Summary
Asure Software opened fiscal 2026 with first-quarter revenue of $42.76 million, up 22.7% from the prior-year quarter. Gross profit rose 23.8% to $30.47 million. Gross margin was 71.3%, up 0.7 percentage points. Operating income swung to $2.33 million from an operating loss in the prior-year quarter, and operating margin was 5.4%, up 11.2 percentage points. Net income was $0.62 million, a swing to profit from a net loss a year earlier. Diluted EPS was $0.02, compared with a loss per share in the prior-year quarter. The quarter generated $2.71 million of operating cash flow, up 35.7%, while capital expenditures were $0.22 million, up 13.5%. Deferred revenue, current portion, rose 50.9% to $7.04 million, and remaining performance obligations increased 4.2% to $85.57 million. The company ended the quarter with a stronger profit profile than it had a year ago, even as it continued to invest in the business.
On a non-GAAP basis, gross profit was $32.3 million, a 76% margin, and adjusted EBITDA rose 69% to $12.3 million from $7.3 million. EBITDA was $9.4 million versus $4.1 million. Adjusted EBITDA margin was 28.9%, up from 21.0%, and EBITDA margin was 22.0% versus 11.9%. Management called the quarter the strongest start to a year in Asure's recent history. It pointed to accelerating organic growth, profitability at the net income level, and continued margin improvement. The company also announced the appointment of Tiffany Mortimer as Chief Transformation People Officer. Mortimer brings 15 years of experience in enterprise transformation, operational execution, and people strategy at high-growth SaaS companies. Asure said the hire supports the operational and organizational foundation for its next phase of growth.
Revenue mix moved during the quarter. The shift came mostly from higher hardware sales tied to time and attendance growth. Management noted that first quarters are seasonally strong because recurring year-end W-2 and ACA revenue is recognized then. That seasonality can make first-quarter results look better than later periods. Asure serves more than 100,000 clients, with about 36% direct and the rest through reseller partners. The company completed one customer relationship asset acquisition during the quarter. That deal added customer relationship assets and was funded with cash, promissory notes, and common stock. Management has said it will continue to explore acquisitions to complement its current software and services.
For the second quarter of 2026, management guided revenue to $36.0 million to $38.0 million and adjusted EBITDA to $6.0 million to $8.0 million. For full-year 2026, it guided revenue to $159.0 million to $163.0 million. The guidance is based on year-to-date results and recent business trends. Management said it is expanding sales and marketing and advancing AI capabilities to improve the client experience and lower cost to serve over time. It believes those initiatives, along with customer adoption of Asure Central, position the company to achieve its full-year 2026 revenue and profitability targets. The risk list includes security breaches, fluctuations in financial and operating results, customer nonrenewal, highly competitive markets, AI adoption and AI use in HCM products, impairment of intangible assets, and the expiration of Employee Retention Tax Credits. The company also flagged risks around potential financing needs, access to capital, market volatility, privacy laws, money transmitter status, software failures, web hosting interruptions, public company costs, internal control weaknesses, litigation, and the ability to hire and retain employees. Liquidity is another consideration. The MidCap credit agreement has a Total Leverage Ratio covenant of no greater than 5.50 to 1.00 and a minimum liquidity threshold of $10,000. Asure said it was in compliance with all covenants as of March 31, 2026. The company also has an at-the-market offering program with $25,000 of common stock available for issuance.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $42.8M | — | — | $34.9M | +22.7% |
| Gross profit | $30.5M | $27.2M | +12.0% | $24.6M | +23.8% |
| Gross margin | 71.3% | — | — | 70.6% | +0.7 pp |
| Research & development | $1.7M | $1.1M | +47.6% | $2.0M | -18.3% |
| Sales & marketing | $8.8M | $8.0M | +9.7% | $8.4M | +4.5% |
| General & administrative | $12.7M | $11.3M | +12.7% | $11.9M | +7.1% |
| Total operating expenses | $28.1M | $25.5M | +10.6% | $26.6M | +5.7% |
| Operating income (loss) | $2.3M | $1.8M | +32.5% | -$2.0M | +215.6% |
| Operating margin | 5.5% | — | — | -5.8% | +11.2 pp |
| Net income (loss) | $625.0K | $757.0K | -17.4% | -$2.4M | +126.1% |
| Net margin | 1.5% | — | — | -6.9% | +8.3 pp |
| Diluted EPS | $0.02 | $0.03 | -$0.01 | -$0.09 | +$0.11 |
Risks
Interest expense for the three months ended March 31, 2026 was $1,748 compared to $451 in the prior-year period, driven by accruals under the $60,000 MidCap Loan Agreement at a rate of 9.04% as of March 31, 2026. The agreement requires a Total Leverage Ratio no greater than 5.50 to 1.00 tested quarterly and a minimum liquidity threshold of $10,000, so a downturn in operating results could pressure covenant compliance.
Recurring revenue represented over 88% of total revenue in the three months ended March 31, 2026, compared to 95% in the three months ended March 31, 2025, a decrease the company attributes to higher hardware sales from time and attendance growth, while professional services, hardware and other revenue rose 200% to $5.0 million. A larger share of lower-visibility, non-recurring hardware and services revenue could make results less predictable.
Cash and cash equivalents declined to $19,221 at March 31, 2026 from $25,244 at December 31, 2025, and working capital decreased by $5,828 to $12,818, primarily due to cash spent on the acquisition of a reseller partner. Management states it may need to raise additional capital and cannot ensure it can do so on acceptable terms or at the time needed.
First quarter revenue and margins are generally higher than in subsequent quarters because payroll forms such as Form W-2 and Form 1099 are typically processed in the first quarter and many clients are subject to ACA employer reporting requirements. Short-term deferred revenue fell to $7,036 at March 31, 2026 from $11,622 at December 31, 2025, illustrating how this seasonality swings reported balances and makes sequential comparisons less meaningful.
Amortization expense for the three months ended March 31, 2026 was $4,972, up 15% from $4,308 in the prior-year period, a rise attributed to a continuing acquisitions strategy with additional acquisitions occurring each quarter, including one customer relationship asset acquisition for a total purchase price of $6,172 funded partly with cash, promissory notes and 49 shares of common stock. Continued deal activity raises integration, valuation and impairment exposure.
Recurring revenue includes interest earned on funds held for clients, which are held from one to 30 days and in some cases up to 120 days and invested in money market funds, commercial paper, fixed income securities and certificates of deposit. The amount of interest earned on these funds is directly affected by changes in interest rates, adding market and liquidity risk to the recurring revenue line.
The company's forward-looking statement disclosures flag adverse material effects from advancements and adoption of artificial intelligence, as well as issues in the use of artificial intelligence in its HCM products and services, alongside an inability to develop new and improved versions of its services and technological developments.
SaaS KPIs
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Summary, forecast, risks and KPIs are extracted from ASURE SOFTWARE INC's SEC filings for Q1 FY2026 (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 1, 2026.