Summary
Asure Software reported third quarter revenue of $29.3 million, flat versus the prior-year quarter and down 0.1%. The top line looks stalled, but the mix underneath shifted sharply. Recurring revenue grew 20% year over year and made up 98% of total revenue, against 81% a year earlier. Professional services, hardware and other revenue dropped 88% as Employee Retention Tax Credit work ran off. Management pointed to revenue excluding ERTC, which rose 20%.
Profitability went the other way. Gross profit fell 7.4% to $19.7 million from $21.3 million in the prior-year quarter, and gross margin slipped to 67.2% from 72.5%. Operating income swung to an operating loss of $3.62 million from $0.25 million of income a year earlier, and the operating margin was -12.4% against 0.9%. The net loss widened to $3.9 million from $2.2 million, while diluted loss per share widened to $0.15 from $0.10. Management attributed the gross profit decline to lower ERTC-related professional services revenue. Amortization of intangible assets rose 29% as acquisitions closed late in 2023 and during 2024. EBITDA was $2.2 million versus $3.0 million, and adjusted EBITDA was $5.4 million versus $6.2 million, with the adjusted EBITDA margin at 18.6% against 21.2%.
The nine-month picture is similar. Revenue was $89.0 million, down 4.1% from the prior-year period. Gross profit was $61.2 million versus $67.7 million. The net loss widened to $8.6 million from $5.6 million, and diluted loss per share widened to $0.33 from $0.27. Adjusted EBITDA for the nine months was $16.3 million against $20.5 million.
Cash generation weakened. Operating cash flow was $1.3 million in the quarter, down 76.9% from $5.7 million. For the nine months, operating cash flow was negative $0.4 million against $11.8 million provided in the prior-year period. Capital expenditures of $0.2 million were down 50.4% from $0.3 million. Remaining performance obligations jumped 256.3% to $67.3 million from $18.9 million, and current deferred revenue fell 10.7% to $3.0 million. On the demand side, new bookings rose 141% year over year, and management said backlog grew more than 35% from the second quarter of 2024 and more than 250% from the third quarter of 2023.
Operationally, Asure added Workday and SAP payroll tax clients, including a large grocery chain and a national HCM systems integrator that works with Workday, SAP and Oracle installations. The company modularized employee self-service into a single API-based service, entered beta with a generative AI agent that answers payroll and payroll tax questions and takes actions on HR requests, and plans to launch AsurePay, a banking alternative with debit card access and paycheck advances, in November 2024. Asure also closed several immaterial asset acquisitions during 2024, including applicant tracking assets for $15.2 million in July, an Ohio reseller's payroll processing assets for $3.0 million in April, and a New Jersey payroll and benefits brokerage for $6.0 million in February.
Guidance points to a stronger fourth quarter and a bigger 2025. For the fourth quarter of 2024, management guided revenue of $30 million to $32 million and adjusted EBITDA of $6 million to $7 million. For the full year 2024, revenue guidance is $119 million to $121 million with an adjusted EBITDA margin of 18% to 19%. For the full year 2025, the company initiated revenue guidance of $134 million to $138 million and an adjusted EBITDA margin of 23% to 24%, excluding revenue from potential future acquisitions.
The risks are familiar but real. The ERTC program is winding down, and the Internal Revenue Service continued its review of previously filed claims, which could delay processing and collections. Management also cautioned that the pace of implementation for large enterprise tax deals can vary. The 10-Q notes that Asure had no credit facility or line of credit as of September 30, 2024 and says it may need to raise additional capital, while stating that liquidity should cover at least the next twelve months. First quarter revenue and margins are seasonally stronger because of W-2 and ACA form filings, so the fourth quarter carries a different mix. Other listed risks include security breaches, the use of artificial intelligence in HCM products, changes in tax and privacy regulation, competition, and impairment of intangible assets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $29.3M | $28.0M | +4.5% | $29.3M | -0.1% |
| Gross profit | $19.7M | $18.9M | +4.4% | $21.3M | -7.4% |
| Gross margin | 67.2% | 67.3% | -0.0 pp | 72.5% | -5.3 pp |
| Research & development | $2.0M | $2.0M | +0.6% | $1.8M | +9.4% |
| Sales & marketing | $6.7M | $6.9M | -3.5% | $6.6M | +1.3% |
| General & administrative | $10.4M | $10.1M | +2.6% | $9.3M | +11.7% |
| Total operating expenses | $23.3M | $23.1M | +1.2% | $21.0M | +10.9% |
| Operating income (loss) | -$3.6M | -$4.2M | +13.4% | $253.0K | -1531.6% |
| Operating margin | -12.4% | -14.9% | +2.6 pp | 0.9% | -13.2 pp |
| Net income (loss) | -$3.9M | -$4.4M | +10.5% | -$2.2M | -76.8% |
| Net margin | -13.3% | -15.6% | +2.2 pp | -7.5% | -5.8 pp |
| Diluted EPS | -$0.15 | -$0.17 | +$0.02 | -$0.10 | -$0.05 |
Risks
The risk factor was restated to cover acquisitions of complementary businesses in addition to reseller partners. MD&A describes four acquisitions from October 2023 through July 2024, and amortization expense rose 29% in FY2024 Q3 and 19% year to date due to new acquisitions, highlighting integration, dilution, unknown liability, and deferred revenue loss risks.
MD&A attributes the 88% decrease in professional services, hardware and other revenue in FY2024 Q3 and the 83% decrease year to date primarily to lower non-recurring ERTC revenue. The IRS moratorium and potential legislative changes to ERTC claims could further delay collections and reduce revenue.
Cash and cash equivalents fell to $11.248 million at September 30, 2024 from $30.317 million at December 31, 2023. Operating cash flow year to date was negative $0.394 million, down 103.3%, and management states the company has no credit facility or line of credit as of September 30, 2024 and may need to raise additional capital.
Gross margin declined to 67.2% in FY2024 Q3 from 72.5% in FY2023 Q3, and operating margin swung to negative 12.4% from positive 0.9%. MD&A links the gross profit decline primarily to lower ERTC related professional services revenue, while net loss widened year to date by 52.1%.
SaaS KPIs
All quarters →Non-GAAP gross margin
Adjusted EBITDA margin
Adjusted EBITDA
Recurring Revenue
Direct Clients
EBITDA
Indirect Clients
Non-GAAP gross profit
Recurring Revenue (% of Total Revenue)
Summary, forecast, risks and KPIs are extracted from ASURE SOFTWARE INC's SEC filings for Q3 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.