CORRECTING and REPLACING – Asure Software Reports Record Fourth Quarter and Full Year 2016 Financial Results; Reaffirms 2017 Guidance

AUSTIN, Texas, March 20, 2017 (GLOBE NEWSWIRE) — In a release issued under the same headline earlier today by Asure Software, Inc. (NASDAQ:ASUR), please note that numbers in the “Net Income (Loss) per Diluted Share, Excluding one-time expenses” rows of the Fourth Quarter 2016 Financial Summary and Fiscal 2016 Financial Summary tables have been updated.

The corrected release follows:

Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, reported results for the fourth quarter and year ended December 31, 2016. The company also reported pro forma unaudited results, which included results from the acquisition of Mangrove Software as if it was completed on January 1, 2015.

 
Fourth Quarter 2016 Financial Summary Actual Results   Pro Forma Results
(in millions except per share data and percentages) Q4 2016 Q4 2015 Change (%)   Q4 2016 Q4 2015 Change (%)
Revenue $    9.7   $   6.8   44 %   $    9.7   $   8.8   10 %
               
Gross Margin $    7.5   $   4.7   60 %   $    7.5   $   6.0   26 %
Gross Margin (as a % of revenue)   77.5 %   69.5 % 11 %     77.5 %   68.0 % 14 %
               
EBITDA (excluding one-time expenses) $    2.2   $   0.6   199 %   $    2.2   $   0.6   274 %
               
Net Income (Loss)   0.13   $   (0.8 ) 117 %     0.13   $   (1.2 ) 111 %
Net Income (Loss) per Diluted Share, Excluding one-time expenses $    0.09   $   (0.08 ) 213 %   $    0.09   $   (0.15 ) 160 %
 
Fiscal 2016 Financial Summary Actual Results   Pro Forma Results
(in millions except per share data and percentages)   2016     2015   Change (%)     2016     2015   Change (%)
Revenue $    35.5   $   26.9   32 %   $    37.7   $   35.1   7 %
               
Gross Margin $    27.4   $   19.6   40 %   $    29.1   $   25.9   12 %
Gross Margin (as a % of revenue)   77.2 %   72.7 % 6 %     77.3 %   73.8 % 5 %
               
EBITDA (excluding one-time expenses) $    7.5   $   3.7   101 %   $    8.0   $   4.7   72 %
               
Net Income (Loss) $    (1.0 ) $   (1.8 ) 45 %   $    (0.1 ) $   (3.1 ) 95 %
Net Income (Loss) per Diluted Share, Excluding one-time expenses $    0.24   $   (0.17 ) 241 %   $    0.26   $   (0.39 ) 167 %

Fourth Quarter and Fiscal 2016 Operational Highlights

  • Appointed seasoned sales executive, Eyal Goldstein, to the new position of Chief Revenue Officer, and reorganized the sales team to optimize cloud sales for 2017.
  • Total bookings for the fourth quarter of 2016 were up 13% year-over-year. For fiscal 2016, total bookings were up 11% compared to fiscal 2015.
  • At quarter-end, backlog totaled $2.5 million, a 36% decrease compared to the prior quarter and a 10% decrease from the year-ago quarter as the company accelerated the movement of customers through the implementation process. The company continues to expect enterprise clients to move through the implementation process throughout 2017, which will result in conversion from backlog to reported revenue growth.
  • Secured several new wins in the fourth quarter of 2016 across a range of industry verticals with leading enterprises, including Procter & Gamble Co. – P&G, Deutsche Bank AG, London, Genpact, Arrow Electronics, Rogers Communications Inc., Akron Children’s Hospital and Pearson.
  • Sold and installed Version 8 of core HCM software at 12 new customers during the fourth quarter of 2016.
  • Cross-sell opportunities grew 46% from the third quarter of 2016, reflecting the increasing amount of synergies realized by the company since its acquisition of Mangrove Software in March 2016.
  • Overall pipeline of deals increased 32% from the prior quarter, as the company continues to integrate its sales team to sell its entire suite of time and labor, workforce, and HCM solutions.
  • Completed the phased rollout of facial recognition technology to more than 400 sites with strategic customer, PSSI, which eliminated employee and supervisor fraud and resulted in cost savings and leads to the next phase in all Canada locations.
  • Brought COBRA solution in-house, developing tighter integration with Asure’s HCM platform to fulfill the company’s vision of a “Hire to Retire” complete solution.
  • Further enhanced Asure’s suite of solutions and expanded deployment of Internet of Things sensor technologies by more than 345% in 2016.

Fourth Quarter and Fiscal 2016 Financial Results

  • Revenue for the fourth quarter of 2016 increased 44% to $9.7 million from $6.8 million in the same year-ago quarter. On a pro forma basis, including the results from Mangrove Software as if the acquisition was completed on January 1, 2015, revenue increased 10% to $9.7 million from $8.8 million in the same year-ago quarter. For fiscal 2016, revenue increased 32% to $35.5 million from $26.9 million in fiscal 2015. On a pro forma basis, including the results from Mangrove Software as if the acquisition was completed on January 1, 2015, revenue increased 7% to $37.7 million as compared to $35.1 million in fiscal 2015.
  • Recurring revenue for the fourth quarter of 2016 as a percent of total revenue was 73%, as compared to 76% in the fourth quarter of 2015. For fiscal 2016, recurring revenue as a percent of total revenue was 74% as compared to 75% in fiscal 2015.
  • For the fourth quarter of 2016, cloud revenue increased 67%, on premise software revenue increased 574%, and hardware revenue increased 38% compared to the same year-ago quarter. For fiscal 2016, cloud revenue increased 51%, on premise software revenue increased 159%, and professional services revenue increased 42% from fiscal 2015.
  • Gross margin for the fourth quarter of 2016 was $7.5 million (78% of total revenue), a 60% increase from $4.7 million (70% of total revenue) in the fourth quarter of 2015. For fiscal 2016, gross margin was $27.4 million (77% of total revenue) compared to $19.6 million (73% of total revenue) in fiscal 2015.
  • EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)* excluding one-time expenses* for the fourth quarter of 2016 totaled $2.2 million, an increase of 199% compared to $599,000 in the fourth quarter of 2015. For fiscal 2016, EBITDA* excluding one-time expenses* totaled $7.5 million, an increase of 101% compared to $3.7 million in fiscal 2015.
  • Net income per diluted share (excluding one-time expenses*) for the fourth quarter of 2016 totaled $0.09, compared to a net loss per diluted share (excluding one-time expenses*) of $(0.08) in the fourth quarter of 2015. On a pro forma basis, including the results from Mangrove Software as if the acquisition was completed on January 1, 2015, net income per diluted share (excluding one-time expenses*) totaled $0.09, an improvement from net loss per diluted share (excluding one-time expenses*) of $(0.15) in the same year-ago quarter. For fiscal 2016, net income per diluted share (excluding one-time expenses*) was $0.24 compared to a net loss per diluted share (excluding one-time expenses*) of $(0.17) in fiscal 2015. On a pro forma basis, including the results from Mangrove Software as if the acquisition was completed on January 1, 2015, net income per diluted share (excluding one-time expenses*) totaled $0.26, an improvement from a net loss per diluted share (excluding one-time expenses*) of $(0.39) in fiscal 2015.

2017 Financial Outlook

Asure management reaffirmed its financial guidance for fiscal 2017 ending December 31, 2017 and introduced non-GAAP net income per share guidance:

  2017 Financial Guidance Fiscal 2017 (versus Fiscal 2016)  
  Revenue $45 million to $47 million (+26.6% to +32.2% vs. 2016 YTD Actual)
  EBITDA, excluding one-time items $9 million to $9.5 million (+20.7% to +27.4% vs. 2016 YTD Actual)  
  Net Income per share, excluding one-time items $0.22 to $0.28 (compared to $0.24 2016 YTD Actual)  
  Non-GAAP net income per share $0.60 to $0.75 (vs. $0.68 2016 YTD Actual)  

Management Commentary

“Q4 was another strong quarter for us, highlighted by double-digit year-over-year growth in revenue, gross profit, EBITDA, and net income,” said Asure CEO, Pat Goepel. “Our performance capped off a transformative year for the company, as highlighted by our acquisition of Mangrove Software, which significantly expanded our total addressable market opportunity. On top of this, we enhanced and unified our software platform, expanded our sales resources, and bolstered our balance sheet through the equity raise we completed last December.

“More recently, we closed three strategic tuck-in acquisitions in January, which has enabled us to add to our rich technology, product platform, and growing sales team. From an organic growth perspective, we have focused heavily on training our salesforce to sell our entire application suite, which we expect will help shorten sales cycles, as we develop an even greater amount of touch points with our clients. We’re also actively looking to build strategic channel partnerships with large software companies and other organizations that don’t have competitive products, leveraging inherent synergies between HCM’s employee-rich data and workspace management’s facilities-rich data.

“When we look back at the accomplishments and progress we’ve achieved throughout the period, 2016 will go down as one of the most pivotal years in Asure’s history. However, the groundwork has only just been laid. Going forward, we will build on this platform by continuing to invest in our sales and marketing teams while building on our channel partnerships to expand our presence in our key growth markets, such as HCM. We expect this to drive strong organic growth, but will also be focused on supplementing this with strategic acquisitions that will help us scale even further, we believe we are in a good position to achieve our guidance for 2017.”

Conference Call Details

Asure management will host a conference call today at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss these financial results and outlook. Asure CEO Pat Goepel and CFO Brad Wolfe will host the presentation, followed by a question and answer period.

Date: Monday, March 20, 2017
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
U.S. dial-in: 877-853-5636
International dial-in: 631-291-4544
Conference ID: 81040936

Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

The conference call will be broadcasted live and available for replay via the investor section of the company’s website.

About Asure Software  

Asure Software, Inc. (NASDAQ:ASUR), headquartered in Austin, Texas, offers intuitive and innovative technologies that enable companies of all sizes and complexities to operate more efficiently. We help build companies of the future. Our cloud platform has helped more than 7,500 clients worldwide to better manage their people and space for a mobile, digital, multi-generational, and global organization. Asure Software’s suite of solutions range from HCM workforce management solutions, time and attendance to workspace asset optimization and meeting room management solutions. For more information, please visit www.asuresoftware.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Statements in this press release regarding Asure’s business which are not historical facts are “forward-looking statements” that involve risks and uncertainties. Such risks and uncertainties could cause actual results to differ from those contained in the forward-looking statements.

ASURE SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
    December 31,
2016
    December 31,
2015
 
Assets            
Current assets:            
Cash and cash equivalents   $ 12,767     $ 1,158  
Accounts and note receivable, net of allowance for doubtful accounts of $338 and $145 at December 31, 2016 and December 31, 2015, respectively     8,108       4,671  
Inventory     487       784  
Prepaid expenses and other current assets     1,256       1,072  
Total current assets before funds held for clients     22,618       7,685  
Funds held for clients     22,981        
Total current assets     45,599       7,685  
Property and equipment, net     1,878       2,212  
Goodwill     26,259       17,436  
Intangible assets, net     12,048       6,026  
Other assets     39       458  
Total assets   $ 85,823     $ 33,817  
Liabilities and stockholders’ equity                
Current liabilities:                
Current portion of notes payable, net of debt issuance cost   $ 5,455     $ 909  
Accounts payable     1,576       2,670  
Accrued compensation and benefits     1,192       715  
Other accrued liabilities     1,613       1,181  
Deferred revenue     9,252       10,803  
 Total current liabilities before client fund obligations     19,088       16,278  
Client fund obligations     22,981        
Total current liabilities     42,069       16,278  
Long-term liabilities:                
Deferred revenue     769       947  
Notes payable, net of debt issuance cost     24,581       12,384  
Other liabilities     158       490  
Total long-term liabilities     25,508       13,821  
Total liabilities     67,577       30,099  
Commitments (Note 13)                
Stockholders’ equity:                
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding            
Common stock, $.01 par value; 11,000 shares authorized; 8,901 and 6,674 shares issued, 8,517 and 6,290 shares outstanding at December 31, 2016 and December 31, 2015, respectively     89       67  
Treasury stock at cost, 384 shares at December 31, 2016 and December 31, 2015     (5,017 )     (5,017 )
Additional paid-in capital     295,044       279,649  
Accumulated deficit     (271,875 )     (270,903 )
Accumulated other comprehensive income (loss)     5       (78 )
Total stockholders’ equity     18,246       3,718  
Total liabilities and stockholders’ equity   $ 85,823     $ 33,817  
                 

ASURE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands, except share and per share data)
 
    FOR THE
TWELVE MONTHS ENDED
DECEMBER 31,
 
    2016     2015  
Revenues:                
Cloud revenue   $ 20,606     $ 13,628  
Hardware revenue     3,795        3,300  
Maintenance and support revenue     4,566       6,054  
On premise software license revenue     2,218       856  
Professional services revenue     4,357        3,068  
Total revenues     35,542       26,906  
Cost of Sales     8,117       7,340  
Gross margin     27,425       19,566  
                 
Operating expenses                
Selling, general and administrative     20,009       14,964  
Research and development     2,897       3,053  
Amortization of intangible assets     2,253       1,866  
Total operating expenses     25,159       19,883  
                 
Income (loss) from operations     2,266       (317 ) 
                 
Other income (loss)                
Interest income     10       22  
Loss on lease termination           (110
Loss on debt refinancing           (4
Foreign currency gain (loss)     (8 )     1  
Interest expense and other     (2,012     (1,109 )
Interest expense – amortization of original issue discount (OID)           (21 )
Acquisition costs     (1,039 )      
Total other loss, net     (3,049 )     (1,221 )
                 
Loss from operations before income taxes     (783 )     (1,538 )
Income tax provision     (189 )     (219 )
Net loss   $ (972 )   $ (1,757 )
Other comprehensive income (loss):                
Foreign currency translation gain     83       8  
Other comprehensive loss   $ (889 )   $ (1,749 )
                 
Basic and diluted net loss per share                
Basic   $ (0.15 )   $ (0.28 )
Diluted   $ (0.15 )   $ (0.28 )
Weighted average basic and diluted shares                
Basic     6,533,000       6,176,000  
Diluted     6,533,000       6,176,000  
                 

ASURE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 
    FOR THE
TWELVE MONTHS ENDED
DECEMBER 31,
 
    2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net loss   $ (972 )   $ (1,757 )
Adjustments to reconcile net loss to net cash provided by operations:                
Depreciation and amortization     3,613       3,012  
Provision for doubtful accounts     265       100  
Share-based compensation     226       409  
Loss on debt refinancing           4  
Other     94       28  
Changes in operating assets and liabilities:                
Accounts and note receivable     (3,401     524  
Inventory     297       (615 )
Prepaid expenses and other assets     233       (527 )
Accounts payable     (1,104     1,120  
Accrued expenses and other long-term obligations     466       422  
Deferred revenue     (1,729     635  
Net cash provided by operating activities     (2,012     3,355  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Acquisitions net of cash acquired     (12,000      
Purchases of property and equipment     (436 )     (1,406 )
Disposals of property and equipment           18  
Collection of note receivable     223        
Net change in funds held for clients     (6,562 )      
 Net cash used in investing activities     (18,775 )     (1,388 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from notes payable     18,413       5,300  
Payments on notes payable     (7,233 )     (6,765 )
Payments on amendment of senior notes payable           (75 )
Debt financing fees     (438 )      
Payments on capital leases     (197 )     (190 )
Net proceeds from issuance of stock     15,192       587  
Net change in client fund obligations     6,562        
Net cash used in financing activities     32,299       (1,143 )
                 
Effect of foreign exchange rates     97       14  
                 
Net increase (decrease) in cash and cash equivalents     11,609       838  
Cash and cash equivalents at beginning of period     1,158       320  
Cash and cash equivalents at end of period   $ 12,767     $ 1,158  
                 
SUPPLEMENTAL INFORMATION:                
Cash paid for:                
Interest   $ 1,415     $ 995  
                 
Non-cash Investing and Financing Activities:                
Note receivable from customer            601  
Subordinated notes payable- Mangrove acquisition     6,000        
Accrued purchases of property and equipment           17  
                 

*Non-GAAP Financial Measures
This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA and GAAP Net Income/(Loss) excluding one-time expenses. These supplemental financial measures are not required by GAAP, nor is the presentation of this financial information intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the Expenses associated with Asure’s earnings results as determined in accordance with GAAP. However, for the reasons described below, management uses these non-GAAP measures to evaluate the performance of Asure’s business. Asure’s management believes that it is important to provide investors with these same tools, together with reconciliation to GAAP, for evaluating the performance of Asure’s business, as it may provide additional insight into Asure’s financial results. See the “Reconciliation of GAAP Net Income/(Loss) to Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA)” and the “Reconciliation of GAAP Net Income/(Loss) to Net Earnings Excluding One-Time Expenses” tables included in this press release for further information regarding these non-GAAP financial measures. In addition, these measures are presented because management believes they are frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization and stock compensation expense to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of Asure’s profitability.

Net Earnings Excluding One-Time Expenses is calculated by combining the company’s GAAP Net Earnings, or earnings per share, with expenses that are one time in nature and are not expected to recur on a dollar or per share basis.

Free Cash Flow is computed by subtracting capital expenditures from cash flow from operations, each as determined in accordance with GAAP and as reflected in the statement of cash flows.

Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA) and EBITDA Excluding One-time Expenses.

FOR THE THREE MONTHS ENDED

$000s December 31,
2016
December 31,
2015
Net Income (Loss) $    131 $   (795 )
Interest and amortization of OID   543   270  
Tax    56   74  
Depreciation   193   229  
Amortization      730   459  
Stock Compensation   60   74  
EBITDA   1,713   311  
One-time expenses      502   298  
EBITDA excluding one-time expenses $   2,215 $   609  

FOR THE TWELVE MONTHS ENDED

$000s December 31,
2016
December 31,
2015
Net Loss $    (972 ) $   (1,757 )
Interest and amortization of OID   1,917     1,117  
Tax   189     219  
Depreciation   935     721  
Amortization   2,678     2,291  
Stock Compensation   226     409  
EBITDA   4,973     3,000  
One-time expenses     2,550      734  
EBITDA excluding one-time expenses $    7,523   $    3,734  

Reconciliation of GAAP Net Income (Loss) to Net Income Excluding One-time Expenses

FOR THE THREE MONTHS ENDED

$000s  
  December 31,
2016
December 31,
2015
Net Income (Loss) $   131 $   (795 )
Legal & Professional Services   429   57  
Other one-time items (net)   73   241  
Sub-total excluding Taxes   502   298  
Sub-total   502   298  
Net Income excluding one-time items $   633 $   (497 )

FOR THE TWELVE MONTHS ENDED

$000s  
  December 31,
2016
December 31,
2015
Net Loss $   (972 ) $   (1,757 )
Legal & Professional Services   1,411     92  
Severance, Recruitment & Relocation   809     55  
Other one-time items (net)   330     587  
Sub-total excluding Taxes   2,550     734  
Sub-total   2,550     734  
Net Income excluding one-time items $   1,578   $   (1,023 )

CONTACT: Company Contact:
Brad Wolfe, CFO
Asure Software, Inc.
888-323-8835
bwolfe@asuresoftware.com

Investor Relations Contact:
Matt Glover and Najim Mostamand
Liolios Group, Inc.
949-574-3860
ASUR@liolios.com

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