenue  1,165   1,192   2,098   2,431 
On premise software license revenue  281   458   450   598 
Professional services revenue  1,048   1,350   1,749   2,138 
Total revenues  12,880   9,664   23,607   16,386 
Cost of sales  2,826   2,176   5,264   3,906 
Gross margin  10,054   7,488   18,343   12,480 
                 
Operating expenses                
Selling, general and administrative  8,784   5,480   15,827   10,513 
Research and development  836   645   1,605   1,456 
Amortization of intangible assets  1,042   626   1,889   1,003 
Total operating expenses  10,662   6,751   19,321   12,972 
                 
Income (loss) from operations  (608)  737   (978)  (492)
                 
Other income (loss)                
Interest expense and other  (1,088)  (559)  (1,635)  (840)
Total other loss  (1,088)  (559)  (1,635)  (840)
                 
Income (loss) from operations before income taxes  (1,696)  178   (2,613)  (1,332)
Income tax provision  (141)  (42)  (283)  (86)
Net income (loss) $(1,837) $136  $(2,896) $(1,418)
Other comprehensive income (loss)                
Foreign currency gain (loss)  (23)  81   (57)  116 
Other comprehensive income (loss) $(1,860)  217  $(2,953) $(1,302)
                 
Basic and diluted net income (loss) per share                
Basic $(0.18) $0.02  $(0.31) $(0.23)
Diluted $(0.18) $0.02  $(0.31) $(0.23)
Weighted average basic and diluted shares                
Basic  9,980,000   6,294,000   9,307,000   6,292,000 
Diluted  9,980,000   6,429,000   9,307,000   6,292,000 



 ASURE SOFTWARE, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
  
  FOR THE
SIX MONTHS ENDED
JUNE 30,
 
  2017  2016 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(2,896) $(1,418)
Adjustments to reconcile net loss to net cash used in operations:        
Depreciation and amortization  2,553   1,706 
Provision for doubtful accounts  150   10 
Share-based compensation  225   106 
Changes in operating assets and liabilities:        
Accounts receivable  (3,486)  (1,059)
Inventory  (2)  268 
Prepaid expenses and other assets  (891)  86 
Accounts payable  (244)  (316)
Accrued expenses and other long-term obligations  9   397 
Deferred revenue  973   (864)
 Net cash used in operating activities  (3,609)  (1,084)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisitions net of cash acquired  (43,698)  (12,000)
Purchases of property and equipment  (782)  (24)
Collection of note receivable  -   64 
Net change in funds held for clients  3,657   (8,106)
 Net cash used in investing activities  (40,823)  (20,066)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from notes payable  45,777   15,335 
Payments on notes payable  (6,391)  (3,274)
Debt financing fees  (1,433)  (438)
Payments on capital leases  (91)  (106)
Net proceeds from issuance of common stock  27,916   528 
Net change in client fund obligations  (3,602)  8,106 
 Net cash provided by financing activities  62,176   20,151 
         
Effect of foreign exchange rates  (92)  124 
         
Net increase (decrease) in cash and cash equivalents  17,652   (875)
Cash and cash equivalents at beginning of period  12,767   1,158 
Cash and cash equivalents at end of period $30,419  $283 
         
SUPPLEMENTAL INFORMATION:        
Cash paid for:        
Interest $889  $456 
         
Non-cash Investing and Financing Activities:        
Subordinated notes payable —acquisitions  8,725   6,000 
Equity issued in connection with acquisitions  18,000   - 


*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 management believes 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 management believes 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.

Guidance

Reconciliation of GAAP Net Income (Loss) to EBITDA Excluding One-time Expenses:

 $000s   
 Fiscal 2017
 Net Income (Loss)  (3,600) to   (3,750)
 Interest   4,800  to   5,000 
 Tax  300  to   400 
 Depreciation  1,500  to   1,700 
 Amortization  5,800  to   6,100 
 Stock Compensation  500  to   550 
 EBITDA  9,300   to   10,000  
   One-time expenses  2,900   to   3,500  
 EBITDA excluding one-time expenses  12,200   to   13,500  

  

Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Excluding One-Time Expenses and non-GAAP Net Income per share

  Fiscal 2017
 Net loss per share$   (0.31) to $   (0.33)
   One time items per share$  0.25  to $  0.31 
 Net Income (loss) per share, excluding one time items$   (0.06) to $   (0.02)
   Stock based compensation per share$  0.05  to $  0.05 
   Amortization expense on acquisition-related intangible assets per share$  0.51  to $  0.53 
 Non GAAP Net Income per share$   0.50   to $   0.56  

 

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

$000sJune 30,
2017
June 30,
2016
Net Income (Loss)(1,837)136
Interest1,079 560
Tax 141 42
Depreciation 224 259
Amortization   1,149 732
Stock Compensation 171 67
EBITDA 927 1,796
  One-time expenses 1,234 831
EBITDA excluding one-time expenses2,161 2,627

 FOR THE SIX MONTHS ENDED

$000sJune 30,
2016
June 30,
2015
Net Loss(2,896)(1,418)
 Interest1,704 852 
 Tax 283 86 
 Depreciation 451 490 
 Amortization2,102 1,216 
 Stock Compensation225 106 
EBITDA1,869 1,332 
  One-time expenses  2,084 1,683 
EBITDA excluding one-time expenses3,953 3,015 

Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Excluding One-time Expenses

FOR THE THREE MONTHS ENDED

$000sJune 30,
2017 
 June 30,
 2016
Net Income (Loss)(1,837)136
Legal & Professional Services861 175
Severance, Recruitment & Relocation174 584
Other one-time items (net)199 72
 Sub-total excluding Taxes1,234 831
Sub-total one-time expenses1,234 831
Net Income (Loss) excluding one-time expenses(603)967


FOR THE SIX MONTHS ENDED

$000sJune 30,
2017
 June 30,
2016
 
Net Income (Loss)(2,896)(1,418)
Legal & Professional Services1,578 857 
Severance, Recruitment & Relocation292 722 
Other one-time items (net)214 104 
 Sub-total excluding Taxes2,084 1,683 
Sub-total one-time expenses2,084 1,683 
Net Income (Loss) excluding one-time expenses(812)265 


Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)

FOR THE THREE MONTHS ENDED

$000s June 30, 
2017
  June 30,
 2016
Net Income (Loss) (1,837) 136
 Amortization expense on acquisition-related intangible assets  1,149  732
 One-time expenses 1,234  831
 Stock compensation   171   67
Sub-total Non-GAAP Items 2,554  1,630
Non-GAAP Net Income (Loss) 717  1,766
Weighted-average shares of common stock outstanding 10,212  6,429
Non-GAAP Net Income (Loss) per Share$0.07 $0.27

   

FOR THE SIX MONTHS ENDED 

$000s June 30,
 2017  
  June 30,
2016
 
Net Income (Loss) (2,896) (1,418)
 Amortization expense on acquisition-related intangible assets 2,102  1,215 
 One-time expenses 2,084  1,683 
 Stock compensation   225    106 
Sub-total Non-GAAP Items 4,411  3,004 
Non-GAAP Net Income (Loss) 1,515  1,586 
Weighted-average shares of common stock outstanding 9,511  6,292 
Non-GAAP Net Income (Loss) per Share$0.16 $0.25 


Company Contact: 
Pat Goepel, CEO
Asure Software, Inc.
888-323-8835
pgoepel@asuresoftware.com

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