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Asure Software: Bracing For More Impact

Jun. 08, 2020 11:54 AM ETAsure Software, Inc. (ASUR)1 Comment
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Tech and Growth


  • COVID-19 has hit the business hard given the company's focus on SMBs. We expect no growth for the rest of 2020.
  • We expect any potential M&A, by which the management expects to deliver an additional 10% growth in 2020, to be put on hold.
  • The long-term issue regarding weak positioning remains.


We will remain neutral on Asure Software (NASDAQ:ASUR), considering the current pandemic-related headwinds that have severely impacted its business and its SMBs client base. The stock is down ~24% from last December when we published our first coverage on the stock. Back then, we discussed our view of the company’s limited upside potential despite the shift to pure HCM SaaS business. Today, we still hold the same view of the outlook, which is even worsened by the COVID-19.


Given the company’s focus on SMBs in tier 2 and 3 cities, the COVID-19 will continue to hit the business really hard and present ongoing uncertainties. For starters, the company implemented salary cuts and benefit reductions to some of its employees in Q1, which amounted to ~$3 million in Q1. The company also reduced its headcounts to 411, down from ~423 at the beginning of the year.

(source: company’s 10-Q earnings call slide)

The rest of the business does not look good as well. The company reported Q1 revenue of $18.9 million, which was better than expected, though still down 1.6% YoY. Given the uncertainty around the timing of reopening, the company also does not have enough visibility. However, we believe the outlook for Q2 and beyond will remain quite similar. There will be very little to no growth going forward, considering ~20% of the company’s clients alone may go out of business. In Q1, bookings already declined by 2.7% YoY, while ~1,000 of its clients decided to temporarily shut down their operations in just over a month between March and April.

(source: company’s Q4 2019 earnings call)

The situation will be more difficult considering Asure’s recent divestiture and transition to SaaS, which have taken a lot of the management’s focus and energy to complete. The management expected no organic

This article was written by

Tech and Growth profile picture
Former tech operator, entrepreneur, and venture capitalist with over a decade of experience starting, investing, and building companies in Asia and US. Long-only manager seeking multi-asset technology / growth opportunities driving disruptive innovation globally.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

TheGryphon profile picture
Yawn - uninspiring and regurgitive
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