The risks and uncertainties referred to above include—but are not limited to— risks associated with breaches of the Company’s security measures; risks related to material weaknesses; possible fluctuations in the Company’s financial and operating results; privacy concerns and laws and other regulations may limit the effectiveness of our applications; the financial and other impact of any previous and future acquisitions; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs; risk of our software and solutions not functioning adequately; interruptions, delays or changes in the Company’s services or the Company’s Web hosting; may incur debt to meet future capital requirements; volatility and weakness in bank and capital markets; access to additional capital; significant costs as a result of operating as a public company; the expiration of Employee Retention Tax Credits ("ERTC”) and the impact of the Internal Revenue Service recent measures regarding ERTC claims and the corresponding cash collections of existing receivables; the inability to continue to release timely updates for changes in laws; the inability to develop new and improved versions of the Company’s services and technological developments; customer’s nonrenewal of their agreements and other similar changes could negatively impact revenue, operating results and financial conditions; the exposure of market, interest, credit and liquidity risk on client funds held int rust; the Company’s operation in highlight competitive markets; risk that our clients could have insufficient funds that could result in limitations in the ability to transmit ACH transactions; impairment of intangible assets; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; various financial aspects of the Company’s Software-as-a-Service model; adverse effects to our business a result of claims, lawsuits, and other proceedings; issues in the use of artificial intelligence in our HCM products and services; adverse changes to financial accounting standards to the Company; inability to maintain third-party licensed software; evolving regulation of the Internet, changes in the infrastructure underlying the Internet or interruptions in Internet; factors affecting the Company’s deferred tax assets and ability to value and utilize them; the nature of the Company’s business model; inability to adopt new or correctly interpret existing money service and money transmitter business status; the Company’s ability to hire, retain and motivate employees and manage the Company’s growth; interruptions to supply chains and extended shut down of businesses; potential enactment of adverse tax laws, regulation, political, economic and social factors; potential sales of a substantial number of shares of our common stock along with its volatility; risks associate with potential equity-related transactions including dividends, rights under the stockholder plan to discourage certain actions and other impacts as a result of actions of our stockholders.
RECONCILIATION OF NON-GAAP AND ADJUSTED FINANCIAL MEASURES(unaudited) (in thousands)Q4-24Q3-24Q2-24Q1-24Q4-23Q3-23Q2-23Q1-23Revenue(1)$30,792 $29,304 $28,044 $31,652 $26,264 $29,334 $30,420 $33,064 Gross Profit to non-GAAP Gross Profit Gross Profit$20,928 $19,704 $18,868 $22,607 $17,839 $21,280 $22,018 $24,400 Gross Margin 68.0% 67.2% 67.3% 71.4% 67.9% 72.5% 72.4% 73.8% Share-based Compensation 44 44 43 40 32 28 46 31 Depreciation 1,190 1,232 1,145 1,110 921 984 1,309 1,009 Amortization - intangibles 50 50 50 50 50 50 50 268 One-time expenses Settlements, penalties & interest 25 2 3 — (6) 8 — 4 Acquisition and transaction costs 221 367 264 39 — — — — Other non-recurring expenses 84 — — — — — — — Non-GAAP Gross Profit$22,542 $21,399 $20,373 $23,846 $18,836 $22,350 $23,423 $25,712 Non-GAAP Gross Margin 73.2% 73.0% 72.6% 75.3% 71.7% 76.2% 77.0% 77.8% Sales and Marketing Expense to non-GAAP Sales and Marketing ExpenseSales and Marketing Expense$6,945 $6,680 $6,924 $7,767 $6,422 $6,597 $8,515 $7,200 Share-based Compensation 251 269 237 243 180 210 149 124 Depreciation — 1 — 1 1 — — — One-time expenses Settlements, penalties & interest 78 (5) 5 18 6 30 4 11 Acquisition and transaction costs 9 68 37 11 — — — — Other non-recurring expenses 52 — — — — — 180 — Non-GAAP Sales and Marketing Expense$6,555 $6,347 $6,645 $7,494 $6,235 $6,357 $8,182 $7,065 General and Administrative Expense to non-GAAP General and Administrative ExpenseGeneral and Administrative Expense$9,940 $10,378 $10,118 $10,063 $9,747 $9,294 $10,336 $9,956 Share-based Compensation 1,081 1,187 1,122 1,535 980 936 1,298 1,142 Depreciation 269 264 256 251 225 200 234 210 One-time expenses Settlements, penalties & interest 142 377 304 98 284 101 432 102 Acquisition and transaction costs 282 371 245 57 51 — — — Other non-recurring expenses 220 253 — 86 53 — 453 — Non-GAAP General and Administrative Expense$7,946 $7,926 $8,191 $8,036 $8,154 $8,057 $7,919 $8,502 Research and Development Expense to non-GAAP Research and Development ExpenseResearch and Development Expense$2,103 $1,973 $1,962 $1,769 $1,739 $1,803 $1,325 $1,979 Share-based Compensation 87 90 86 85 69 76 89 40 One-time expenses Settlements, penalties & interest 21 — 27 31 — — — — Acquisition and transaction costs 153 195 369 147 — — — — Other non-recurring expenses 29 — — — — — — — Non-GAAP Research and Development Expense$1,813 $1,688 $1,480 $1,506 $1,670 $1,727 $1,236 $1,939 (1)Note that first quarters are seasonally strong as recurring year-end W2/ACA revenue is recognized in this period. ASURE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss$(11,773) $(9,214)Adjustments to reconcile loss to net cash provided by operations: Depreciation and amortization 22,142 19,135 Amortization of operating lease assets 1,386 1,481 Amortization of debt financing costs and discount 726 820 Non-cash interest expense 298 1,471 Net accretion of discounts and amortization of premiums on available-for-sale securities (377) (119)Provision for expected losses 46 2,047 Provision for deferred income taxes 884 225 Loss on extinguishment of debt — 990 Net realized gains on sales of available-for-sale securities (2,609) (2,257)Share-based compensation 6,444 5,430 Loss on disposals of long-term assets — 132 Change in fair value of contingent purchase consideration — 175 Changes in operating assets and liabilities: Accounts receivable (3,998) (4,126)Inventory (41) 97 Prepaid expenses and other assets (1,886) 5,101 Operating lease right-of-use assets — 546 Accounts payable (1,206) 376 Accrued expenses and other long-term obligations (1,103) 87 Operating lease liabilities (1,555) (1,118)Deferred revenue 2,010 (2,379)Net cash provided by operating activities 9,388 18,900 Cash flows from investing activities: Acquisition of intangible assets (13,256) (7,651)Purchases of property and equipment (692) (1,585)Software capitalization costs (10,187) (7,027)Purchases of available-for-sale securities (15,643) (27,647)Proceeds from sales and maturities of available-for-sale securities 20,522 14,385 Net cash used in investing activities (19,256) (29,525)Cash flows from financing activities: Proceeds from notes payable, net of issuance costs 4,995 — Payments of notes payable (420) (35,627)Debt extinguishment costs — (250)Net proceeds from issuance of common stock 1,370 46,800 Capital raise fees (132) (338)Payments made on amounts due for the acquisition of intangibles (1,513) (311)Net change in client fund obligations (26,342) 13,931 Net cash provided by (used in) financing activities (22,042) 24,205 Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents (31,910) 13,580 Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 177,622 164,042 Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$145,712 $177,622 ASURE SOFTWARE, INC.
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