Summary
Asure Software's fiscal 2024 first quarter showed a split between recurring business momentum and GAAP profitability pressure. Total revenue was $31.65 million, down 4.3% from the prior-year quarter. Gross profit was $22.61 million, down 7.3%. The company swung to an operating loss of $0.44 million from operating income in the prior-year quarter. Net loss was $0.31 million, a swing from net income in the prior-year quarter, and diluted EPS was -$0.01, also a swing to a loss. Gross margin was 71.4%, down 2.4 percentage points. Operating margin was -1.4%, down 7.3 percentage points. The GAAP decline came largely from lower ERTC revenue in professional services, hardware and other revenue, which management described as a one-time drag.
The operational story was stronger on a non-GAAP basis. Recurring revenue grew 8% year over year. Adjusted EBITDA was $6.8 million, down from $8.2 million. EBITDA was $4.4 million, down from $6.8 million. Non-GAAP gross profit was $23.8 million with a 75% non-GAAP gross margin, compared with $25.7 million and 78% in the prior-year quarter. Management launched employee self-service and role-based identity access tools. It went live with its first Workday client, a Major League Baseball team, after certifying Workday's Global Payroll integration with Asure's Payroll Tax Platform. It also announced an employer tax credit service with HR Logics and embedded an AI agent into its enterprise Payroll Tax Management platform as part of an Amazon AWS partnership. These releases are part of an architecture modernization strategy to improve scalability and lower cost to serve. Asure serves more than 100,000 SMBs, with approximately 15,000 direct clients and 85,000 indirect clients through reseller partners. The company also acquired certain assets of a New Jersey payroll processing and benefits brokerage servicer in February 2024, and on April 30, 2024, it acquired certain assets of an Ohio reseller partner.
Cash generation weakened. Operating cash flow was -$3.95 million, down 186.0% from the prior-year quarter. Capital expenditures were $0.24 million, down 66.9%. Deferred revenue, current portion, was $3.55 million, down 15.2%. Remaining performance obligations were $18.71 million, down 12.1%. Those declines matter because deferred revenue and RPO are forward-looking indicators of work already contracted. First quarter revenue and margins are seasonally higher because of ACA form filings, management noted. Management believes the company has sufficient liquidity to support operations for at least the next twelve months. However, Asure has no credit facility or line of credit, and management said it may need to raise additional capital.
Guidance remains focused on the recurring business and excludes any potential ERTC revenue. For the second quarter of 2024, management guided revenue of $28.0 million to $29.0 million and adjusted EBITDA of $4.0 million to $5.0 million. For the full fiscal year 2024, it reiterated revenue guidance of $125.0 million to $129.0 million and an adjusted EBITDA margin range of 20% to 21%. The main risk is the ERTC program. The IRS paused processing new ERTC claims in September 2023, and the House passed the Tax Relief for American Families Act of 2024, which would set a January 31, 2024 expiration date for additional claims. Management continues to monitor the program. Other risks include the company's reliance on SMBs, competition, collection of receivables, volatility in bank and capital markets, and the need to convert deferred revenue and RPO into revenue and cash flow. The company also faces risks from breaches of security measures, interruptions to services or web hosting, regulatory changes, and issues in the use of artificial intelligence in HCM products.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $31.7M | $26.3M | +20.5% | $33.1M | -4.3% |
| Gross profit | $22.6M | $17.8M | +26.7% | $24.4M | -7.3% |
| Gross margin | 71.4% | 67.9% | +3.5 pp | 73.8% | -2.4 pp |
| Research & development | $1.8M | $1.7M | +1.7% | $2.0M | -10.6% |
| Sales & marketing | $7.8M | $6.4M | +20.9% | $7.2M | +7.9% |
| General & administrative | $10.1M | $9.7M | +3.2% | $10.0M | +1.1% |
| Total operating expenses | $23.0M | $21.6M | +6.7% | $22.4M | +2.7% |
| Operating income (loss) | -$441.0K | -$3.8M | +88.3% | $2.0M | -122.5% |
| Operating margin | -1.4% | -14.3% | +12.9 pp | 5.9% | -7.3 pp |
| Net income (loss) | -$308.0K | -$3.6M | +91.4% | $339.0K | -190.9% |
| Net margin | -1.0% | -13.6% | +12.7 pp | 1.0% | -2.0 pp |
| Diluted EPS | -$0.01 | -$0.16 | +$0.15 | $0.02 | -$0.03 |
Risks
Professional services, hardware and other revenue decreased 73% for the three months ended March 31, 2024 from the prior-year period, primarily due to a decrease in non-recurring ERTC revenue. The IRS moratorium on processing new ERTC claims and possible retroactive expiration of the program could further affect ERTC revenue and cash collections.
As of March 31, 2024, cash and cash equivalents were $23.166 million compared to $30.317 million at December 31, 2023, and working capital decreased $1.840 million to $24.040 million. The company has no credit facility or line of credit and may need to raise additional capital, while operating cash flow was negative $3.947 million for the quarter versus positive $4.588 million in the prior-year quarter.
SaaS KPIs
All quarters →Non-GAAP gross margin
Adjusted EBITDA margin
Adjusted EBITDA
Recurring Revenue
Direct Clients
EBITDA
EBITDA margin
Indirect Clients
Non-GAAP gross profit
Recurring Revenue as % of Total Revenue
Summary, forecast, risks and KPIs are extracted from ASURE SOFTWARE INC's SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.