What Happened?

Shares of online payroll and human resource software provider Asure (NASDAQ:ASUR) fell 22.3% in the pre-market session after the company reported weak third-quarter earnings, which missed on most of the key metrics we track, including revenue, EBITDA, and EPS. Notably, given the weak performance during the quarter, full-year sales and EBITDA margin guidance provided for FY'24 implied a downward correction, which is never a good sign. Overall, this was a pretty bad quarter.

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What The Market Is Telling Us

Asure’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for Asure and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 20.5% on the news that the company reported fourth-quarter results with revenue and EPS missing Wall Street's estimates. Sales growth declined in absolute terms. The weak topline growth also impacted profitability as gross margin declined significantly during the quarter. Looking ahead, its revenue outlook for the next quarter was soft, suggesting slower demand to start the year. 

On the other hand, Asure's full-year 2024 sales and EBITDA outlook exceeded analysts' expectations. The company noted that the forward sales guidance excludes contributions from Employee Retention Tax Credit (ERTC – a refundable tax credit for some businesses impacted by the recent pandemic) but assumes potential benefits from acquisitions. Overall, the results could have been better.

Asure is down 6.7% since the beginning of the year, and at $8.44 per share, it is trading 19% below its 52-week high of $10.41 from February 2024. Investors who bought $1,000 worth of Asure’s shares 5 years ago would now be looking at an investment worth $920.85.

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