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Asure's (NASDAQ:ASUR) Q4 Earnings Results: Revenue In Line With Expectations, Provides Optimistic Full-Year Guidance

StockStory - Mon Feb 26, 3:24PM CST

ASUR Cover Image

Online payroll and human resource software provider Asure (NASDAQ:ASUR) reported results in line with analysts' expectations in Q4 FY2023, with revenue down 10.3% year on year to $26.26 million. On the other hand, next quarter's revenue guidance of $31 million was less impressive, coming in 4.5% below analysts' estimates. It made a GAAP loss of $0.14 per share, down from its profit of $0.17 per share in the same quarter last year.

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Asure (ASUR) Q4 FY2023 Highlights:

  • Revenue: $26.26 million vs analyst estimates of $26.32 million (small miss)
  • EPS: -$0.14 vs analyst expectations of -$0.13 (7.7% miss)
  • Revenue Guidance for Q1 2024 is $31 million at the midpoint, below analyst estimates of $32.46 million
  • Management's revenue guidance for the upcoming financial year 2024 is $127 million at the midpoint, beating analyst estimates by 4.3% and implying 6.6% growth (vs 27.3% in FY2023)
  • Free Cash Flow of $4.85 million, similar to the previous quarter
  • Gross Margin (GAAP): 67.9%, down from 72.2% in the same quarter last year
  • Market Capitalization: $247.3 million

“We are excited to have delivered another strong performance from our Company for the full year 2023. Total revenue for the year was up 24% versus the prior year, excluding ERTC revenues were up 19%. Our recurring revenues increased 16% for the year versus the prior year, excluding ERTC recurring revenues were up 19%. Organic revenue growth in 2023 excluding ERTC was up 18% and we also saw strong gains in gross margins versus the same period a year ago which are the primary result of increased revenues and more efficient operations driven by the consolidation and standardization efforts across the Company,” said Asure Chairman and CEO Pat Goepel.

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 Software

Modern 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 Growth

As you can see below, Asure's revenue growth has been strong over the last two years, growing from $21.11 million in Q4 FY2021 to $26.26 million this quarter.

Asure Total Revenue

This quarter, Asure's revenue was down 10.3% year on year, which might disappointment some shareholders.

Next quarter, Asure is guiding for a 6.2% year-on-year revenue decline to $31 million, a further deceleration from the 35.9% year-on-year decrease it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $127 million at the midpoint, growing 6.6% year on year compared to the 24.3% increase in FY2023.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Asure's free cash flow came in at $4.85 million in Q4, down 22.5% year on year.

Asure Free Cash Flow

Asure has generated $13.64 million in free cash flow over the last 12 months, or 11.5% of revenue. This FCF margin stems from its asset-lite business model and enables it to reinvest in its business without depending on the capital markets.

Key Takeaways from Asure's Q4 Results

It was good to see Asure's full-year 2024 sales and EBITDA outlook exceed analysts' expectations. On the other hand, this quarter's revenue and EPS missed Wall Street's estimates and its revenue outlook for next quarter was soft, suggesting slower demand to start the year. Overall, the results could have been better. The company is down 1.2% on the results and currently trades at $10.12 per share. 

Asure may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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