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Online payroll and human resource software provider Asure (NASDAQ:ASUR) fell short of analysts' expectations in Q2 CY2024, with revenue down 7.8% year on year to $28.04 million. The company also expects next quarter's revenue to be around $31.5 million, slightly below analysts' estimates. It made a GAAP loss of $0.17 per share, improving from its loss of $0.18 per share in the same quarter last year.
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Asure (ASUR) Q2 CY2024 Highlights:
- Revenue: $28.04 million vs analyst estimates of $28.6 million (2% miss)
- EPS: -$0.17 vs analyst estimates of -$0.09 (-$0.08 miss)
- Revenue Guidance for Q3 CY2024 is $31.5 million at the midpoint, below analyst estimates of $31.81 million
- The company dropped its revenue guidance for the full year from $127 million to $126 million at the midpoint, a 0.8% decrease
- Gross Margin (GAAP): 67.3%, down from 72.4% in the same quarter last year
- Free Cash Flow was -$514,000 compared to -$6.62 million in the previous quarter
- Billings: $29.79 million at quarter end, down 1.1% year on year
- Market Capitalization: $265.9 million
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
HR SoftwareModern HR software has two powerful benefits: cost savings and ease of use. For cost savings, businesses large and small much prefer the flexibility of cloud-based, web-browser-delivered software paid for on a subscription basis rather than the hassle and complexity of purchasing and managing on-premise enterprise software. On the usability side, the consumerization of business software creates seamless experiences whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy-to-use platform.
Sales GrowthAs you can see below, Asure's revenue growth has been mediocre over the last three years, growing from $17.17 million in Q2 2021 to $28.04 million this quarter.
This quarter, Asure's revenue was down 7.8% year on year, which might disappointment some shareholders.
Next quarter's guidance suggests that Asure is expecting revenue to grow 7.4% year on year to $31.5 million, slowing down from the 33.9% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 17.3% over the next 12 months before the earnings results announcement.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
Asure has shown weak cash profitability over the last year, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.2%, subpar for a software business.
Asure burned through $514,000 of cash in Q2, equivalent to a negative 1.8% margin. The company's cash burn decreased by 44.7% year on year but still deviates from its longer-term margin, raising some eyebrows.
Key Takeaways from Asure's Q2 Results We struggled to find many strong positives in these results. Its revenue unfortunately missed analysts' expectations and its gross margin shrunk. The company also lowered its full year revenue outlook. Overall, this quarter could have been better. The stock remained flat at $9.99 immediately after reporting.
