Asure Software Inc.
ASURE SOFTWARE INC (Form: 8-K, Received: 05/11/2017 10:01:17)
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):   May 11, 2017
 
ASURE SOFTWARE, INC.
(Exact name of registrant as specified in charter)
 
Delaware
0-20008
74-2415696
(State or other jurisdiction of incorporation or organization)
(Commission File No.)
(IRS Employer Identification No.)
 
110 Wild Basin Road, Suite 100, Austin, Texas 78746
(Address of principal executive offices)
 
512-437-2700
(Registrant’s telephone number, including area code)
 
N/A
(Former Name and Address)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2). in Rule 12b-2 of the Exchange Act.

      Emerging growth company
 
 
 
 
If an emerging growth company, indicate by check mark if he registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provide pursuant to Section 13(a) of the Exchange Act.






Item 2.02. Results of Operations and Financial Condition.

On May 11, 2017, Asure Software, Inc. (the “Company”) issued a press release announcing its financial results for its first quarter ended March 31, 2017. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
 
The information contained in this Item 2.02 of this Current Report (including the press release furnished as an exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01. Financial Statements and Exhibits.

  (d)           Exhibits
 
EXHIBIT NUMBER
 
DESCRIPTION
99.1
 
 
 
 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ASURE SOFTWARE, INC.
 
Dated: May 11, 2017                                                  By        /s/ Brad Wolfe                                                      
                                                                      Brad Wolfe, Chief Financial Officer
 
 
 
 

 

Exhibit 99.1
 
 



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

AUSTIN, TX – May 11, 2017  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 Summary
 
Actual Results
 
(in millions except per share data and percentages)
  Q1 2017     Q1 2016    
Change (%)
 
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
·
Closed three strategic acquisitions: Personnel Management Systems, Inc. (PMSI), a leading provider of outsourced HR solutions; Corporate Payroll, Inc. (Payroll Division) (CPI), a leading provider of payroll services; and Payroll Specialties NW, Inc. (PSNW), a leading provider of payroll services. 
 
·
Cloud bookings increased 69 % from the first quarter of 2016.
 
·
Overall pipeline of deals increased approximately 202% from the prior quarter and approximately 325% from the first quarter of 2016, reflecting the additions of the company’s strategic acquisitions, increased cross-sell opportunities and the effectiveness of the expanded sales force.
 
·
Backlog totaled $2.7 million, a 9% increase compared to the prior quarter and a 3% increase from the year-ago quarter. The company continues to expect many enterprise clients will move through the implementation process throughout 2017, which will result in conversion from backlog to reported revenue growth.
 
·
Secured several new wins across a range of industry verticals, including Procter & Gamble (P&G) Worldwide, Merck & Co., Stinson Leonard, Atmosphere Commercial Interiors and Great Lakes Airlines.
 
·
Appointed seasoned HCM sales executive, Brad Burrows, to the new position of director of sales, responsible for leading the company’s client executive team.
 


First Quarter 2017 Financial Results
·
Revenue increased 6 0 % to $10.7 million from $6.7 million in the same year-ago quarter, primarily due to the acquisitions of Mangrove, PMSI, CPI, and PSNW.
·
Recurring revenue as a percent of total revenue increased to 85% from 77% in the first quarter of 2016.
·
Cloud revenue increased 103% and hardware revenue increased 57% from the first quarter of 2016 .
·
Gross margin was $8.3 million (77.3% of total revenue), a 3% increase from $5.0 million (74.3% of total revenue) in the first quarter of 2016.
·
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)* excluding one-time items* was approximately $1.8 million, an increase of 362% compared to $388 , 000 in the first quarter of 2016 .
·
Net loss per share (excluding one-times*) totaled $(0.02), an improvement from net loss per share (excluding one-times*) of $(0.11) in the first quarter of 2016.
·
Non-GAAP net income per share totaled $0.09, an improvement from non-GAAP net loss per share of $(0.03) in the first quarter of 2016.

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.

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


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

$000s
 
March 31,
2017
   
March 31,
2016
 
Net Income (Loss)
   
(1,059
)
   
(1,554
)
Interest
   
625
     
292
 
Tax
   
142
     
44
 
Depreciation
   
227
     
233
 
Amortization
   
953
     
482
 
Stock Compensation
   
54
     
39
 
EBITDA
   
942
     
(464
)
One-time expenses
   
850
     
852
 
EBITDA excluding one-time expenses
   
1,792
     
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
)