Investment Thesis
ASURE exhibits acquisition-driven revenue growth (2871% YoY) but profitability deteriorated with net income declining 11.5% and net margin collapsing to 1.5% despite healthy 71.3% gross margins. Critical financial stress evident from 1.0x interest coverage ratio, 1.05x current ratio, and operating cash flow of only $2.7M on $42.8M revenue, raising serious concerns about debt serviceability and operational sustainability.
Strengths
- Strong gross margin of 71.3% indicates core business economics and customer pricing power remain intact
- Manageable debt-to-equity ratio of 0.34x provides some leverage capacity for operations
- Substantial revenue expansion from acquisition demonstrates scale growth and market presence expansion
Risks
- Interest coverage ratio of 1.0x is critically tight—operating income barely covers interest expense, leaving zero margin for earnings deterioration
- Net income declined 11.5% YoY despite 2871% revenue surge, indicating acquisition is unprofitable or synergies are not materializing
- Severe liquidity stress with 1.05x current ratio, only $19.2M cash, and minimal operating cash generation of $2.7M creating potential covenant and refinancing risk
Key Metrics to Watch
- Operating cash flow trend—must exceed $5M+ quarterly to resolve liquidity concerns and validate business model
- Interest coverage ratio—must improve above 2.0x within 2-3 quarters to indicate financial stability
- Operating margin expansion—must reach 10%+ to justify balance sheet size and prove acquisition integration success
Financial Metrics
Revenue
42.8M
Net Income
625.0K
EPS (Diluted)
$0.02
Free Cash Flow
2.5M
Total Assets
518.7M
Cash
19.2M
Profitability Ratios
Gross Margin
71.3%
Operating Margin
5.4%
Net Margin
1.5%
ROE
0.3%
ROA
0.1%
FCF Margin
5.8%
Balance Sheet & Liquidity
Current Ratio
1.05x
Quick Ratio
1.04x
Debt/Equity
0.34x
Debt/Assets
61.4%
Interest Coverage
1.05x
Long-term Debt
68.8M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T16:56:54.635154 |
Data as of: 2026-03-31 |
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