Q4 2019 Earnings Call
Ladies and gentlemen, please standby your conference calls scheduled to begin momentarily. Thank you for your patience and please continue to standby.
[music].
Good afternoon, and welcome to assure softwares fourth quarter and full year 2019 earnings conference call joining us today for today's call our assure CEO Pat.
Capital.
Our CFO Cowen Brennen, and vice President of HR Cheryl Trbula.
With that I would like to turn the call over to Sheryl for introductory remarks Cheryl.
Operator, and good afternoon, everyone before we start I'd like to mention some of the statements made by management. During today's call might include projections estimates and other forward looking information. This will include any discussion of the company's business outlook for guidance. These particular forward looking statements and all of the statements that may.
He made on this call that are not historical are subject to a number of risk and uncertainties that could affect they're all.
Works to consider the risk factors relating to that companies. This is contained in our reports on file with the Securities and Exchange Commission. These risk factors are important and they could cause actual results to differ materially from expected results. Finally, I would like to remind everyone that this call will be recorded and that will be made available on the investor Relations section of our.
Website at Www Dot for software Dot Com finally, I will note that we have posted some slides in our investor relations website regarding the quarter. Please refer to the events and presentations section on our IR website with that I would now like to turn the call over the past couple CEO.
Thank you Sheryl and thank you all for being on a call today, we'd like to welcome everyone for the fourth quarter call in our 2019 earnings call. We certainly appreciate your interest whether you're at employee client investor analyst are valued interested party, we posted some slides on the internet is.
IR website as Sheryl this Scott and I will go through some of those slides Aptar Kentlands financial results commentary.
First of all before we go to Cowen some big takeaways. This year, we sold to work space business for $121.5 million into fourth quarter.
That all cash steel really helped us position the company into a pure play human capital Management Company. A we went from a net debt position to a cash positive position.
Pure play H.C.M. or human capital management position will go through some compares of companies in that space, but it's a highly sought after highly valuable space and we really like how we're positioning the company, it's hardly repetitive and recurring revenue where its.
90% plus.
We're now position as we go from we had that that almost 400 810 million or so when you have covenants, we're growing our salespeople. This year from 34 to over 55 to six the at the ended the year this positions us really.
Nicely organically in 2020, you're going to see a steady increase in organic growth throughout the quarters of 2020.
I remind you. We also have acquisition opportunities. Our go to market model is also with resellers, we're signing up more and more resellers and we have now 195 resellers to be able to acquire ultimately which puts us in a really nice position to grow long term.
2019, we spent a lot of calories in some go on Amazon Web services and net suite.
In addition to our Docomo analytics, we now have the infrastructure to grow and grow over the long term and then finally were rebrand branding the company in the human capital management.
If you look at our website new vision mission values. Our employees are excited that clients are excited with the focus Killen I'll talk a little bit about our bookings success revenue and EBITDA as we beat consensus in all areas somebody analysts and.
Some of the first call data had the workspace business in for a full quarter, we were very fortunate and working with outbound systems, which is an excel KKR company, where we completed the acquisition almost a month earlier than some first call estimates and that shows.
Now a for the year that we have a significant beat in each area.
Hi, My name from a board of directors perspective, we approved the sheer reach or reach purchase program for $5 million. In addition to some shares that we already had in place. So we now have $5.3 million of opportunity to buy or shares we enter.
Tend to be very opportunistic and and thoughtful and deciding if we want to purchase those shares in the market.
Yeah, that's in light of some of the macro conditions I'm going to talk a little bit about the macro conditions first of all my heart.
Prayers go out to people that are affected with Corona virus in their family and extended family. It is something that's kind of a a crazy a man here in the next couple of weeks or in the past couple of weeks and even leading to the yet to see double H is canceling moments ago.
Oh.
Well, we have done is try to take into effect that macro event in the guidance. We had a in December or we have now lowered our fed funds rate, which capital talk about a in light of the Corona virus in the fed actions and we have also lowered.
In our model, where we traditionally had a 2% same store sales for two quarters were you in 2020, we're gonna have that flat. So we're taking that down about a percentage point despite those two areas.
Areas, where really we don't control those factors based on this event, we are maintaining 2020 guidance.
Hi Inn in we're excited to be in a position that do that also I want to just take a step back I've been in the human capital management space now 35 years I've seen up a lot of advance whether it's 87 2007 et cetera why to Jay.
I want to I'd remind people that in these times of top NAS our model our business model is such that it's highly re occurring where aligned with the government you'll see that the governmental proposed changes companies need a valued partner to respond to those changes.
And that's why we feel as an outsource or any human capital management partner certainly were never recession proof, but we do thrive when there's change in the market places we're predictable reliable and these businesses in this space are very valuable in good times in in bad.
And companies need us all the more in times like this we're excited about what 2020 will bring despite the doom and gloom at the last two weeks and we're excited to tell you why with that though before we go any further I'd like kinda talk about the financial results gallon.
You pads and good afternoon, everyone. We're pleased with our 29 team full year results, which exceeded guidance and all category, having said that the sale of our workspace management division in the fourth quarter and the restructuring of our HCM Division created anomalies in our quarter result, we would point due to our full year results for the health of the come.
Right now for the details as a reminder, as usual all non revenue financial figures I will discuss today or non-GAAP unless I state them as a GAAP measure as always you'll find a reconciliation from GAAP to non-GAAP results in today's press release.
During the quarter H.C.N. bookings grew 62% year over year. This represents the focus of our go forward HCM business and will be the best indicator of growth other shore.
As Pat mentioned, we were pleased to report that 2019 HCM revenue came in at 73.2 million ahead of our guidance of 72 to 73 million.
HCM revenue for the fourth quarter increased 1% to 17.6 million from 17.4 million in Q4 of last year recurring revenues grew 3% year over year recurring revenue in Q4 as a percentage of HCM revenue was 95% compared to 92% Inc.
Q4 up 2018.
Next I'll discuss our profitability metrics.
Q4, non gap H.C.M. gross profit was 9.6 million equating to a non-GAAP gross margin of 54.8%. This compares to 11.3 million or gross margin of 65.3% in Q4 2018.
For the fiscal year 2020, we expect gross margins to be in the high 50.
Interest on client funds exceeded 400000 in the fourth quarter up from less than 80000 in the fourth quarter of 2018.
Given the recent fed fund rate reduction, we expect 100 basis points of interest on client funds in Q1 and going for.
Having said that this is based on today's current portfolio holding and market rate.
Fiscal 2019, non-GAAP EBITDA was 12.1 billion above our guidance of 11 to 12 million looking ahead to the first quarter. Our non-GAAP effective tax rate guidance is still zero percent and we feel this more accurately measures our expectations for actual performance.
Now shifting gears to our balance sheet and cash flows cash and cash equivalents was 28.9 billion at the quarter in.
29, teen operating cash flow improved year over year by some 6.7 million to operating outflow of 450000.
We believe this will continue to improve through 2020, we attribute the improvement to our cost reduction and restructuring efforts during 2019 facilitated by our net suite implementation.
At December 31st 29 team, we had 26.7 million a net debt, which are the amounts payable for seller notes in our term loan. This was down dramatically from 124 million at the end of Q3 of 29 team as we paid down or institutional debt with the proceeds from the sale.
Workspace, which closed in December.
During the quarter, we also amended our credit agreement with Wells Fargo. The New agreement provides us with 20 million a term loan and a $10 million revolver.
Total deferred revenue on the balance sheet as of December 31st 29 team, including both short and long term combined was 5.8 million.
Yes. So in Q4 was 24 days up from 22 days and a year ago quarter.
Overall headcount decreased sequentially by 13 employees in Q4 with ending headcount of for 13.
Before I turn the call back over to Pat I want to update you on our client Fund initiative as we discussed on a recent earnings call. We've taken steps to consolidate client funds to achieve a higher blended investment right. We have begun protecting against short term interest rate fluctuations by extending the tenor of certain investments so as much as three to five years.
However, given the recent 50 basis point decline in federal funds rate, we expect our blended annual rate to decline to 1% to 1.25 as of today.
When we initiated this effort we started out with 60 account spread across 11 thing and we're still working hard to rationalize the banking in investment currently we've consolidated 75% of the client and operating funds across nine banks. We expect the majority of the funds to be consolidated by the ended the year. This is a very high margin revenue.
The stream. So we're pleased to see additional synergies from the acquisitions impact our top and bottom line.
Finally, we identified a deficiency related to the design effectiveness of the company's controls surrounding the safeguarding of assets specifically the company did not maintain appropriate access to certain systems and did not maintain appropriate segregation of duties related to processes associated with those system. We.
Have implemented measures designed to remediate that efficiency and improve the internal controls as a company. There are are there were no material misstatements to the consolidated financial statements stemming from these deficiencies. We are required just close any deficiencies that creates a possibility that a material in the state.
Oh, the consolidated financial statements will not be prevented or detected on a timely basis now I'll turn the call back over to Pat Pat. Thanks, Carolyn I want to refer you to the investment a deck on the website a I'll be going through a couple slide on slide three re.
We we talked about rebranding it sure yeah sure software will now be assure a it reflects our reinventing for human capital management as a growth brand. If you look at her vision mission and values. We really now have rolled these out to all the employees in the company I personally.
Visited with all the employees in the company in the first quarter I went out of listening tour and really we're set to rally to company around growth and that growth means employee grow quite grow growth for shareholders and a communities. We serve we're excited about the new branding.
And we're focused on what it means to be successful on slide four our long term plan, which we introduced to you in the fourth quarter, we want a double in size in revenue, we want 10% plus growth organically each year 2020 used to transition year, and then we want to layer talk.
Good acquisitions, many of which we own the technology makes it easy for us to be able to assimilate those acquisitions in the growth model and if we do that properly we think that EBITDA will grow faster than revenue, therefore, enhancing shareholder value and works.
Got it about positioning and then from an employee growth perspective, we'll add employees, but not at the pace that we're going to add revenue because we'll get leverage in the model on page six really we talk about the big market. It's a 42 billion dollar or billion dollar but to be Pam growing at 7.6.
Pager 60000 clients, we have both indirect and direct data is at 90% plus repetitive revenue and they are very sticky they stay with us on average of eight to 10 years and that is a long term relationship. So we enjoy with them which makes the.
This space so attractive and then finally I referenced some companies that are in this space I posed their valuations there great companies. Some some of them are bigger of which then we are we do have a scale as a 75 million dollar company that borrow a far outweighs the capability.
Many of 75 billion in that about 50000 of our clients are in a reseller relationship right now we believe the market undervalues the company and one of the reasons why we sold the space business is to really zero on that value gap or value opportunity.
In the human capital management space on page eight.
If you invested with US last year, you were $100 billion in that and what we have done with the workspace business is now we have a self sustaining capital structure, where we have a as Colin mentioned more cash than that or we have positive cash flow we pick.
GAAP $9 million are you in cash as compared to last year's interest expense and we can fund acquisitions on page nine I refer due to the transition kinda year that we haven't 2020, we're going from 34 reps to 55.
60 by the ended the year organic growth is a priority for US you will see it ticked up each quarter and in 2021, our expectation is word double digits in organic growth set up for a repeatable Ryan for years to calm we also.
Want to layer tuck in acquisitions now that our infrastructure is in place and we believe the long term margins of EBITDA will be 20% plus finally, the quality of EBITDA will go up dramatically the onetime expenses, which will lay out for you in 22.
20, a in our guidance will show that the EBITDA less one times will grow substantially in 2020.
On page 12, we talk about the sales rep grow we did have some sales reps that went with the space business and we're growing that ill Goldstein, our chief revenue officer set an outstanding job of hiring we have 43 in place right now and we're growing by the ended the year, we'll have 55 to six.
The in place the cross sell opportunity is big for US we feel overtime that are beyond payroll revenue will equal our payroll revenue. It takes a while to cross sell to do that.
I wanted to things that we did it are listening to or is within the service model now all the bag or all the products in the bag of a salesperson implementation person service person are all in one location Oh, that's close to the customer and we can now sell.
Oh implement and service solutions set a customer needs, where they don't have to call. Additional people. We have a unique channel that we talk about on page 13, where we have 180 resellers. Another 15 in our backlog and if we weren't to look at what their revenue.
As to the street, it's another 220 million or so.
That's the opportunity that we can grow when we sell the resellers, we have a partner for life concept, where.
We'll give them access to our software, but also over time, if they wish to exit the business for any reason, we're the logical long term partner of that acquisition.
Finally on 17, we have a.
Stable growing base of recurring revenue, we're going to accelerate it both in the reseller as well as the organic salespeople and we're gonna grow that in a very predictable fashion.
On page 18, I remind you a couple things one I have over 750000 shares plus options I've never sold to share I really like how we're positioned we're focused we're gonna grow and we're going to grow.
In every aspect of the business employee clients five satisfaction as well as revenue and finally income to the shareholders. So with that I know times are top with the Corona, there's some uncertainty around the market and what decisions are going to be made.
Right, but I'm very certain that we're gonna be a long term success in this business and with that I open the floor for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your touch on telephone to withdraw your question. Please press the pound keep our first question comes from Ryan Macdonald with Needham Your line is open.
Yes, good afternoon, and paying count thanks for taking my questions I guess first on a you know what's going on right. Now maybe you can sort of talk a little bit more about you know what you're seeing as you're kind of going through the year in terms of just everyday business practices conversations you're having with customers are you seeing any changes and act.
Nobody in terms of buying patterns from those customers at all.
You know a Ryan. Thank you I would say through the first two months bookings have been strong fourth quarter was strong I would say in the last week theres been some hesitation or you don't want I think let's face. It a you know with the MBK cancelling and NC double H.
Absolutely et cetera, you know that was reported in the last week, but it wasn't a you know wasn't anything major at all a you know we feel confident our pipeline.
We're getting really good salespeople and we have a good pipeline in the salespeople, but a you know we feel pretty good on a sale side I think the same you know the same emphasis that I, just said, where you know if there's caution at all a with this business model a retention that all.
So helps retention because customers you know, sometimes our hunkering down et cetera, I think people are turning to small businesses that we serve and I remind you. We don't have any more international exposure you know our businesses are more local Oh, you know they can pick we can pay.
A cup the phone we can talk to.
You know I talked to several restaurants that were local you know, they're seeing a emphasis on takeout orders versus a in inside so business has been okay. So far from unemployment perspective, we have seen and payroll traditionally a little bit of a leg or indicator.
But employment levels have been pretty good we did block in that maybe hiring would slow down a little bit weitz. Despite that you know reaffirm our guidance because we feel pretty good about the visibility so far.
But in this real time environment that that's how I see it.
Excellent and then just as a follow up great to see that you're making some nice progress with the reps that you've already added this year in your targets for year end, but in the event that we do see I guess, an additional slowdown what sort of levers can you pull on you know in terms of those investments that you're planning to make on head count. Thanks.
Yeah, he and I appreciate it right what would I would say is a from a sales perspective, you know I take the long term view I believe we were under served in the marketplace from a sales perspective, I'm confident we have a value proposition than we can sell a you know we're reinventing this company.
As a growth company and we are going to higher salespeople I think from a non discretionary or excuse me nine sales opportunity, we could slow down or some of our infrastructure investment and some of it will take advantage of that we have been thoughtful in that area, we're winding down.
On the T.S. say in the second quarter transition service agreement that separates us from a FM system, that's going really well. So we do have levers we can pull and then from a travel perspective, you know not essential meetings.
You know also a can be held based on you know our client conference. For example is is gonna be now in a virtual environment as opposed to going to a location. So there are levers we can Paul but I would tell you, we're really going Oh put the emphasis on growth our our view.
You as a this to a shall pass and really set up 2021, and 2022, where this is a growth company and we'll do business a little bit differently, we've had a zoom and and other enablers from a technology perspective, where a low touch sale.
And ER, and Oh, low touch and high touch delivery, a in a way that customers need us down more than ever and if you think about some of the legislation that's being floated by the government to have a trusted third party to be able to navigate that is invaluable in these times.
Awesome, Thanks for taking my questions.
Thank you.
Thank you and our next question comes from Derrick Wood with Cowen and company. Your line is open.
Great. Thanks, Andrew Sherman on for Derek.
Pad, it looks like HCM bookings, urbanized, 62% or hot or cold and actually.
It was a big acceleration from last quarter, maybe to just.
Flush out of the drivers of that in and the adult diverse revenue growth and kind of way, we should see that show up in revenue.
Yeah, No I think Greg question couple of things. So first of all you know what I think the separation of space business and HCM in this space business. We had some very large customers the Morgan stanley's of the world.
You know companies that are multinational and big sales cycles.
With the separation of space, we can now really laser focus on human capital management, and you know I think when I look good and talk tail Goldstein and his team really it's about focus we're hiring the right people fourth quarter is a good quarter anyway, and then I would say the resell.
Others have had some good success this year and we got a lot of momentum in that area. So those are some of the reasons for success going forward. You know, we're fortunate enough that we wholesale and I've been in the business along time in some of our leaders have been in the business a long time, we do have a good linked and and.
Rolodex and you know areas that we can pick up high quality salespeople that can produce and produce right away and we're going to leverage those relationships to continue to grow.
Great and maybe one for colon think there was a comment that cash flow will continue to improve but maybe just talk about how we should think about that this year and beyond and.
In comparison to EBITDA and any other initiatives you have to improve that thanks, well I think what you're going to see we're going to continue to improve in 2020. It is a transition year for us, but you know, having having said that as we start to and we want to introduce that we want to start right.
Porting, both EBITDA and adjusted EBITDA, I think you're going to see as we go through the year and give guidance, but the quality of our earnings were going to go up so in other words kinda acquisition cost and one time, Oh, we're gonna be significantly lower than what you've seen in the past and ER and if you think about EBITDA and adjusted the Delta.
Between that will be much smaller which improves the quality of earnings.
Great. Thanks.
Thank you.
Thank you. Our next question comes from Ryan Meyers with Lake Street Capital. Your line is open.
Hi, guys. Thanks for taking my questions first one for me if you could just start by talking about how some of the investment in sales reps have paid off for you so far.
Yeah, Ryan Thank you and Telerik, we missed some but have but what I would say from the investment in salespeople you know when we look you know I think it's probably a little early you will see organic growth go up through the year in 2020, but.
Sure I would say we've been very fortunate is that we've hired some people that are industry, leading and you know just the energy, they're bringing to deals we've had immediate success.
You know as evidenced by the 62.
Or 62% growth, but also more importantly, they are starting to bring other cadre of people relationships and one of the aspects of our model. That's important is when we go to a tier two or tier three city, we look to really solidify banking relationships CP.
Hey relationship benefit broker relationships some of our valued competitors are starting to go after some of that business. We're taking the approach where we are welcoming them to help sell a whole solution and we get a value from that and some of those folks that we're bringing on have deep relationship.
Chips that are able to fast forward pretty quickly I think of a relationship of somebody that we brought on in January we were in front of a pretty good size West Coast Bank. A this past week and you know we'll be getting hundreds the leads from that bank over it.
Of course to 2020. So that's an example, where somebody can make an impact pretty quickly.
Okay. That's helpful and then just one more.
You provide us with some more details are almost cross sell opportunities that you guys have seen so far.
Yeah, I think from a cross sell opportunity perspective, you know there a couple of things that really are resonating with US first of all we put all the solutions.
Into the sales persons bag as well as implemented in service and when we can offer for example, HR consulting or online HR consulting.
Advice.
Play handbooks, HR products and services time, and labor all as part of a payroll package and then you know we can able to take employee calls or they can do the work now you have an opportunity.
Resonates with them because you're really solve in their problem and if you think about either the krona virus, where people might you know work from home or work in a virtual environment.
If you know some of them don't have Pcs some of them add workstations and they can use us as a valued partner, we're seeing those opportunities pop up in the marketplace.
Okay. Thank you.
Thank you once again, ladies and gentlemen star one to ask the question. It is star one on next question comes from Jeff Van Rhee with Craig Hallum. Your line is open.
Great. Thanks, Oh excuse me so several from me I'm Gonna start on the reps just.
Jumping back a little further how did you into 18 in terms of HCM reps and then at the end of nitrogen 19, I wanted to be clear. It was 34 and the current number was 43 or just maybe validate those numbers and then with respect to the sales heads now in the in particularly the sales head you're adding you've obviously got a multi tiered or multi focused sales model spin.
Typically where are the new hedges dropping in.
So on the revenue let me do that first I think you asked where the full year finished for 18. It was 63.6 million versus a 29 team full year of 73.2.
Yeah, actually sorry, I Didnt word that very well I would I was asking was each C. M wraps the actual sales rep headcount at the <unk> team now you said reps that I've heard rep. So sure sorry about that and and Rep strive route.
Okay. So Jeff I you know, we we had about a 65 35 mix in space reps to HCM wraps. We ended the year at about 34 HCM space now we're at around 43, we have a nice pipeline of candidates will finish.
The year between 55 and 60, the second half a year or be about two a month or so that we have that adds in the plan. So that's a you know I think a positive driver.
When we sold the space business, some or some of the reps when we look at it you know they were selling all the products. Some went away now we have people focus direct in the small middle market. We're looking at tier two tier three cities, we beefed up the west coast with a nice higher.
Our we also have looked at our channel strategy, we've been on fire with our resellers and we have bolstered that area as well in selected areas that have a the country. So you know I would say, we've really looked at it from a balancing out our USA presence.
Balancing out our channel strategies, where we can align with the SCPA banker and or benefit broker in cities, where we can leverage those relationships. So that's been the strategy thus far.
Got it and then I guess kaelin, a couple of modeling questions with respect to the the target model with 20% EBITDA margins, what kind of gross margin trying to get a sense a trajectory on gross margin you got some obviously extra costs you're carrying at this point, but maybe working backward would've gross margin looked like in that target.
Model and then just secondly, as it relates to the deficiencies for the for the audit is that ultimately we've gotta waits for the K to get acknowledgement from the auditors that that's been formally cleared or just touched upon that's likely to play.
Okay. So let's start with gross margin first as you can see that we were in the in the Fiftys in Q4, what I said and what I said in my remarks is that we're looking at the high Fiftys and the reason for that and that's primarily in 2021 2020, as we sold the workspace business.
You know, we basically have with it whether it's eight up U.S. or additional headcount as we start to prepare to scale up. So we're carrying in this transition here a little more heavier cost, but they are in place now and allows us to grow and scale through acquisition or through organic growth.
You know, we're still a public company, but we lost you know 30 million of revenue on the workspace businesses. So it's still continues to have cost there in both opex and in gross margin.
As to the a as to the deficiency you will see Andy Andy eight in the 10-K that we have.
A material weakness over these control we had oh, we have remediate those you will see that necessarily in the K because by the time that we found the the problem given the fact that we were coming off great plains in into net suite and trying to get it all up and running in Q3 in Q4.
We didn't have enough months left to be able to demonstrate the remediation even though that we had done. It. So you I would expect to see that that that deficiency roll off a and B remediated and Q1, if not early Q2.
Got it and just just to complete the thought on that on the gross margin. The question was.
Going forward so in the target model of 20% EBITDA margin what is the implicit gross margin at that point.
It would be in the high Fiftys I would say.
Okay, Yeah 50, okay fixing it.
Yeah, I think long term long term, we have an opportunity to improve from that and then from a 20% a target of EBITDA. We have done that before I think you know the Ts say, we'll get rid of in the second quarter and then scale I'm you know the growth of the acquisition and or the.
The organic sales people will continue to improve the gross margin in the long term plan and so we feel good about to tactics that we're doing a will give further guidance as we make progress throughout the year.
For the long term model in the out years of 2021 2022.
Got it I'll sneak one last one real quick then if I could on the on the cross sell can you spend on not just a bit obviously, you're you're getting mastered on on head count and you know with respect to the cross sell <unk> what are the gating factors how should we think about this is it a matter of treating de <unk> need to add some incremental.
Products or product upgrades, how how are you gonna measure what are the benchmarks. There in terms of how you expect cross sell to accelerate.
Yeah, I think if you you know, Jeff I don't want Dodge that question, but in a month or less than a month.
Gets a little bit more in a month in the first quarter earnings call, we're going to lay out a you know guidance and with the implementation of net suite. You know we have plans internally by market by cross sell and we'll have some metrics for you that we can sink our teeth and together but supply.
Nice to say there is some product work going on around the integration of the want a sure and I want to sure from a mobile device from a a integration perspective, primarily around time, a and payroll and addition, HR and payroll and then finally consulting we worked really.
Hard on a low touch consulting model that also expands in a repetitive way and we're pretty excited about that and then from a service model perspective are listening tour is really brought all products and services to a salesperson and implementation services and we think that there'll be some pretty big demand and they're off.
We're already seeing it but we'll lay out those metrics on the first Curt quarter earnings call.
Great. Thanks for taking my questions appreciate it thank you.
Thank you it looks like we have time for one more question or last question comes from Vincent.
Hello, Kim with Barrington Research your line is open.
Oh, Yeah, Pat let's congratulate the quarter. Most of my were asked a just up well that's the happened to hit the high end of your financial guidance.
Our first of all you know from a guidance perspective, you know we don't think were to her ROIC by any means now we're in a tough macro environment, we get that I think if we continue to keep our customers we grow our customers from a growth perspective, I'd remind you that no acquisition.
Hi, there in the guidance.
You know, we feel like it's pretty well balanced a at this point, we think the models pretty a repetitive.
So we're positioned I think pretty well, but to beat the guidance or get a high end. Its you know keep our customers you know love them up have them by more get our salespeople hired and growing and a then from a cost perspective, we're well on our way to separate.
In a business we feel we're on target to meet that need in the second quarter, and then really get the flywheel going and then a couple acquisitions or or really just the organic progress I think you're going to see us through the quarter continue to grow and if we execute and when we execute.
A good things will happen.
Thank you.
Thank you beds, well I think that concludes our questions I will first of all I want to acknowledge the 417 employees. If you think about this year was a transformative year for US you know selling a space business and doing it with a great partner.
Vacate KR and FM systems that went really smooth it puts us into a reinvention position, where we can talk today about a business that we weren't even in four years ago, and we have really high hopes for where you think we're at the right time of a market opportunity when the right.
Segment of the marketplace, we have access to the right people to grow the business. You know we can do read something really special here. So some days when you think about you know the uncertainty in the world et cetera, If you think past that.
There's going to be payroll, there's going to be a human capital management services and a there's going to be clients that need help and we're going to be position quite nicely to help them. We believe the value will catch up when this thing goes away and when people see that this company doesn't have that.
And they're growing organically and they have this type of acquisition opportunity and they see the execution that this team is capable of.
You know, we think we're poised nicely. So I appreciate your interest.
We'll continue to be here and I've been here 10 years I haven't sold to share a more confident today than at any point in the a 10 year history that I've been out as sure as so I. Thank you for your interest.
[noise], ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.
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