The risks and uncertainties referred to above include—but are not limited to—risks associated with breaches of the Company’s security measures; risks related to material weaknesses; possible fluctuations in the Company’s financial and operating results; privacy concerns and laws and other regulations may limit the effectiveness of our applications; the financial and other impact of any previous and future acquisitions; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs; risk of our software and solutions not functioning adequately; interruptions, delays or changes in the Company’s services or the Company’s Web hosting; may incur debt to meet future capital requirements; volatility and weakness in bank and capital markets; access to additional capital; significant costs as a result of operating as a public company; the expiration of Employee Retention Tax Credits ("ERTC”) and the impact of the Internal Revenue Service recent measures regarding ERTC claims and the corresponding cash collections of existing receivables; the inability to continue to release timely updates for changes in laws; the inability to develop new and improved versions of the Company’s services and technological developments; customer’s nonrenewal of their agreements and other similar changes could negatively impact revenue, operating results and financial conditions; the exposure of market, interest, credit and liquidity risk on client funds held int rust; the Company’s operation in highlight competitive markets; risk that our clients could have insufficient funds that could result in limitations in the ability to transmit ACH transactions; impairment of intangible assets; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; various financial aspects of the Company’s Software-as-a-Service model; adverse effects to our business a result of claims, lawsuits, and other proceedings; issues in the use of artificial intelligence in our HCM products and services; adverse changes to financial accounting standards to the Company; inability to maintain third-party licensed software; evolving regulation of the Internet, changes in the infrastructure underlying the Internet or interruptions in Internet; factors affecting the Company’s deferred tax assets and ability to value and utilize them; the nature of the Company’s business model; inability to adopt new or correctly interpret existing money service and money transmitter business status; the Company’s ability to hire, retain and motivate employees and manage the Company’s growth; interruptions to supply chains and extended shut down of businesses; potential enactment of adverse tax laws, regulation, political, economic and social factors; potential sales of a substantial number of shares of our common stock along with its volatility; risks associate with potential equity-related transactions including dividends, rights under the stockholder plan to discourage certain actions and other impacts as a result of actions of our stockholders.
RECONCILIATION OF NON-GAAP AND ADJUSTED FINANCIAL MEASURES(unaudited) (in thousands)Q1-25Q4-24Q3-24Q2-24Q1-24Q4-23Q3-23Q2-23Revenue(1)$34,854 $30,792 $29,304 $28,044 $31,652 $26,264 $29,334 $30,420 Gross Profit to non-GAAP Gross Profit Gross Profit$24,608 $20,928 $19,704 $18,868 $22,607 $17,839 $21,280 $22,018 Gross Margin 70.6% 68.0% 67.2% 67.3% 71.4% 67.9% 72.5% 72.4% Share-based Compensation 44 44 44 43 40 32 28 46 Depreciation 1,369 1,190 1,232 1,145 1,110 921 984 1,309 Amortization - intangibles 50 50 50 50 50 50 50 50 One-time expenses Settlements, penalties & interest 29 25 2 3 — (6) 8 — Acquisition and transaction costs 167 221 367 264 39 — — — Other non-recurring expenses — 84 — — — — — — Non-GAAP Gross Profit$26,267 $22,542 $21,399 $20,373 $23,846 $18,836 $22,350 $23,423 Non-GAAP Gross Margin 75.4% 73.2% 73.0% 72.6% 75.3% 71.7% 76.2% 77.0% Sales and Marketing Expense to non-GAAP Sales and Marketing ExpenseSales and Marketing Expense$8,386 $6,945 $6,680 $6,924 $7,767 $6,422 $6,597 $8,515 Share-based Compensation 322 251 269 237 243 180 210 149 Depreciation 1 — 1 — 1 1 — — One-time expenses Settlements, penalties & interest 51 78 (5) 5 18 6 30 4 Acquisition and transaction costs 30 9 68 37 11 — — — Other non-recurring expenses — 52 — — — — — 180 Non-GAAP Sales and Marketing Expense$7,982 $6,555 $6,347 $6,645 $7,494 $6,235 $6,357 $8,182 General and Administrative Expense to non-GAAP General and Administrative ExpenseGeneral and Administrative Expense$11,900 $9,940 $10,378 $10,118 $10,063 $9,747 $9,294 $10,336 Share-based Compensation 1,407 1,081 1,187 1,122 1,535 980 936 1,298 Depreciation 244 269 264 256 251 225 200 234 One-time expenses Settlements, penalties & interest 492 142 377 304 98 284 101 432 Acquisition and transaction costs 491 282 371 245 57 51 — — Other non-recurring expenses 136 220 253 — 86 53 — 453 Non-GAAP General and Administrative Expense$9,130 $7,946 $7,926 $8,191 $8,036 $8,154 $8,057 $7,919 Research and Development Expense to non-GAAP Research and Development ExpenseResearch and Development Expense$2,029 $2,103 $1,973 $1,962 $1,769 $1,739 $1,803 $1,325 Share-based Compensation 90 87 90 86 85 69 76 89 Depreciation 1 — $— $— $— $— $— $— One-time expenses Settlements, penalties & interest 9 21 — 27 31 — — — Acquisition and transaction costs 91 153 195 369 147 — — — Other non-recurring expenses — 29 — — — — — — Non-GAAP Research and Development Expense$1,838 $1,813 $1,688 $1,480 $1,506 $1,670 $1,727 $1,236 (1)Note that first quarters are seasonally strong as recurring year-end W2/ACA revenue is recognized in this period. ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss$(2,398) $(308)Adjustments to reconcile loss to net cash provided by (used in) operations: Depreciation and amortization 5,972 4,860 Amortization of operating lease assets 374 335 Amortization of debt financing costs and discount 253 142 Non-cash interest expense 197 — Net accretion of discounts and amortization of premiums on available-for-sale securities (110) (78)Provision for expected losses 93 46 Provision for deferred income taxes 291 24 Net realized gains on sales of available-for-sale securities (656) (652)Share-based compensation 1,863 1,902 Changes in operating assets and liabilities: Accounts receivable 2,261 (919)Inventory (24) (50)Prepaid expenses and other assets (1,049) (473)Operating lease right-of-use assets — 30 Accounts payable 903 (960)Accrued expenses and other long-term obligations (1,737) (2,665)Operating lease liabilities (427) (141)Deferred revenue (3,810) (5,040)Net cash provided by (used in) operating activities 1,996 (3,947)Cash flows from investing activities: Acquisition of intangible assets (6,346) (710)Purchases of property and equipment (192) (240)Software capitalization costs (2,769) (2,435)Purchases of available-for-sale securities (6,589) (3,516)Proceeds from sales and maturities of available-for-sale securities 3,266 2,406 Net cash used in investing activities (12,630) (4,495)Cash flows from financing activities: Payments made on amounts due for the acquisition of intangibles (723) (236)Net proceeds from issuance of common stock 441 176 Net change in client fund obligations 64,207 21,122 Net cash provided by financing activities 63,925 21,062 Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 53,291 12,620 Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 145,712 177,622 Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$199,003 $190,242 ASURE SOFTWARE, INC.
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