Market Overview

Asure Software Announces Third Quarter 2019 Results

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AUSTIN, Texas, Nov. 11, 2019 (GLOBE NEWSWIRE) -- 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 38% 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:

2020 Guidance Range
         
Revenue
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