10-Q: Asure Software Reports Q2 2026 Financial Results

Asure Software, Inc. reported its financial results for the second quarter ended June 30, 2026, showing revenue growth driven by its time and attendance solutions.

Summary

• Asure Software, Inc. reported its financial results for the second quarter and first six months of 2026.
• Total revenue for the second quarter increased by 23% to $37.1 million, and for the first six months increased by 23% to $79.9 million.
• Recurring revenue grew 19% in Q2 and 16% in the first six months, driven by time and attendance solutions.
• Professional services, hardware, and other revenue saw significant increases of 106% in Q2 and 155% in the first six months, also attributed to time and attendance solutions.
• Gross profit increased by 26% in Q2 and 25% in the first six months, with gross margin improving to 68% in Q2 and 70% in the first six months.
• The company reported a net loss of $4.4 million ($0.15 per share) for Q2 2026, an improvement from a loss of $6.1 million ($0.22 per share) in Q2 2025.
• For the first six months of 2026, the net loss was $3.8 million ($0.13 per share), an improvement from a loss of $8.5 million ($0.31 per share) in the same period of 2025.
• Cash and cash equivalents were $19.7 million as of June 30, 2026.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive report, with strong revenue growth and improving margins, though the continued net loss and increased interest expense temper the overall sentiment.

Positives

• Total revenue increased by 23% year-over-year for both the second quarter ($37.1 million) and the first six months ($79.9 million) of 2026.
• Recurring revenue showed strong growth, up 19% in Q2 and 16% in the first six months, primarily due to the time and attendance solutions.
• Professional services, hardware, and other revenue experienced substantial growth of 106% in Q2 and 155% in the first six months, also driven by time and attendance solutions.
• Gross profit increased by 26% in Q2 and 25% in the first six months, with gross margin improving to 68% in Q2 and 70% in the first six months.
• Net loss improved significantly, from $6.1 million in Q2 2025 to $4.4 million in Q2 2026, and from $8.5 million in the first six months of 2025 to $3.8 million in the same period of 2026.
• Sales and marketing expenses as a percentage of revenue decreased to 25% in Q2 and 22% in the first six months, indicating improved efficiency.
• General and administrative expenses as a percentage of revenue decreased to 33% in Q2 and 31% in the first six months, showing operational leverage.
• The company is in compliance with all covenants under its Senior Credit Facility.

Negatives

• The company continues to report net losses, with a loss of $4.4 million in Q2 2026 and $3.8 million in the first six months of 2026.
• Interest expense increased significantly to $1.8 million in Q2 2026 and $3.5 million in the first six months of 2026, primarily due to the MidCap loan.
• Deferred revenue decreased from $11.6 million at the end of 2025 to $6.7 million at June 30, 2026.
• Cash and cash equivalents decreased from $25.2 million at December 31, 2025, to $19.7 million at June 30, 2026.
• Net cash used in investing activities was substantial at $23.2 million for the first six months of 2026, driven by investments in securities and software capitalization.
• Net cash used in financing activities was significant at $49.2 million for the first six months of 2026, primarily due to a decrease in client fund obligations.
• Amortization of intangible assets remains a significant expense, totaling $9.7 million for the first six months of 2026.

Risks

• Risks associated with breaches of security measures.
• Possible fluctuations in financial and operating results.
• Potential financing needed to meet future capital requirements and access to additional capital.
• Privacy concerns and laws that may limit the effectiveness of applications.
• Risk of software and solutions not functioning adequately.
• Interruption, delays, or changes in services or web hosting.
• Significant costs associated with operating as a public company.
• Adverse material effects caused by advancements and adoption of artificial intelligence.

Future Outlook

The company expects revenue to increase as new applications are introduced, the client base expands, and relationships with existing clients are renewed and expanded. The mix of recurring revenue and professional services, hardware, and other revenue is expected to remain relatively constant. The seasonality of revenue related to ACA form filings is expected to decrease as clients utilize more non-payroll applications. The company anticipates continuing to expand selling costs by hiring direct sales personnel, increasing brand recognition, and enhancing lead generation efforts. Future business demands may lead to cash utilization at levels greater than recently experienced or expected, and the company may need to raise additional capital for growth and strategic acquisitions.

Management Comments

• The company strives to be the most trusted HCM resource.
• Our solutions solve three primary challenges that prevent businesses from growing: HR complexity, allocation of human and financial capital, and the ability to build great teams.
• We have and will continue to invest in research and development to expand our solutions.
• We believe significant synergies are expected to arise from our strategic acquisitions and their assembled work forces.

Industry Context

StockSavvy.ai notes that Asure Software's performance in Q2 2026 reflects a broader trend in the Human Capital Management (HCM) software sector, where companies are increasingly focusing on integrated solutions that address payroll, HR, time and attendance, and benefits administration. The growth in time and attendance solutions, as highlighted by Asure, aligns with the ongoing need for businesses to manage workforce efficiency and compliance in a dynamic labor market. The company's continued investment in R&D and exploration of acquisitions are common strategies for SaaS providers aiming to maintain competitive advantage and expand market share.

Comparison to Industry Standards

• The revenue growth of 23% for the first six months of 2026 is strong compared to the average SaaS industry growth rate, which can vary but often hovers in the mid-to-high teens for established companies.
• The improvement in gross margin to 70% for the first six months of 2026 is generally in line with or slightly above the typical gross margins for mature SaaS companies, which often range from 65% to 80%.
• The continued net loss, while improving year-over-year, indicates that Asure is still in a growth and investment phase, which is common for many SaaS companies prioritizing market expansion over immediate profitability. Competitors like Paycom (PAYC) and Paylocity (PCTY) have achieved profitability, but they operate at different scales and market positions.
• The increase in sales and marketing expenses as a percentage of revenue in Q2 2025 (27%) and subsequent decrease in Q2 2026 (25%) suggests a move towards more efficient customer acquisition, a key metric for SaaS companies. Industry benchmarks for S&M as a percentage of revenue can range widely but often fall between 20-40% for growth-stage companies.

Legal Proceedings

• As of June 30, 2026, the company was not a party to any material legal proceedings.

Stakeholder Impact

• Shareholders: Continued investment in growth and potential future capital raises may impact share value. Improved financial performance could lead to positive stock performance.
• Employees: Increased compensation-related expenses and potential for continued growth may offer job security and opportunities.
• Customers: The company's focus on expanding its HCM platform and services aims to provide better tools for managing HR complexity and compliance.
• Creditors: The company is in compliance with its loan covenants, indicating stability in meeting its debt obligations.

Next Steps

• Continue to invest in research and development to expand solutions.
• Actively explore opportunities to acquire additional products or technologies.
• Continue to expand and increase selling costs, focusing on hiring direct sales personnel, expanding brand recognition, and lead generation.
• Potentially raise additional capital in the future to support growth and acquisitions.

Key Dates

Recommendation

The company shows strong revenue growth and improving operational efficiencies, which are positive indicators. However, the continued net loss, increasing interest expenses, and the need for potential future capital raises suggest a cautious approach. While the business is growing, profitability has not yet been achieved, making it a hold for investors seeking more established profitable companies.

Keywords

Human Capital Management, HCM Software, Payroll and Tax, HR Compliance, Time and Attendance, SaaS, Cloud-based Software, Acquisitions