ASURE SOFTWARE INC

Asure Software, Inc. operates in the cloud-based Human Capital Management (HCM) software industry, delivering solutions as Software-as-a-Service (SaaS) to businesses of all sizes. The company's solutions address HR complexity, allocation of human and financial capital, and the ability to build great teams, serving more than 100,000 clients across the United States. Approximately 35% of these clients are direct, with the remaining balance indirect through contracts with Reseller Partners who white label Asure's solutions. The industry is characterized by continuing improvements in technology, frequent introduction of new products, short product life cycles, changes in client needs, and continual improvement in product performance characteristics.

The market for HCM solutions is competitive and subject to evolving technology, shifting client needs, and regular introduction of new products and services. Asure's main competitors are ADP, Paychex, UKG, Paylocity, Paycom, Ceridian, isolved, and Gusto. Asure competes based on product and service quality and reputation, scope of service, application offering and price, with price being the most important factor for small business clients and the range of features, implementation, and scalability more important for larger clients. Asure has the advantage of a flexible, easy-to-use, cloud-based SaaS-delivered solution that is affordable with a proven deployment methodology, but faces challenges from vendors with face-to-face sales contact and national payroll processors with loss-leader products.

Asure generates revenue through a combination of recurring per-employee-per-month fees, transaction-based processing fees, implementation and setup fees, fees associated with payment processing and funds movement, and hardware sales and Hardware-as-a-Service (HaaS) arrangements. Recurring revenue represented over 91% of total revenue in the year ended 2025, compared to 96% in 2024. The company sells its solutions through both direct and partner channels, with two types of partners: Reseller Partners that white label products and Referral Partners that provide client leads. Revenue is also generated from interest earned on funds held for clients, which are invested in money market funds, demand deposit accounts, commercial paper, and fixed income securities until disbursement.

The Asure HCM suite includes eight product lines: Asure Payroll & Tax, Asure HR Compliance, Asure Time & Attendance, AsureRecruiting, Asure Insurance and Benefits Administration, AsurePay, Asure Tax Management Solutions, and AsureMarketplace. Payroll and HCM Solutions provide payroll processing, workforce management, compliance support, and related employee services for small and mid-sized employers. Enterprise Payroll Tax and Treasury Solutions are designed for payroll service bureaus, large employers, and systems integrators, supporting payroll tax calculation, filing, remittance, and related treasury functions across multiple jurisdictions. Platform Integrations and Marketplace include integrations with third-party applications and service providers to facilitate data exchange across payroll, HR, benefits, and related systems.

The Asure HCM platform serves as the foundation for delivering core software and complementary technology-enabled services. AsureMarketplace automates data exchange between the HCM system and third-party providers. HR Compliance services combine expert guidance with scalable digital delivery. AsurePay, the payroll card provided in association with partners, offers employees fast, secure access to earned wages. Through its licensed brokerage, Asure offers Insurance Services that help employers manage benefits and reduce administrative costs. The company's solutions also include time and attendance offerings with mobile time capture, geo-positioning verification, and biometric authentication technologies, as well as talent acquisition tools for applicant tracking and recruiting.

During the fiscal year, Asure completed several significant acquisitions. Effective July 1, 2025, Asure acquired 100% of the membership interests of Lathem Time 2025 LLC for an aggregate purchase price of $39,497 ¹, consisting of $37,500 ² paid in cash on hand and $2,221 ³ in the form of a promissory note. The company also completed seven customer relationship asset acquisitions during the year ended December 31, 2025, with a total purchase price of $20,523 ⁴, which included $16,019 ⁵ of cash paid, $56 ⁶ of cash to be paid over the next 12 months, promissory notes of $3,492 ⁷ net of discounts, and 124 ⁸ shares of Asure common stock with an aggregate fair value of $956 ⁹. On April 10, 2025, Asure entered into a Loan Agreement with MidCap Financial Trust, borrowing up to $60,000 ¹⁰, all of which was funded as of June 30, 2025, with net proceeds of $57,975 ¹¹. The company also issued 338 ¹² shares of common stock for debt payments with a value of $2,566 ¹³ and repurchased no shares during the period.

Consolidated revenue for 2025 was $140,541 ¹⁴, representing a 17% increase over revenue in 2024 of $119,792 ¹⁵. Recurring revenue was $127,288 ¹⁶ for 2025, an 11% increase from $114,471 ¹⁷ in 2024. Net loss was $13,126 ¹⁸ for 2025, an increase of $1,353 ¹⁹ from the prior year loss of $11,773 ²⁰. Gross profit was $94,874 ²¹ for 2025 versus $82,107 ²² in 2024. Gross margin as a percentage of revenue was 68% ²³ for 2025, compared to 69% ²⁴ for 2024. Loss from operations was $8,408 ²⁵ for 2025, compared to $10,737 ²⁶ for 2024. Net cash provided by operating activities was $22,218 ²⁷ for 2025, compared to $9,388 ²⁸ for 2024.

Asure plans to continue to enhance its products and technologies by leveraging the latest technology stack, Robotic Process Automation (RPA), AI, and development partnerships. The company expects that expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies will lay the groundwork for broader market opportunities and represent a key aspect of competitive differentiation. Asure also plans to expand its technological resources through organic improvements and acquired intellectual property, and expects to continue to expand the breadth of integration between its solutions, allowing direct clients and Reseller Partners the ability to easily add and implement components across the entire solution set. The company's initiatives include providing customers with more accurate and efficient automation powered by an informed knowledge base, with the engineering team utilizing an AI development Copilot to increase productivity and efficiency, and the operations team utilizing a digital assistant for more efficient and accurate automation of repetitive tasks.

Asure has acquired and plans to continue to acquire from time to time its Reseller Partners' businesses that have licensed its proprietary software and other complementary businesses either through stock acquisition or through an asset purchase of their client service agreements and related assets. The company continues to evaluate opportunities for developing new solutions that enable organizations to streamline and automate HR tasks associated with growing their businesses. Asure seeks to simultaneously allow organizations to improve their productivity while reducing the costs associated with those tasks. The company continues to work to automate processes using RPA by developing 'bots' that perform repetitive tasks, which act as digital workers that make the company more efficient and eliminate errors, allowing it to quickly take advantage of new opportunities and scale the business without the expense or lead times required to hire additional staff.

Asure expects to continue to expand and increase selling costs as it focuses on hiring direct sales personnel, expanding recognition of its brand, and lead generation. The company expects to continue to incur operating losses as a result of expenses associated with the continued development and expansion of its business, including transaction costs associated with acquisitions, sales and marketing, research and development, consulting and support services, and other costs relating to the development, marketing, sale and service of products that may not generate revenue until later periods, if at all. The company's ability to achieve profitability is subject to a number of risks and uncertainties, including the impact of the current economic environment.

Asure continues to invest in research and development to expand its solutions, with research and development expenses of $5,599 ²⁹ for the year ended December 31, 2025, a decrease of $2,208 ³⁰ or 28% from $7,807 ³¹ in 2024, primarily attributable to an increase in capitalization of software development expenses driven by continued investments in the development of products. The company capitalized $13,733 ³² of software development costs during 2025, compared to $10,187 ³³ in 2024. As of December 31, 2025, Asure had a total of 641 ³⁴ employees, 627 ³⁵ of which are full-time employees, with headcount by department including 90 ³⁶ in research and development, 166 ³⁷ in sales and marketing, 265 ³⁸ in customer service and technical support, and 120 ³⁹ in administration and management.

Asure's capital allocation strategy includes continued investment in acquisitions, with cash paid in business combinations or asset acquisitions of $53,166 ⁴⁰ during 2025, primarily consisting of the purchase of Lathem. The company has access to an 'at the market offering' program entered on October 31, 2024, under which it may offer and sell up to $25,000 ⁴¹ of newly issued shares of common stock, with $25,000 ⁴² of shares available for issuance as of December 31, 2025. Asure also has a universal shelf registration statement on Form S-3 with the SEC, effective April 19, 2024, to offer securities having an aggregate value of up to $150,000 ⁴³, with $150,000 ⁴⁴ available as of December 31, 2025. The company does not intend to pay dividends for the foreseeable future, intending to retain any earnings to finance the development and expansion of its business. Under the Loan Agreement with MidCap, Asure is restricted from paying dividends to stockholders. The company's research and development spending was $5,599 ⁴⁵ for 2025, and capital expenditures for property and equipment were $787 ⁴⁶ for 2025.

Asure faces several structural headwinds and constraints. The company has a history of losses, with a net loss from continuing operations of $13.1 million ⁴⁷ in fiscal year ended December 31, 2025, an accumulated deficit of $320.4 million ⁴⁸ as of December 31, 2025, and total stockholders' equity of $197.8 million ⁴⁹. The company expects to continue to incur operating losses. Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs. The adoption of new or interpretation of existing money service business statutes and money transmitter statutes could subject Asure to additional regulation and related expense and necessitate changes to its business model. Advancements and adoption of AI could reduce demand for Asure's solutions if customers reduce headcount as a result of AI-based automation, negatively impacting recurring revenues priced based on employee or transaction count, active users, or payroll volume.

Asure identified a material weakness in internal control over financial reporting related to ineffective design and operations of controls over program change management due to a lack of complete program and data change logs for certain financially relevant applications, which was remediated as of December 31, 2025. The company's balance sheet includes significant amounts of goodwill and intangible assets, with goodwill and identifiable intangible assets together accounting for approximately 38% of total assets as of December 31, 2025. A portion of accounts receivable is related to tax processing services for Employee Retention Tax Credits under the CARES Act, with risk pertaining to the ability to collect these amounts in the future. The company's ability to use its net operating loss carryforwards may be limited under Sections 382 and 383 of the Internal Revenue Code if an ownership change occurs.

Asure faces material risks including a history of losses with a net loss of $13.1 million ⁵⁰ in fiscal 2025 and an accumulated deficit of $320.4 million ⁵¹ as of December 31, 2025, with no certainty of achieving or sustaining profitability. The company's balance sheet includes significant goodwill and intangible assets totaling approximately 38% of total assets as of December 31, 2025, and any impairment would adversely affect results. Asure's payroll processing involves moving significant funds from client accounts, and clients could have insufficient funds to cover payments made on their behalf, potentially requiring the company to advance substantial funds. The company holds client funds in trust subject to market, interest rate, credit and liquidity risk, with funds held for clients of $228,111 ⁵² as of December 31, 2025. Asure's business depends substantially on clients renewing agreements, and if customers do not renew or reduce services purchased, revenue will decline. The company is subject to evolving regulation of money service business and money transmitter statutes, and currently holds money transmission licenses or payroll processor licenses in all jurisdictions where believed required, with ongoing compliance costs including surety bond premiums and examination fees. A portion of accounts receivable is related to Employee Retention Tax Credit processing services, with risk pertaining to collection of these amounts in the future.

Management's message emphasizes Asure's position as a provider of cloud-based HCM software solutions delivered as SaaS to businesses of all sizes, with a focus on solving three primary challenges: HR complexity, allocation of human and financial capital, and the ability to build great teams. The company highlights its 2025 achievements including consolidated revenue of $140,541 ⁵³ representing a 17% increase over 2024, recurring revenue of $127,288 ⁵⁴ representing an 11% increase, and gross profit of $94,874 ⁵⁵ versus $82,107 ⁵⁶ in 2024. Management's strategic priorities include continuing to enhance products and technologies by leveraging the latest technology stack, RPA, AI, and development partnerships; expanding technological resources through organic improvements and acquired intellectual property; and expanding the breadth of integration between solutions to allow clients and Reseller Partners to easily add and implement components across the entire solution set. The company plans to continue to invest in research and development to expand its solutions, with development efforts driven by feedback from existing and potential customers and by gauging market trends. Management also emphasizes the company's commitment to providing best-in-class solutions and its investments in compliance and certifications including SOC I Type 2 and SOC II Type 2 certifications, BIPA, CCPA, and other initiatives.