Summary
Asure Software reported second-quarter 2026 revenue of $37.1 million, up 23.2% year over year. First-half revenue reached $79.9 million, up 22.9%. Recurring revenue rose 19% in the quarter and represented over 91% of total revenue, while professional services, hardware and other revenue jumped 106% on time and attendance hardware growth. Management described the growth as broad based, with improved organic growth, higher product attach rates, and a healthy pipeline for AsureWorks. The company also expanded its partnership with Foodservice Restaurant Partners Group's FRPG Restaurant Rewards, a network that spans 20 states and 3,000 members. Asure sells to more than 100,000 clients, and about 35% of those are direct. The MD&A notes that first-quarter revenue and margins are generally higher than in later quarters because of annual W-2 and ACA form filings.
Profitability improved. Gross profit was $25.1 million in the quarter, up 25.8%, and gross margin was 67.5%, up 1.4 percentage points. First-half gross margin was 69.5%, up 1.0 percentage point. Operating loss narrowed to $2.4 million, and operating margin improved to -6.5%, an increase of 9.0 percentage points. Net loss narrowed 27.4% to $4.4 million. Diluted loss per share narrowed to -$0.15. For the first half, net loss narrowed 55.2% to $3.8 million. On a non-GAAP basis, gross profit was $27.1 million with a 73% margin. EBITDA was $4.6 million versus $1.4 million, and adjusted EBITDA was $7.7 million versus $5.2 million. First-half adjusted EBITDA was $20.1 million versus $12.6 million. The reconciliation shows adjusted EBITDA margin of 20.9% for the quarter, up from 17.4% a year earlier, and EBITDA margin of 12.4%, up from 4.8%.
Cash generation also improved. Operating cash flow was $4.47 million in the quarter, up 41.7%, and first-half operating cash flow was $7.18 million, up 39.4%. Capital expenditures were $0.25 million, up 26.4%. Current deferred revenue was $6.73 million, up 80.7%. Remaining performance obligations were $80.03 million, down 2.9%. The company said it was in compliance with all covenants under its MidCap loan agreement, which requires a total leverage ratio no greater than 5.50 to 1.00 and minimum liquidity of $10,000. The loan's interest rate was 8.74% as of June 30, 2026. Management said it believes it has sufficient liquidity to support business operations for at least the next twelve months, but it also warned that future business demands could require additional capital. The company has an at-the-market offering program under which it may sell up to $25,000 of newly issued shares. Management still flagged familiar risks: customer nonrenewal, competition, cybersecurity, issues with artificial intelligence in HCM products, regulatory changes, the expiration of Employee Retention Tax Credits, and the need for additional capital if business demands rise.
Guidance points to continued growth. For the third quarter of 2026, Asure guided revenue to $38.0 million to $40.0 million and adjusted EBITDA to $8.0 million to $10.0 million. For the full year 2026, the company guided revenue to $159.0 million to $163.0 million and an adjusted EBITDA margin of 24% to 25%. Management said the investments made in the first half and recent business trends put the company in a strong position to achieve its 2026 growth and profitability goals. Management also said it remains focused on increasing product attach rates, advancing AI capabilities, and building on sales and marketing efforts. The key question is whether the time and attendance hardware lift and improving attach rates can sustain the margin gains while the company manages its debt and liquidity needs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.1M | $42.8M | -13.2% | $30.1M | +23.2% |
| Gross profit | $25.1M | $30.5M | -17.8% | $19.9M | +25.8% |
| Gross margin | 67.5% | 71.3% | -3.8 pp | 66.1% | +1.4 pp |
| Research & development | $1.6M | $1.7M | -5.6% | $1.3M | +22.9% |
| Sales & marketing | $9.1M | $8.8M | +3.8% | $8.1M | +11.6% |
| General & administrative | $12.1M | $12.7M | -5.1% | $11.0M | +10.3% |
| Total operating expenses | $27.5M | $28.1M | -2.5% | $24.6M | +11.8% |
| Operating income (loss) | -$2.4M | $2.3M | -202.9% | -$4.7M | +48.5% |
| Operating margin | -6.5% | 5.5% | -11.9 pp | -15.4% | +9.0 pp |
| Net income (loss) | -$4.4M | $625.0K | -810.9% | -$6.1M | +27.4% |
| Net margin | -12.0% | 1.5% | -13.4 pp | -20.3% | +8.4 pp |
| Diluted EPS | -$0.15 | $0.02 | -$0.17 | -$0.22 | +$0.07 |
Risks
Interest expense rose to $1,753 for the three months ended June 30, 2026 from $809 in the prior-year quarter, and to $3,499 for the six months ended June 30, 2026 from $1,260, driven by accruals under the $60,000 MidCap Loan Agreement. The loan bears interest at Term SOFR plus 5.00% (8.74% at June 30, 2026) and requires compliance with a Total Leverage Ratio no greater than 5.50 to 1.00 and a $10,000 minimum liquidity threshold.
Cash and cash equivalents fell to $19,679 at June 30, 2026 from $25,244 at December 31, 2025, and working capital decreased $5,212 to $13,434 over the same period. Management states it may need to raise additional capital and cannot ensure it can do so on acceptable terms, or at all.
Recurring revenue fell to 91% and 90% of total revenue in the three and six months ended June 30, 2026 from 95% in the comparable 2025 periods, as professional services, hardware and other revenue grew 106% in the quarter and 155% year to date on higher hardware sales tied to the time and attendance business. Growth is increasingly weighted toward lower-visibility, non-recurring hardware revenue.
Remaining performance obligations declined 2.9% to $80.03 million at June 30, 2026 from $82.39 million a year earlier even as revenue grew 23.2% in the quarter. The company also notes it does not require clients to enter into long-term contractual commitments, and recurring revenue is billed in varying weekly to monthly cycles.
First quarter revenue and margins are generally higher than subsequent quarters because of annual ACA employer form filings such as Form W-2 and Form 1099, and fourth quarter revenue is elevated by unscheduled payroll runs. Management expects this seasonality to decrease only to the extent clients adopt more non-payroll applications, leaving results exposed to payroll form timing and regulatory reporting requirements.
Approximately 35% of the more than 100,000 clients are direct and the remainder are indirect through reseller partners that white label the solutions, concentrating a majority of the client base in third-party distribution relationships whose nonrenewal would impair revenue.
Amortization of intangible assets increased 12% to $4,689 in the three months ended June 30, 2026 and 14% to $9,661 year to date, which management attributes to its continuing acquisitions strategy. The company also carries nine subordinated promissory notes with a combined outstanding principal balance of $11,395 maturing from August 1, 2026 to July 1, 2029, adding obligation and impairment exposure.
The filing flags adverse material effects from advancements and adoption of artificial intelligence as well as issues in the use of AI in the company's HCM products and services, a competitive and product-execution exposure for its payroll, tax and compliance platform.
The company cites the expiration of Employee Retention Tax Credits and recent regulatory and other measures by governmental authorities regarding ERTC claims, which affect cash collection of existing receivables, alongside evolving money service and money transmitter business status requirements and client funds held in trust.
SaaS KPIs
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Summary, forecast, risks and KPIs are extracted from ASURE SOFTWARE INC's SEC filings for Q2 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.