What Happened:

Shares of online payroll and human resource software provider Asure (NASDAQ:ASUR) fell 13% in the morning session after the company reported first-quarter results with billings that missed analysts' expectations. Free cash flow also turned negative and fell below expectations. In addition, its revenue guidance for next quarter came in slightly below Wall Street's estimates. On the other hand, Asure's gross margin improved this quarter. Its full-year revenue guidance also came in higher than Wall Street's estimates. Overall, this was a mixed quarter for Asure.

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What is the market telling us:

Asure's shares are not very volatile than the market average and over the last year have had only 24 moves greater than 5%. Moves this big are very rare for Asure and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 2 months ago, when the stock dropped 20.5% on the news that the company reported fourth-quarter results with revenue and EPS missing Wall Street's estimates. Sales growth declined in absolute terms. The weak topline growth also impacted profitability as gross margin declined significantly during the quarter. Looking ahead, its revenue outlook for the next quarter was soft, suggesting slower demand to start the year. 

On the other hand, Asure's full-year 2024 sales and EBITDA outlook exceeded analysts' expectations. The company noted that the forward sales guidance excludes contributions from Employee Retention Tax Credit ( ERTC – a refundable tax credit for some businesses impacted by the recent pandemic) but assumes potential benefits from acquisitions. Overall, the results could have been better.

Asure is down 23% since the beginning of the year, and at $6.96 per share it is trading 53.2% below its 52-week high of $14.87 from August 2023. Investors who bought $1,000 worth of Asure's shares 5 years ago would now be looking at an investment worth $1,004.

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