ASUR Q2 Deep Dive: Lathem Acquisition, Attach Rate Gains, and Integration Challenges

August 12, 2025 at 22:55 PM EDT

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Online payroll and human resource software provider Asure (NASDAQ: ASUR) missed Wall Street’s revenue expectations in Q2 CY2025, but sales rose 7.4% year on year to $30.12 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $36 million at the midpoint, or 6.2% above analysts’ estimates. Its non-GAAP profit of $0.08 per share was 42.2% below analysts’ consensus estimates.

Is now the time to buy ASUR? Find out in our full research report (it’s free).

Asure (ASUR) Q2 CY2025 Highlights:

Revenue: $30.12 million vs analyst estimates of $31.14 million (7.4% year-on-year growth, 3.2% miss)
Adjusted EPS: $0.08 vs analyst expectations of $0.14 (42.2% miss)
Adjusted Operating Income: $5.24 million vs analyst estimates of -$2.31 million (17.4% margin, significant beat)
The company lifted its revenue guidance for the full year to $140 million at the midpoint from $136 million, a 2.9% increase
EBITDA guidance for Q3 CY2025 is $8 million at the midpoint, below analyst estimates of $8.70 million
Operating Margin: -15.4%, in line with the same quarter last year
Billings: $28.5 million at quarter end, down 4.3% year on year
Market Capitalization: $227.6 million

StockStory’s Take

Asure’s second quarter results were met with a significant negative market reaction, as the company’s revenue and adjusted earnings per share both fell short of Wall Street’s expectations. Management attributed the underperformance to headwinds in its HR Compliance business, particularly related to the sunsetting of Employee Retention Tax Credit (ERTC) bundling activity, as well as softer professional services revenue. CEO Pat Goepel described these challenges as “the low point for the impact of HR Compliance ERTC-related issues,” emphasizing that the company’s Payroll Tax Management product and improved attach rates for human capital management products remained bright spots in the quarter.

Looking forward, Asure’s updated guidance is shaped by optimism surrounding its recent acquisition of Lathem Time Corporation and the anticipated integration of multiple point solutions. Management expects the Lathem deal to accelerate cross-sell opportunities and drive higher attach rates across payroll, time, and HR offerings. CFO John Pence noted that, while integration will require additional investment and may pressure margins in the near term, “we believe this will continue to help us drive acceleration of these attach rates.” Asure is also aiming for improved profitability as the business scales and integration efforts mature.

Key Insights from Management’s Remarks

Management emphasized that the quarter’s performance was driven by sustained momentum in Payroll Tax Management, increasing attach rates, and the closing of the Lathem acquisition, while headwinds in HR Compliance and timing of enterprise deals weighed on growth.

Payroll Tax Management growth: Management highlighted continued client wins and strong backlog in Payroll Tax Management, viewing it as an increasingly important revenue contributor, despite some phased install schedules impacting near-term timing.
Attach rate improvements: The attach rate—customers adopting more than one Asure product—increased by 400 basis points versus last year, reflecting effective cross-selling and greater integration of the product suite, which management believes will drive higher organic growth over time.
Lathem Time acquisition: The purchase of Lathem Time brings approximately 14,000 clients and a self-install time and attendance solution, which management believes will both accelerate client onboarding and create substantial cross-sell potential for payroll, HR, and AsurePay offerings.
HR Compliance headwinds: Management acknowledged that the HR Compliance segment faced revenue pressure as customers acquired primarily for ERTC-related offerings rolled off, but stated this is “largely behind us” and expects normalization in the second half of the year.
Integration and product suite strategy: Asure is prioritizing integration of acquired point solutions to deliver a single user experience, aiming to increase per-employee-per-month (PEPM) revenue and streamline onboarding, which management expects to support margin expansion and organic growth as scale is achieved.

Drivers of Future Performance

Management expects future performance to be shaped by cross-sell expansion, integration of recent acquisitions, and stabilization in HR Compliance, though integration costs and shifting revenue mix may pressure margins.

Lathem integration and cross-sell: The full integration of Lathem Time is expected to unlock new revenue streams, as Asure plans to cross-sell payroll and HR solutions to Lathem’s client base, while also leveraging Lathem’s rapid self-install capabilities to reduce onboarding time and increase attach rates.
Attach rate and PEPM expansion: Management is focused on driving attach rates higher—with a target to move beyond the current 29% of clients using multiple products—and expanding per-employee-per-month revenue, which they see as essential for scaling organic growth and improving profitability.
Normalization in HR Compliance: Asure anticipates that the headwind from ERTC-related HR Compliance churn will subside, with management citing improved monthly sales and retention trends as signs that the business is moving past this temporary drag on growth.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be closely watching (1) the pace and effectiveness of Lathem Time’s integration and related cross-sell initiatives, (2) whether attach rates and per-employee-per-month revenue continue to climb as new solutions are rolled out, and (3) signs of stabilization and renewed growth in HR Compliance as ERTC-related churn moves into the rearview. The scalability of Asure’s integrated platform and realization of cost synergies will also be key indicators to monitor.

Asure currently trades at $8.46, down from $9.71 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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