Asure Software, Inc.NASDAQ: ASUR), which provides cloud-based human capital management solutions to underserved small and medium businesses, has seen its share price rise recently. He surged from a 52-week low of $4.87. After climbing to a 52-week high of $10.52 from Oct. 10, 2022 to Dec. 21, 2022, it is pulling back to $9.50 per share as I write.
I think Asure Software, Inc. stock is ahead of that. Management believes they have pulled together different parts of the company to ensure they can sustain a high level of performance into 2023, but at this point this is too positive an assumption based on the company’s impact. tend to think that economic slowdown.
From comments in its earnings report, Asure Software, Inc. appears to believe that recessionary pressures will have a greater impact on large companies outside of their competing markets. Conversely, when it gets tough financially, it’s usually a smaller company. We tend to cut back on spending to survive tough economic times. As for midsize companies, I think it goes either way.
Therefore, the company could outperform or underperform depending on economic conditions in 2023. However, in relation to the stock price, I don’t think Asure Software, Inc.’s stock price is likely to rise in the near term, as the expected performance improvement appears to have already been priced in.
Third quarter revenue of $22 million, up 22% or $4 million from third quarter 2021 revenue of $18 million. In the first nine months of calendar year 2022, ASUR generated $41.3 million in revenue for him, an increase of $8 million from $33.3. 1 million in revenue generated in the first nine months of calendar year 2021.
Net loss for the reporting period was $(453) million, or $(0.22) per share, down nearly $10 million from third quarter 2021 net income of $5.32 million, or $0.28 per share. For the first nine months of 2022, the company posted a net loss of $(16.2) million or $(0.67) per share and a net profit of $7.2 million ($0.39 per share) for the first nine months of 2021. $) down by about $9 million.
Adjusted EBITDA for the reporting period was $2.1 million, up 71% year-over-year primarily due to improved revenue size and operational efficiency. Adjusted EBITDA in Q3 2022 was 9.6%, an increase of 280 basis points compared to Q3 2021.
Management believes that improved technology has expanded the business to the point where more revenue has a positive impact on adjusted EBITDA margins.
As of the end of the third quarter of 2022, Asure Software, Inc. had cash and cash equivalents of $10.9 million and liabilities of $34.4 million.
In terms of revenue and adjusted EBITDA, Asure Software, Inc. delivered consistent growth from full year 2020 to 2022, but is still operating at a loss as economic conditions likely deteriorate in 2023. , I think you’re forecasting another 1x increase in revenue. A 10% adjusted EBITDA of $3 million to $5 million may be overly optimistic.
Asure Software, Inc. has some elements in both financial categories that can grow organically at these levels, but it’s not clear enough to know if it’s achievable in the next year or so. is not.
There is no guarantee that momentum will continue or will continue
In its earnings report, management was very optimistic about the company’s performance next year based on the momentum of several parts of the business.
Among the positive factors the company cited was the increase in new sales, up 91% year-over-year, with several categories such as HR compliance and tax solutions enjoying nearly 200% growth. I’m here. Others include bundling, payroll, and the introduction of integrated markets.
The company is very confident in the integrated market, which it believes has the potential to account for 30% to 40% of total revenue over the next few years.
It also noted a healthy pipeline and backlog, suggesting that demand for the company’s solutions in the current economic environment could continue to gain momentum and likely increase over the next year. increase.
After several acquisitions, the company now expects near-term growth to be largely organic, with improved adjusted EBITDA margin and overall general margin in 2023 if deployed that way. may lead to As it improves, the company needs to improve the bottom line of its business and move closer to profitability. Combined with the efficiency improvements, Asure Software, Inc.’s management believes it will be able to translate a significant portion of the increased revenue into its Adjusted EBITDA. The impression we get from the latest earnings report is that many of the initiatives the company has put into action are bearing fruit right now, and that momentum will continue into his 2023.
My problem with that is that I haven’t been able to find any caveats in earnings reports that offer a warning against an optimistic outlook. I’ve seen the
Asure Software, Inc. has experienced considerable growth over the last few years, but I believe it is facing some headwinds. Because we believe that different pieces of the company’s puzzle come together to ease it.
Combine that with the idea that the slowdown in the economy hits larger companies more than small businesses, and I think this could be a humbling experience for Asure Software, Inc. in 2023. If everything goes wrong as it is now.
I think the market has rewarded Asure Software, Inc.’s share price over the last 10 weeks or so because the business outlook is bright. But at the moment it’s more than priced in, and we expect the company’s share price to change direction once the market takes it into account and starts taking profits.
And if 2023 proves to be more difficult for ASUR than management thinks at the moment, it’s going to undergo a quick fix.
However, it will do well for investors who prefer ASUR’s long-term outlook. Amendment is a great opportunity to take a position or add to an existing position with Asure Software, Inc.
I think the future is bright for Asure Software, Inc., but at this point I don’t know how to avoid the impact of the 2023 recession.