Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

  
FORM 8-K
 

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report: November 12, 2019
(Date of earliest event reported)
 
Asure Software, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
0-20008
74-2415696
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification Number)
 
3700 N. Capital of Texas Hwy, Suite 350, Austin, TX
78746
(Address of principal executive offices)
(Zip Code)
 
512-437-2700
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former Name or Former Address, if changed since last report)
 
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 1934 (§240.12b-2 of this chapter)
Emerging growth company ☐.
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐







Item 2.02. Results of Operations and Financial Condition.
 
On November 11, 2019, Asure Software, Inc. (the “Company”) issued a press release announcing its financial results for its third quarter ended September 30, 2019. 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: November 12 , 2019
By:
/s/ Kelyn Brannon
 
 
 
Kelyn Brannon, Chief Financial Officer
 
 
 
 
 



Exhibit

https://cdn.kscope.io/3c00fcdc79be0a6ce028050d0228f408-asuresoftwarea01.gif

Exhibit 99.1

Asure Software Announces Third Quarter 2019 Results

AUSTIN, TX - November 11, 2019 Asure Software, Inc. (NASDAQ: ASUR), the leading provider of dynamic cloud-based solutions that elevate how, when and where work gets done, reported results for the third quarter ended September 30, 2019.

Third Quarter 2019 Key HCM Financial Highlights

Asure will be a pure-play HCM SaaS vendor after the previously announced $120 Million sale of Workspace Management, which is expected to close in December 2019
Core HCM bookings increased 8% year-over-year
HCM revenue of $17.9 million, above internal expectations
Interest on HCM client funds exceeded $450,000, up from $20,000 in the third quarter of 2018
Establishing HCM revenue guidance of $72.0-73.0 million for 2019 and $72.0-74.0 million for 2020
Establishing HCM adjusted EBITDA guidance of $11.0-12.0 million for 2019 and $11.0-12.0 million for 2020

Third Quarter 2019 Financial Summary (HCM and Workspace Management)


For the three months ended
 
For the nine months ended
 
In thousands
September 30, 2019
 
September 30, 2018
 
Change (%)
 
September 30, 2019
 
September 30, 2018
 
Change (%)
 
Revenue
$24,559
 
$23,458
 
5%
 
$76,160
 
$64,529
 
18%
 


 

 

 
 
 
 
 
 
 
GAAP Gross Profit
$15,507
 
$14,987
 
3%
 
$48,559
 
$43,281
 
12%
 
GAAP Gross Margin
63.1%
 
63.9%
 
(1)%
 
63.8%
 
67.1%
 
(5)%
 


 

 

 
 
 
 
 
 
 
Non-GAAP Gross Profit*
$16,104
 
$15,934
 
1%
 
$50,432
 
$45,019
 
12%
 
Non-GAAP Gross Margin*
65.6%
 
67.9%
 
(3)%
 
66.2%
 
69.8%
 
(5)%
 


 

 

 
 
 
 
 
 
 
GAAP Net Loss
$(3,356)
 
$(3,584)
 
(6)%
 
$(11,217)
 
$(9,277)
 
21%
 
Non-GAAP Net Income*
$1,669
 
$2,221
 
(25)%
 
$6,200
 
$5,673
 
9%
 


 

 

 
 
 
 
 
 
 
GAAP Net Loss per Share
$(0.22)
 
$(0.24)
 
(8)%
 
$(0.73)
 
$(0.68)
 
7%
 
Non-GAAP Net Earnings per Share**
$0.11
 
$0.14
 
(21)%
 
$0.40
 
$0.37
 
8%
 


 

 

 
 
 
 
 
 
 
Non-GAAP EBITDA*
$5,348
 
$5,365
 
—%
 
$17,154
 
$14,029
 
22%
 
Non-GAAP EBITDA Margin*
21.8%
 
22.9%
 
(5)%
 
22.5%
 
21.7%
 
4%
 
_______________________
* Non-GAAP financial measures are reconciled to GAAP in the tables set forth in this release.
** Historical non-GAAP Net Earnings Per Share adjusted for 0% effective tax rate for comparison purposes.










Management Commentary

“Given the expected impact to our financial model resulting from the Workspace Management sale, once closed, this transaction allows Asure to be laser-focused on our award-winning Human Capital Management Solutions to resellers and small and midsize businesses. Asure Software will be pure-play HCM and we will dedicate our product innovations decisively on HCM solutions,” stated Pat Goepel, CEO of Asure Software. “We plan to pay off the majority of our debt with the proceeds -- right sizing our capital structure for a company of our size. And we believe our financial predictability will be enhanced with the new Asure's recurring revenue mix exceeding 90% of total revenue.”


Asure delivered the following results (HCM and Workspace Management) for its third quarter ended September 30, 2019:
 
Revenue: Total revenue for the third quarter of 2019 was $24.6 million, an increase of 5% from $23.5 million in the third quarter of 2018. Revenue mix for the third quarter of 2019 was comprised primarily of recurring revenue, which represented 86% of total revenue with professional services, hardware and other representing the remaining 14%. HCM revenue represented 73% of total and Workspace was 27%.

Gross Profit: GAAP gross profit for the third quarter of 2019 was $15.5 million (63.1% margin), a 3% increase from $15.0 million (63.9% margin) in the third quarter of 2018. Non-GAAP gross profit* was $16.1 million (65.6% margin), up 1% from $15.9 million (67.9% margin) in the year-ago quarter due to the increasing mix of HCM in our business.

Earnings (Loss) per Share: GAAP loss per share was $(0.22), compared with a net loss per share of $(0.24) in the third quarter of 2018. Non-GAAP earnings per share* was $0.11, as compared with $0.14 in the year-ago quarter.

Non-GAAP EBITDA*: Non-GAAP EBITDA was $5.3 million (21.8% margin), an increase of 0% from $5.4 million (22.9% margin) in the third quarter of 2018.


Recent Business Highlights

Announced that the Company entered into an agreement to sell its Workspace Management business to FM:Systems in an asset and equity transaction valued at $120 million.
New HCM Wins: During the third quarter, Asure secured wins across a range of companies including, Megha Alliance, Startkleen Legacy, the minor league baseball team Florence Freedom, a multi-unit quick service restaurant franchise with 14 locations and Theoris Software. We also added 16 new Service Bureau Organizations to the Evolution family. Third quarter workspace wins included Whole Foods and TX Dot.
Asure Consulting launched a comprehensive HR Training Courses Program, consisting of 47 modular segments based on trending operations and compliance topics to assist business professionals to optimize abilities and mitigate risk.
Appointed Charlie Lathrop, payroll processing veteran, to the company’s board of directors.


2019 Financial Guidance (HCM)

Given the impact to our financial model due to the timing of the Workspace Management sale, Asure is issuing guidance based on HCM performance only. The fourth quarter will be impacted by a large capital gain at the time of closing which the Company expects to take in December 2019.

Asure is establishing the following guidance for HCM only, excluding Workspace Management given the pending disposition:

2019 Guidance
Range

 
 
 
 
Revenue
$
72.0

million
to
$
73.0

million
Non-GAAP EBITDA
$
11.0

million
to
$
12.0

million

Additional 2019 Guidance
Range

 
 
 
 
Basic average shares outstanding
15.4

million
to
15.9

million
Non-GAAP diluted shares outstanding
15.7

million
to
16.0

million
Non-GAAP Effective Tax Rate
0
%
 
 
 
 

2020 Financial Guidance (HCM)

Asure is establishing the following guidance for HCM only, excluding Workspace Management given the pending disposition:

2




2020 Guidance
Range
 
 
 
 
Revenue
$
72.0

million
to
$
74.0

million
Non-GAAP EBITDA
$
11.0

million
to
$
12.0

million


Conference Call Details
Asure management will host a conference call today, Monday, November, 11, 2019 at 4:30 p.m. Eastern time (3:30 p.m. Central time) to discuss these financial results and outlook. Asure CEO Pat Goepel and CFO Kelyn Brannon 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: 6128479

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

*Non-GAAP Financial Measures: This press release includes information about non-GAAP diluted earnings per share, non-GAAP tax rates, non-GAAP net income, non-GAAP gross profit, and non-GAAP EBITDA (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 EBITDA differs from GAAP net loss in that it excludes things such as interest, tax, depreciation, amortization, stock compensation, and one-time expenses. Asure Software is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort. Therefore, Asure Software has not provided guidance for GAAP net loss or a reconciliation of the foregoing forward-looking Non-GAAP EBITDA guidance to GAAP net loss.

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 third quarter 2019 financial statements and for its non-GAAP estimates for the full fiscal 2019:

Stock-Based Compensation Expenses: The company's compensation strategy includes the use of stock-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, stock-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.

3




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, and relocation.

About Asure Software
Asure Software, Inc. (NASDAQ: ASUR), headquartered in Austin, Texas, provides innovative and flexible SaaS-based cloud platforms that help clients worldwide elevate how, when, and where work gets done throughout the employee lifecycle. More than a Human Capital Management (HCM) software program, our Smart Office suite capitalizes on the intrinsic value between workforce and workspace so organizations of all sizes can better compete for talent, space, time, and capital assets. Asure Software’s offerings include a fully-integrated HCM platform, Time & Attendance, Talent Management, Employee Benefits, Benefits Administration, Payroll & Tax, Asset & Move Management, Full-Service Room Scheduling, Hoteling & Mobile Workforce and Workplace Occupancy Sensors. Visit us at www.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, stock-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 closing of the company's sale of Workspace Management business; the company's rate of growth and anticipated revenue run rate, including 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; domestic and international regulatory developments, including the adoption of new privacy 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.

© 2019 Asure Software, Inc. All rights reserved.







4



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


September 30, 2019 (unaudited)

December 31, 2018
Assets



Current assets:




Cash and cash equivalents
$
12,576


$
15,444

Accounts receivable, net of allowance for doubtful accounts of $1,047 and $1,467 at September 30, 2019 and December 31, 2018, respectively
15,199


16,028

Inventory
5,061


3,117

Prepaid expenses and other current assets
3,437


3,120

Total current assets before funds held for clients
36,273


37,709

Funds held for clients
88,210


122,206

Total current assets
124,483


159,915

Property and equipment, net
10,636


8,948

Goodwill
115,957


111,387

Intangible assets, net
72,472


76,760

Other assets, net
11,878


4,090

Total assets
$
335,426


$
361,100

Liabilities and stockholders’ equity





Current liabilities:





Current portion of notes payable, net of debt issuance cost
$
4,220


$
4,733

Revolving line of credit
4,000



Accounts payable
3,943


3,662

Accrued compensation and benefits
2,894


2,824

Other accrued liabilities
4,965


2,234

Deferred revenue
12,362


11,849

Total current liabilities before client fund obligations
32,384


25,302

Client fund obligations
88,470


123,170

Total current liabilities
120,854


148,472

Long-term liabilities:





Deferred revenue
470


876

Deferred tax liability
1,965


1,566

Notes payable, net of current portion and debt issuance cost
112,473


107,229

Other liabilities
6,015


439

Total long-term liabilities
120,923


110,110

Total liabilities
241,777


258,582

Commitments





Stockholders’ equity:





Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding



Common stock, $.01 par value; 22,000 and 22,000 shares authorized; 15,970 and 15,666 shares issued, 15,586 and 15,282 shares outstanding at September 30, 2019 and December 31, 2018, respectively
160


157

Treasury stock at cost, 384 shares at September 30, 2019 and December 31, 2018
(5,017
)

(5,017
)
Additional paid-in capital
394,810


391,927

Accumulated deficit
(294,860
)

(283,643
)
Accumulated other comprehensive loss
(1,444
)

(906
)
Total stockholders’ equity
93,649


102,518

Total liabilities and stockholders’ equity
$
335,426


$
361,100

 

 






5



ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE 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,

2019

2018

2019

2018
Revenue:








Recurring
$
21,220


$
19,561


$
65,214


54,795

Professional services, hardware and other
3,339


3,897


10,946


9,734

Total revenue
24,559


23,458


76,160


64,529

Cost of Sales
9,052


8,471


27,601


21,248

Gross profit
15,507


14,987


48,559


43,281

Operating expenses:









Selling, general and administrative
11,395


11,052


36,019


33,394

Research and development
2,501


3,514


6,730


6,495

Amortization of intangible assets
2,375


2,447


7,918


6,038

Total operating expenses
16,271


17,013


50,667


45,927

Loss from operations
(764
)

(2,026
)

(2,108
)

(2,646
)
Other expense









Interest expense and other
(2,864
)

(1,861
)

(8,709
)

(6,343
)
Total other expense, net
(2,864
)

(1,861
)

(8,709
)

(6,343
)
Loss before income taxes
(3,628
)

(3,887
)

(10,817
)

(8,989
)
Income tax benefit (expense)
272


303


(400
)

(288
)
Net Loss
$
(3,356
)

$
(3,584
)

(11,217
)

(9,277
)
Other comprehensive income:









Unrealized gain (loss) on marketable securities
(4
)

(101
)

22


(101
)
Foreign currency translation loss
(514
)

(211
)

(560
)

(645
)
Comprehensive loss
$
(3,874
)

$
(3,896
)

$
(11,755
)

$
(10,023
)
Basic and diluted net loss per share









Basic
$
(0.22
)

$
(0.24
)

$
(0.73
)

$
(0.68
)
Diluted
$
(0.22
)

$
(0.24
)

$
(0.73
)

$
(0.68
)
Weighted average basic and diluted shares









Basic
15,551,000


15,223,000


15,467,000


13,591,000

Diluted
15,551,000


15,223,000


15,467,000


13,591,000




6



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

For the Nine Months Ended September 30,

2019

2018
Cash flows from operating activities:



Net loss
$
(11,217
)

$
(9,277
)
Adjustments to reconcile net loss to net cash provided by (used in) operations:



 
Depreciation and amortization
11,594


9,100

Amortization of debt financing costs and discount
1,178


499

Provision for (recovery of) doubtful accounts
(414
)

496

Provision for deferred income taxes
468


1,127

Share-based compensation
1,580


887

Release of contingent consideration

 
(489
)
Loss on disposals of fixed assets
83



Changes in operating assets and liabilities:



 
Accounts receivable
2,930


(6,587
)
Inventory
(2,062
)

(137
)
Prepaid expenses and other assets
16


(2,250
)
Accounts payable
(598
)

850

Accrued expenses and other long-term obligations
217


(449
)
Deferred revenue
148


168

Net cash provided by (used in) operating activities
3,923


(6,062
)
Cash flows from investing activities:





Acquisitions net of cash acquired
(7,443
)

(66,366
)
Purchases of property and equipment
(1,159
)

(1,503
)
Software capitalization costs
(3,207
)

(2,536
)
Net change in funds held for clients
48,361


16,617

Net cash provided by (used in) investing activities
36,552


(53,788
)
Cash flows from financing activities:





Proceeds from notes payable
8,000


36,750

Payments on notes payable
(4,638
)

(5,772
)
Proceeds from revolving line of credit
8,000


4,540

Payments on revolving line of credit
(4,000
)

(4,540
)
Debt financing fees
(1,102
)

(1,693
)
Payments on capital leases
(102
)

(124
)
Proceeds from issuance of common stock
496


39,156

Net change in client fund obligations
(49,964
)

(16,937
)
Net cash provided by (used in) financing activities
(43,310
)

51,380

Effect of foreign exchange rates
(33
)

(128
)
Net decrease in cash and cash equivalents
(2,868
)

(8,598
)
Cash and cash equivalents at beginning of period
15,444


27,792

Cash and cash equivalents at end of period
$
12,576


$
19,194

Supplemental information:





Cash paid for:





Interest
$
6,581


$
5,605

Income taxes
31


101

Non-cash Investing and Financing Activities:



 
Subordinated notes payable –acquisitions
2,000


7,592

Equity issued in connection with acquisitions
555


4,493



7



Reconciliation of GAAP to Non-GAAP
(In thousands)
 
1Q17
 
2Q17
 
3Q17
 
4Q17
 
1Q18
 
2Q18
 
3Q18*
 
4Q18*
 
1Q19
2Q19
3Q19
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring
$
8,769

 
$
9,991

 
$
12,255

 
$
12,704

 
$
17,485

 
$
17,749

 
$
19,561

 
$
19,397

 
$
23,561

$
20,433

$
21,220

Professional Services, Hardware and Other
1,958

 
2,889

 
3,272

 
2,604

 
1,819

 
4,018

 
3,897

 
5,026

 
3,199

4,408

3,339

Total Revenues
$
10,727

 
$
12,880

 
$
15,527

 
$
15,308

 
$
19,304

 
$
21,767

 
$
23,458

 
$
24,423

 
$
26,760

$
24,841

$
24,559

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q17
 
2Q17
 
3Q17
 
4Q17
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
2Q19
3Q19
Reconciliation from GAAP gross profit to non-GAAP gross profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
8,289

 
$
10,054

 
$
12,131

 
$
11,349

 
$
13,747

 
$
14,547

 
$
14,987

 
$
14,841

 
$
18,062

$
14,990

$
15,507

Stock compensation
2

 
4

 
4

 

 
4

 
4

 
12

 
12

 
15

10

16

Amortization
106

 
106

 
106

 
134

 
297

 
486

 
437

 
437

 
437

$
437

413

One Time Inventory Adjustment

 

 

 

 

 

 
498

 
18

 



One Time Travel Expense Adjustment

 

 

 

 

 

 

 
54

 

$


One Time Product Royalties

 

 

 

 

 

 

 
81

 
189

188

168

Non-GAAP gross profit
$
8,397

 
$
10,164

 
$
12,241

 
$
11,483

 
$
14,048

 
$
15,037

 
$
15,934

 
$
15,443

 
$
18,703

$
15,625

$
16,104

Non-GAAP gross margin
78.3%
 
78.9%
 
78.8%
 
75.0%
 
72.8%
 
69.1%
 
67.9%
 
63.2%
 
69.9%
62.9%
65.6%
 
1Q17
 
2Q17
 
3Q17
 
4Q17
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
2Q19
3Q19
Reconciliation from net income to non-GAAP EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income (loss)
$
(1,059
)
 
$
(1,837
)
 
$
(1,281
)
 
$
(1,545
)
 
$
(1,925
)
 
$
(3,768
)
 
$
(3,584
)
 
$
1,729

 
$
(2,894
)
$
(4,967
)
$
(3,356
)
Stock compensation
54

 
171

 
139

 
230

 
194

 
329

 
363

 
800

 
611

392

582

Amortization
953

 
1,148

 
1,449

 
1,380

 
1,895

 
2,481

 
2,884

 
3,090

 
3,218

3,200

2,962

Acquisition costs and other one-time expenses
850

 
1,233

 
1,583

 
2,073

 
1,308

 
2,346

 
2,861

 
3,935

 
2,103

2,112

1,753

Taxes based on a 0% tax rate
142

 
141

 
85

 
(272
)
 
184

 
408

 
(303
)
 
(7,518
)
 
304

367

(272
)
Interest Expense One-Time Credit

 

 

 
(259
)
 

 

 

 

 



Depreciation
227

 
224

 
342

 
337

 
370

 
361

 
794

 
1,091

 
766

750

815

Interest Expense & Other , Net
547

 
1,088

 
1,643

 
1,347

 
1,760

 
2,722

 
2,350

 
2,738

 
2,754

3,090

2,864

Non-GAAP EBITDA
$
1,714

 
$
2,168

 
$
3,960

 
$
3,291

 
$
3,786

 
$
4,879

 
$
5,365

 
$
5,865

 
$
6,862

$
4,944

$
5,348

Non-GAAP EBITDA margin
16.0%
 
16.8%
 
25.5%
 
21.5%
 
19.6%
 
22.4%
 
22.9%
 
24.0%
 
25.6%
19.9%
21.8%
 
1Q17
 
2Q17
 
3Q17
 
4Q17
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
2Q19
3Q19
Reconciliation from GAAP net income (loss) to non-GAAP net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income (loss)
$
(1,059
)
 
$
(1,837
)
 
$
(1,281
)
 
$
(1,545
)
 
$
(1,925
)
 
$
(3,768
)
 
$
(3,584
)
 
$
1,729

 
$
(2,894
)
(4,967
)
$
(3,356
)
One-time depreciation adjustment

 

 

 

 

 

 

 
188

 



Stock compensation
54

 
171

 
139

 
230

 
194

 
329

 
363

 
800

 
611

392

582

Amortization
953

 
1,148

 
1,449

 
1,380

 
1,895

 
2,481

 
2,884

 
3,090

 
3,217

3,200

2,962

Acquisition costs and other one-time expenses
850

 
1,233

 
1,583

 
2,073

 
1,308

 
2,346

 
2,861

 
3,935

 
2,103

2,112

1,753

Taxes based on a 0% tax rate
142

 
141

 
85

 
(272
)
 
184

 
408

 
(303
)
 
(7,518
)
 
304

367

(272
)
Interest Expense One-Time Credit

 

 

 
(259
)
 

 

 

 

 



One time tax penalty related to prior periods

 

 

 

 

 

 

 

 

86


Non-GAAP net income
$
940

 
$
856

 
$
1,975

 
$
1,607

 
$
1,656

 
$
1,796

 
$
2,221

 
$
2,224

 
$
3,341

$
1,190

$
1,669

 
1Q17
 
2Q17
 
3Q17
 
4Q17
 
1Q18
 
2Q18
 
3Q18
 
4Q18
 
1Q19
2Q19
3Q19
Calculation of non-GAAP net income per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income
$
940

 
$
856

 
$
1,975

 
$
1,607

 
$
1,656

 
$
1,796

 
$
2,221

 
$
2,224

 
$
3,341

$
1,190

$
1,669

Pro forma diluted weighted-average shares
8,839

 
10,212

 
12,599

 
12,659

 
12,846

 
13,259

 
15,489

 
15,337

 
15,436

15,502

15,551

Non-GAAP EPS
$
0.11

 
$
0.08

 
$
0.16

 
$
0.13

 
$
0.13

 
$
0.14

 
$
0.14

 
$
0.15

 
$
0.22

$
0.08

$
0.11


* Adjusting for a revenue reclassification, 4Q18 recurring revenue would have been $20,127 and professional services, hardware and other would have been $4,296. In 3Q18 recurring revenue would have been $19,194 and professional services, hardware and other would have been $4,261.





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Investor Relations Contact:
Carolyn Bass
Market Street Partners
415-445-3232
cbass@marketstreetpartners.com  

9