Asure Software announced better-than-expected 4Q results. Meanwhile, revenues of the cloud-based human capital management (HCM) software solutions provider declined year-over-year, reflecting the negative impact of the COVID-19 pandemic. Shares rose 5.8% ahead of the results release on March 11.
Asure’s (ASUR) 4Q revenues dropped 7% to $16.4 million year-on-year but came in ahead of analysts’ expectations of $16.2 million. Recurring revenues accounted for 97% of total sales, while professional services, hardware and other revenue contributed the remaining 3%.
The company reported breakeven earnings for the quarter on a non-GAAP basis, reflecting a strong improvement from the loss of $0.16 per share posted in the year-ago quarter. Moreover, the bottom-line result compared favorably with the Street’s estimates of a loss of $0.01 per share.
Asure recorded a sequential improvement across key metrics. The company’s 4Q revenues increased 3% sequentially, while the breakeven earnings reflect an improvement from a loss of $0.03 per share reported in 3Q. (See Asure Software stock analysis on TipRanks)
Asure’s CEO Pat Goepel said, “The high-caliber sales representatives we added in the second half of 2020 helped us achieve encouraging results during a difficult economic landscape. We are particularly pleased with the growth in number of customers added and are cautiously optimistic that gradually improving unemployment rates will serve as a tailwind, leading to increased revenue over time.”
Ahead of the earnings release, Barrington analyst Vincent Colicchio reiterated his Buy rating and price target of $12 (33.5% upside potential) on the stock. In a note to investors, Colicchio wrote, “We expect Asure to achieve solid organic and acquisition-related growth in 2021 and beyond in the HCM software market.”
Overall, consensus among analysts is a Moderate Buy based on 2 unanimous Buys. The average analyst price target of $11 implies upside potential of about 22.4% to current levels. Shares have surged more than 49% over the past year.
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