Asure Software (ASUR -13.71%), a provider of cloud-based human capital management (HCM) and payroll solutions for businesses of all sizes, released its second-quarter 2025 earnings on July 31, 2025. The company posted a GAAP net loss per share of $(0.22), missing the estimate for positive GAAP earnings of $0.14 per share. Despite the revenue miss and an expanded net loss, underlying recurring revenue and adjusted EBITDA improved. Management raised full-year revenue guidance, citing growth in key product lines and the recent acquisition of Lathem Time. This quarter showed solid progress in strategic initiatives, but also highlighted cost and profitability challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.22) | $0.14 | $(0.17) | (29.4%) |
| Revenue (GAAP) | $30.1 million | $31.03 million | N/A | N/A |
| Adjusted EBITDA | $5.2 million | $4.1 million | 26.8% | |
| Non-GAAP Gross Profit | $21.9 million | $20.4 million | 7.4% | |
| Recurring Revenue | $28.6 million | $27.1 million | 5.5% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About the Business and Key Success Factors
Asure Software delivers cloud-based HCM, payroll processing, compliance, and related software and services to small and mid-sized American businesses. Its platform manages functions such as payroll processing, time and attendance, tax filing, employee onboarding, and benefits management. The company’s solutions are primarily distributed through a mix of direct sales and partnerships with other payroll or HR service providers.
Recent strategy has focused on innovation in software through product development and automation, notably leveraging robotic process automation (RPA) and artificial intelligence (AI). Compliance, sales execution, and security also remain core areas. Success for Asure often depends on growing recurring software subscription revenues, expanding its customer base, improving product “attach rates” (how many products each client adopts), and integrating acquired businesses quickly and efficiently.
Quarter Highlights and Financial Developments
Total reported revenue rose 7% year over year. Adjusted EBITDA, a measure of core operational profitability before certain one-time and non-cash costs, grew from $4.1 million to $5.2 million. Management attributed the net loss expansion to higher operating costs, including increased spending in general and administrative, and sales and marketing, which together climbed from $17.0 million to $19.1 million year over year.
Recurring revenue reached $28.6 million, making up 95% of company revenue and rising 6% from a year ago. The company’s Payroll Tax Management product line, which helps clients accurately manage payroll taxes, was a significant engine of growth. Also important was an increase in attach rates—the proportion of customers adopting multiple Asure products, as discussed by management in Q1 2025. This metric saw double-digit percentage growth in Q1 2025, supported by cross-selling within the existing customer base and by reorganized, more specialized sales teams.
A major event in the quarter was the acquisition of Lathem Time, a time and attendance tracking solutions provider, which closed on July 1, 2025, just after the end of the reporting period. Management expects this deal to expand Asure’s scale, recurring revenue base, and cross-selling opportunities. Although the Lathem results did not impact this quarter, the company said future quarters will reflect its contributions, including additional high-margin recurring revenue.
Gross profit increased year over year, both on a GAAP and non-GAAP basis. The adjusted (non-GAAP) gross margin held steady at 73%. Net loss (GAAP) widened to $6.1 million. Expense discipline will be necessary for future improvement in profitability, a point management called attention to in remarks during the Q1 2025 earnings call, stating it anticipates the cost structure “to be relatively flat going forward as we experience improved profitability as the revenue growth continues” into fiscal 2025.
Products, Strategic Focus, and Notable Activity
The company continues to develop and refine its suite of cloud-based HCM and compliance software offerings. Payroll Tax Management, a service that enables clients to manage tax filing requirements in the U.S. and Canada, remained a highlight due to new enterprise wins and product enhancements, including Canadian-tax integration and partnerships with platforms like Workday, Oracle, and SAP. AsurePay, a digital payroll banking solution, showed growth in customer usage and is being rolled out to more businesses, with management highlighting positive trends and expansion plans in Q1 2025.
Sales execution improved through specialized teams, resulting in a significant increase in cross-selling and revenue backlog. Contracted revenue backlog, or committed future revenue not yet recognized, reached $82 million, up 339% year over year as of Q1 2025. New bookings in Q1 2025 also grew by 45% year over year, suggesting momentum in sales activity.
Compliance and regulatory management remain central. The wind-down of the Employee Retention Tax Credit (ERTC) program, a government pandemic-era payroll tax incentive, continued to weigh on growth in Q1 2025, but management noted this “cohort effect” has largely played out. The company expects compliance-related product growth to recover in 2026.
R&D expense declined, but investment in product updates and new features remains ongoing. Continuous development and innovation are viewed as essential given the fast-moving competitive environment.
Outlook and What’s Ahead
Management increased its outlook for full-year 2025 revenue to a range of $138.0–$142.0 million, up from previous guidance of $134.0–$138.0 million. For Q3 2025, management projects revenue of $35.0–$37.0 million. Adjusted EBITDA (non-GAAP) for Q3 2025 is expected to improve to $7.0–$9.0 million. The company targets an adjusted EBITDA margin of 22–24% for fiscal 2025, in line with prior targets. These forecasts reflect the addition of Lathem Time and higher contracted backlog.
With a competitive HCM and payroll technology market, investors should watch for progress in cost containment, integration of acquired businesses, margin trends, and the impact of increasing leverage on the balance sheet. R&D spending and continued sales execution are also important areas to watch. Management did not announce a dividend this quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
