Asure’s second quarter results were met with a significant negative market reaction, as the company’s revenue and adjusted earnings per share both fell short of Wall Street’s expectations. Management attributed the underperformance to headwinds in its HR Compliance business, particularly related to the sunsetting of Employee Retention Tax Credit (ERTC) bundling activity, as well as softer professional services revenue. CEO Pat Goepel described these challenges as “the low point for the impact of HR Compliance ERTC-related issues,” emphasizing that the company’s Payroll Tax Management product and improved attach rates for human capital management products remained bright spots in the quarter.
Is now the time to buy ASUR? Find out in our full research report (it’s free).
Asure (ASUR) Q2 CY2025 Highlights:
- Revenue: $30.12 million vs analyst estimates of $31.14 million (7.4% year-on-year growth, 3.2% miss)
- Adjusted EPS: $0.08 vs analyst expectations of $0.14 (42.2% miss)
- Adjusted Operating Income: $5.24 million vs analyst estimates of -$2.31 million (17.4% margin, significant beat)
- The company lifted its revenue guidance for the full year to $140 million at the midpoint from $136 million, a 2.9% increase
- EBITDA guidance for Q3 CY2025 is $8 million at the midpoint, below analyst estimates of $8.70 million
- Operating Margin: -15.4%, in line with the same quarter last year
- Billings: $28.5 million at quarter end, down 4.3% year on year
- Market Capitalization: $227.6 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Asure’s Q2 Earnings Call
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Jeffrey Van Rhee (Craig-Hallum) pressed CEO Pat Goepel about the status of large Payroll Tax Management deals and their revenue impact; Goepel confirmed no major cancellations, with some deals phased in over time and continued backlog progress.
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Joshua Reilly (Needham & Company) asked how the Lathem acquisition changes Asure’s ability to penetrate its existing base with time and attendance solutions; Goepel and CFO John Pence explained that minimal overlap exists, creating significant cross-sell opportunities and faster installs.
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Jared Levine (TD Cowen) inquired about revenue synergies and whether any are built into current guidance; Pence clarified that guidance does not assume material cross-sell synergies from Lathem in 2025, with most benefits expected beyond this year.
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Eric Martinuzzi (Lake Street) questioned the overlap between Lathem and Asure’s installed base, and whether macro demand for core payroll and HCM has changed; management reported little overlap and steady demand trends, with a strong pipeline for future quarters.
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Charles Nabhan (Stephens Inc.) sought clarity on margin guidance changes; Pence attributed near-term margin pressure to Lathem’s revenue mix but expects accretive contributions as integration progresses.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be closely watching (1) the pace and effectiveness of Lathem Time’s integration and related cross-sell initiatives, (2) whether attach rates and per-employee-per-month revenue continue to climb as new solutions are rolled out, and (3) signs of stabilization and renewed growth in HR Compliance as ERTC-related churn moves into the rearview. The scalability of Asure’s integrated platform and realization of cost synergies will also be key indicators to monitor.
Asure currently trades at $8.46, down from $9.71 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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