Q4 2021 Asure Software Inc Earnings Call
Good afternoon, and welcome to insurers fourth quarter 2021 earnings conference call joining us for today's call are injuries, chairman and CEO .
Depo assures chief Financial Officer, John Pins, and head of Investor Relations Randall Radecki. Following their prepared remarks, there will be a question and answer session for analysts and investors I would now like to turn the call over to Randall Rudnicky for introductory remarks. Please go ahead.
Okay.
Thank you operator, good afternoon, everyone and thank you for joining us for sure it's fourth quarter 2021 earnings call. Following the close of market. We released our financial results. The earnings release is available on the SEC's website and on our Investor Relations website at Investor data sure software Dot Com, where you can also find the investor presentation.
During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items, a description and timing of these items along with a reconciliation of non-GAAP measures to their most comparable GAAP measures can be found in our earnings release.
This call will also contain forward looking statements that refer to future events and as such involve some risks we use words such as expects believes in me to indicate forward looking statements and we encourage you to review our filings with the FCC for additional information on factors that could cause actual results to.
To differ materially from our current expectations finally, I'd like to remind everyone that this call is being recorded and it will be made available for replay via a link available on the Investor Relations section of our website with that I would now like to turn the call over to Pat Campbell, Chairman and CEO .
Uh huh.
Thank you Randall and welcome everyone to assure software's fourth quarter earnings call. We welcome all clients partners employees and investors I'll begin today's presentation with an update on our business performance of 2021, and specifically fourth quarter, then I will turn the call over.
To our CFO John pads for a more detailed review of our financial results and financial outlook for all of 2022 and first quarter of 2022, I'll then offer comments as we look forward to.
For the year of 2022, and then conclude with a SaaS Shen of answering your questions.
Our performance, we reported a very strong fourth quarter performance with revenues growing 29% to $21 1 million and EBIT more than doubling to two 4 million. We grew EBIT margin strongly to 11% in the fourth quarter.
From 7% a year earlier notable has been our strong gross margin improvement over the last two years as you recall, we sold our workspace business in 2019, and this was our second year as a standalone human capital management business, we're very pleased.
Pleased with our gross margin improvement for the full year, we grew revenues by 16% to 76 million with about one quarter from organic revenue growth and the remainder from acquisitions, our new sales bookings rose by 29% relative to 2020.
And we are guiding for another positive year in 2022 with revenues expected to reach $85 million to $90 million approaching important.
Milestone of a $100 million revenues, where we gained critical scale benefits of our business.
In order to get there we're executing against our 2020 to plan. The first initiative I want to talk about is the transformation of our sales organization to drive accelerated levels of organic growth via new client wins and cross sells we have significant expansion of our direct sales staff.
Underway and it's supported by the investments in partners.
And sales and marketing, including lead generation activity not only are we expanding our reach but we're more effectively targeting clients and investing in sales automation tools and support. These efforts are expect expected to accelerate time to productivity.
<unk> customer acquisition costs and enhanced cross selling activity.
<unk>, our sales objectives, we're spending more digitally digitizing and activating new targeted campaigns to feed our sales engine, we're off to a great start in 2022 with new sales bookings in January rising by over 22% year over year and were just get.
<unk> started we have grown by a factor of three the sales organization. Since we began as a pure play human capital management provider two years ago, we're continuously optimizing our sales and marketing tactics and putting our resources behind the market opportunities that we.
Think will bear the most fruit. We're also leveraging key technologies within the assured family that provide us with unique differentiation in the market that will enable us to expand our relationships and tap into larger client segments. A great example of a key asset that we're leveraging.
As our HR consulting business, we feel this business is a differentiator for us and it offers several technology and service options to suit the needs of small and medium sized businesses ranging from self service HR support all the way up the value chain.
Fully outsource HR solutions, our solutions provide compliance with federal state and local employment laws.
Replace an internal HR manager for a fraction of the cost and provide a team of certified it HR professionals. We're really excited about the differentiation. We have in the early wins are really encouraging next I'll turn it over to our product strategy. There are two main.
Objectives to drive our product strategy. One the first is our folks are focused on extending our platform. This is really all about moving from the legacy way of doing business in the human capital management World, providing transactional support to just businesses to reach reaching employ.
Activities directly in ways that positively impact their lives. This is about moving from a fulfillment model to a future world, where we deliver to.
To electronic wallets real time pay alternative currencies and become a trusted financial partner for employees.
Second is our focus on building platform connections. This is our drive to make connectivity of services systems and application much more seamless and robust not only within the walls of the assure ecosystem by expanding needs to our community of partners. This provides.
New value for our clients by increasing automation, and making administrative business processes easier to use and more efficient.
Long term, we see this as a big opportunity for assure our product strategy is all about the future and positioning assure with its unique collection of assets to deliver to businesses. Their employees unique value. This is where we think the market is going and we intend to be leaders in taking it.
They're so let's talk about some other recent product developments in that light in the fourth quarter and with future announcements last week, we announced a new integration with Intuit Quickbooks. This enhancement allows insurance clients to automatically sync their payroll data with Quickbooks online.
The need to enter payroll manually or duplicate information between the general Ledger and accounting software. This makes it easier for our customers to do business with us and saves them time, allowing them to focus on their core businesses reach recently announced a new Treasury management.
To bring world class automation to our clients. This system allows customers to be more effectively manage their treasury functions and provides instant visibility, thereby enabling them to operate more efficiently and reduce their risk. This solution is geared for human capital management.
<unk> and larger enterprises, who need automation and is a compelling and innovative products in our view in the fourth quarter, we built functionality to integrate with employee navigator.
Nap employee navigators serve 60000 companies and serves 10 million employees with benefit administration Onboarding compliance and more this solution creates a seamless connection between employee navigator and assures payroll and HR solutions, enabling benefit brokers too.
Separate their offerings create new value for the brokers and their clients Lastly, I wanted to touch on the unique value of our tax platform.
Client interest continues to build particularly among larger enterprises. Our solution has a distinctive position in the market and offers compelling value by enabling our customers to lower risk and seamlessly integrate with our accurate and trusted tax filing solution.
We're very excited about this business.
It really has the potential to significantly expand our addressable market and open up new client segments for us we're experiencing strong demand for our tax solutions and have integrations underway with several new partners. We will keep you updated on our progress and success.
Successes, while some of our product goals, our future oriented and they represent a change from the way human capital management solutions have been traditionally consumed in the market. One thing is not changing and thats our commitment to be the most trusted partner for small businesses and to deliver that.
Effective solutions that enable them to focus on their core businesses in the current environment, which features an unprecedented level of compliance and regulatory change we are determined to be a valued partner with that I'll turn it over to John <unk> to talk about 2021 .
And his comments John .
Thanks, Pat as Randall mentioned at the beginning of this call several of the financial figures discussed today are non-GAAP .
You will find a description of our GAAP to non-GAAP reconciliations in the earnings release that was made available earlier today and.
And the reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at assure software Dot com.
Now onto the results.
Overall, we are pleased with our financial performance in the fourth quarter here are some of the highlights.
In terms of revenues in the fourth quarter was our highest revenue quarter since we repositioned into share.
As a pure play HCM provider.
Our Q4 revenues rose by 29% year over year in the fourth quarter to $21 1 million and were up 16% year over year.
For 2021 fiscal year to $76 1 million.
Our revenue performance in the fourth quarter was driven by both acquisition and organic revenue growth.
Next we grew our non-GAAP gross margins by 150 basis points in the fourth quarter relative to prior year with cost of sales rising 19% relative to prior year on a 29% increase in revenues.
non-GAAP gross margin in the fourth quarter was 67, 9%.
And for the full year of 2021 was 67, 5%.
Both marketing strong gains relative to prior year.
This March Q4 is the fourth consecutive quarter in which we have grown our gross margin percentage. This performance is due to efforts to drive revenue growth while containing cost.
And has occurred despite the headwinds from higher pay and benefit increases.
These factors drove gross margin dollars up 21% year over year.
EBITDA generation in the fourth quarter more than doubled relative to prior year to $2 4 million.
This is a notable achievement given that prior year results were supported by temporary pay bonus and benefit reductions that were implemented in response to the impact of Covid on our business.
We restored pay and benefit levels in 2021 and in the fourth quarter. We also absorbed the costs of the two acquisitions, we completed in September .
Despite those headwinds we doubled our EBITDA in the fourth quarter on the strength of our revenue performance combined with disciplined underlying cost control.
We think it's also instructive to look at our EBITDA margins on a sequential quarter over quarter basis.
We believe that looking at our EBITDA margin. This way provides further validation of our strategy to grow margins by increasing the scale of the business.
In the fourth quarter, we grew revenues by $3 1 million relative to the third quarter to $21 1 million.
Over that same period, we grew EBITDA by $1 2 million.
Representing the EBITDA conversion rate of 38% of revenues that EBITDA conversion drove our non-GAAP EBITDA margin to 11% in the quarter from 7% in the previous quarter.
That's an increase of 460 basis points relative to Q3.
We believe this is a proof point on the scalability of our operating model and we continue to target, 20% EBITDA margins over the long term.
In 2022, we intend to reinvest a portion of our profit improvement to fuel the expansion of sales and marketing activities to drive further enhancements in our service capability as well as technical improvements.
Our product strategy and business processes.
I would also like to point out that in the fourth quarter. We also began the integration process of two resellers that we acquired at the end of September 2021.
Duration of the businesses and to assure has been proceeding as planned and we are very excited to have them as part of the insurer family.
Turning now to the balance sheet.
Fund assets were $217 4 million at December 31.
And interest on those funds was approximately 157000 in the fourth quarter.
Continuing with the balance sheet, we ended the quarter with cash and cash equivalents of $13 4 million and had debt of $35 million.
Which is comprised of the initial 3 million drawdown from structural capital and the balance is made up of seller notes from acquisitions.
Now I'm going to turn to guidance for the first quarter ending March 31 2022.
This guidance is offered with a backdrop of a continuing challenging environment to predict future economic results given.
Given the ebbs and flows of employment trends Covid and the other economic and political challenges of today.
And considers the impact of our recent acquisitions.
It also is important to keep in mind. The first quarters are seasonally strong as recurring year and W. Two and ECA revenue is recognized in this period.
We are providing the following guidance.
Revenue in the first quarter of 2022 is expected to be in the range of between 23 to 5 million to $23 $75 million.
non-GAAP EBITDA is guided to be in the range of between $3 3 million.
The $3 5 million.
And non-GAAP EPS is guided to be between four and six.
For 2020 fiscal year, we are maintaining the initial guidance we provided on our third quarter earnings call. As a reminder, revenue in 2022 is expected to be in the range of $85 million to $90 million.
We also anticipate fiscal year 2022 non-GAAP EBITDA margin percentages to be in line with historical percentages and seasonal trends as we have experienced as a pure play SaaS based human capital management enterprise.
Our guidance for 2022 reflects the uncertainties that continue to play a part of the current economic environment, but also reflects the anticipated investments to grow and enhance our direct sales force to accelerate the pace of marketing activity and to build our product and technology to provide a foundation for the future growth and margin expansion.
Consistent with our historical performance, we expect the first quarter <unk> results will benefit from the revenue generated by the annual preparation of federal reporting regarding employee employer reporting of WTO income and ACA compliance.
Overall, we are pleased with our fourth quarter and full year financial results 2021 was the second year since we divested the space business and focused on our core business of providing HR solutions to growing businesses.
2021 was all about resetting the foundation for future growth.
With our initiatives and standardizing and reducing controllable cost and integrating the individual components, we share into a unified operation.
At the same time, we are enhancing our solution offerings by leveraging our technology to provide innovative and trustworthy HCM offerings that enable our customers to focus on successfully running their businesses.
We're excited about what 2000 tweet 22 holds in store for this year.
I will now turn the call back over to Pat for some final remarks.
Thanks, John in summary, we're happy with our progression throughout 2021, which featured significant COVID-19 related challenges. We ended the year strongly on the back of both organic and acquisition driven growth with quarter four revenues rising by 29%.
Relative to the prior year, our acquisition and organic strategy is bearing fruit in terms of margin gains. We continue to focus on a 20% EBITDA margin longer term and believe that as we gain scale through revenue growth, we will get there over time, we ended 2020.
One much stronger than when we entered it and we're very excited about 2022 and our potential longer term, we are making significant progress with our product strategy. We are laser focused on creating compelling solutions that create new ways of adding value to our clients.
And their employees in 2022, you will see a stronger assure one net is approaching $100 million in sales one that is improving in new markets. One that is focused on partner relationships and money movement. One that is we'll continue to.
<unk> gross margin improvement and automation of our product and client relationships.
One that will also be.
Opportunistic for future acquisitions to continue to grow with scale with that.
I will open the floor for questions.
Operator.
Thank you Sir we will now begin the question and answer session to ask a question you will need to press star one on your telephone again the star one on your telephone keypad. However, if your question has been answered or you wish to withdraw from the key just Preston Pankey. Please standby, while we compile the Q&A roster.
Your first question is from Bryan Bergin with Cowen. Please go ahead.
Hi, guys. Thank you Pat.
I think I caught your January bookings performance up 22% wrote down here does that strength carried through February two and can you just talk about the overall demand environment across employer size segments, and maybe the direct versus reseller channel.
Yes, I am not going to go into February right now.
I would say demand is strong we feel pretty good about the environment and I think coming out of Covid people were trying to survive and now they are trying to thrive and yes, there might be some market noise with the war, obviously and other things, but from a small business.
Perspective people they want to improve their businesses they want to grow and so I think demand for services is pretty good right now.
Okay.
And then can you comment on retention levels, essentially gross retention or unit retention for the past year.
And then just last one for you just just an update on the two deals that you did.
In late September .
Yes, just a couple of things first of all retention overall, we've been pretty pleased with the initiatives we put in place.
And that would also include.
Our January because January you say.
Okay.
<unk>.
A scorecard if you will on the on the year. So we've been very pleased with the efforts around our retention.
Far as.
Revenue retention.
Store and spend maybe two points lower with Covid I think that bounce back so if you're thinking in that 10% 10% range.
Kind of where we are which.
Given that we serve the small market we think that's a.
Pretty good level of retention I also think the work we're doing with Dr. Tc or the earn retention tax credits built tremendous loyalty with our customers. We were able to give them all over $200 million back and you don't want to provider helps them do that.
There is big money for a small business. So we think we're getting a halo effect on that and I also think so many initiatives, where we mentioned HR services in the.
The money movement in tax filing.
Those are starting to bear fruit for us.
And.
Allow us to retain our clients.
Value add way, so very pleased with that as far as the two acquisitions theyre going along great.
We're very fortunate both through our long term resellers for us their employees are very experience theyre very savvy at our products. They have been able to make a difference not only at their locations, but at the overall assure so we're very very pleased with the acquisition of Baltimore Mint and also the.
Forthcoming integration, we're on track and feel really good about it.
Alright, thank you.
Your next question is from Joshua Reilly with Needham. Please go ahead.
Hey, guys. Thanks for taking my questions.
So given the uncertainty in the macro now how are you thinking about the pace of acquisitions here in 2022, maybe versus your initial expectations kind of entering the year and can you just remind us how much capacity do you have right now after the two most recent deals to make purchases.
Yeah, Josh maybe a couple of things one.
I don't think were going to be I don't think youll see.
At acquisition, we acquired a couple in October and we're going to take the time to integrate them in the business I think as far as the macro environment.
We are active and opportunistic I would look towards the second half not the first half as far as capacity we have.
<unk>.
Plenty of room to do.
A couple of really good acquisitions.
We have.
$20 million or so.
Structural line, if we want to use that and then we also have.
<unk>.
In the teens on cash to use that as well so.
We're going to execute on our strategy, we're going to focus on organic growth and some of the product developments I think that frankly are pretty exciting and we will do a good job there and in the second half of the year, we will look at our reseller channel and if acquisitions make sense, we'll take advantage of that yes, let me add one other thing Josh.
Just in terms of capacity last year about the same time I guess it was in the second quarter of last year we.
Reloaded our S. Three I think there is look I think I am.
Going from memory here $150 million on that and then we also filed an S. Four to put on the shelf I think it was $12 5 million shares again I'm going from memory. So we've got lots of different.
Mechanisms to prosecute the acquisition strategy.
Okay got it and then you guys did a really good job with this <unk> in terms of with.
With the clients and stuff in 2021 can you just give us a sense of does that create any type of tough comparison here in 'twenty. Two in terms of revenue you generated last year that you won't be able to generate this year.
That goes away, our sunsets or how is that going to flow through.
Yeah, I think Josh just from my perspective, I think 13% of our clients we have processed.
See we are getting inquiries.
Yes.
By the day so.
It will taper off over time, but certainly.
Our expectation is that we'll probably do a similar amount.
Then.
Last year. This year, so if anything it will wind down will be at 23 or 24 issue, but we don't anticipate too tough of a compare in 'twenty two.
Yes, I think just just.
Yes.
Understand the way the program works.
You have almost five years.
To go back and make those amended filings so it's probably not going to be as robust.
In the out years, but theres still opportunity to go to go sell and deliver that value.
Okay, great. Thanks, guys.
Thanks, Josh.
Your next question is from Erik <unk> with Lake Street. Your line is open.
Yes, I was trying to Peel back the growth rate for 2022 on an organic basis.
Got my math right here it looks like roughly 4 million Bucks from the acquired.
<unk> I'm not sure the seasonality of that business, but what are we looking at for growth rate of the legacy business in 2022.
Yes, I think from US Eric I think what we're doing is we've kept same sort of sales flat, we have a goal internally to get 10% to 12%, we probably guided in.
Single digits, maybe 345%.
We believe that we have an opportunity to beat that but we wanted to make sure. The guide was relatively conservative and consistent with the fourth quarter. We do believe that we have an opportunity to beat that and I'll tell you I think one of the things that youre going to see and Pat mentioned it in some of his comments earlier.
Really got a focus I think we mentioned on our last call. How we were happy with.
The ability to cross sell and up sell and deliver additional value to our customers I think we're going to you're going to see more of that in the coming year, we're really focused specifically on selling consulting services.
We really think that it's a differentiator. So if you think about it it's a fractional HR ownership model.
Thats really a lot different than what you see with our competitors.
And again, it's really.
It's a good fit for our target market right. So these are small businesses they can't afford to have it.
Full time, HR person and it gives them access to.
Fairly complicated.
<unk>.
And not having to pay for that full full salary of unemployment.
Just shine a little bit more light on that if you think of our average small business customers somewhere around 2700, a year in fees.
The HR model Theres three flavors of it but.
Roughly its.
6000, 15000, 30000, so when you get a sense of.
That you can triple or almost 10 times your revenue by adding HR services, depending on the level of the model that's pretty exciting so already.
This quarter.
We sold more than we've done last year.
And.
That's in just this quarter so what's exciting about that for US is we think there is more runway ahead, and then coming out of the pandemic more and more small businesses are realizing the value of HR, whether it's a hybrid strategy.
They were just dealing with some of the issues around the great resignation.
We think that we have an opportunity to really move our business forward.
Okay last question for me you had been targeting I think it was 80 on the direct sales force by year end did you get to that number and then what do you think about productivity of those reps that you hired.
Yes at year end were about 75.
I think we'll exit the year this year, probably somewhere over 90, so continuing to March on our journey, there as far as productivity the average.
Tenure of our sales force is 19 months and we break out in our investor deck. Some of the productivity gains so we're starting to get into.
Pretty decent area here, where we expect productivity.
With.
The sales efforts, so far, but we're going to put more and more gasoline on it with some of the initiatives and we also believe that Youll see.
Little bit of a tailwind based on the tenure and based on some of the initiatives that we've talked about whether it's digital digitizing the sales force and some of the campaigns.
And really excited about the early results that we've that we've done this year so more to come on future calls and I think one other point I'd make on this one.
We're getting to a point, where we're getting to some scale and then that in that organization and what that allows for us to do is create more of a career path.
And what I mean by that is we bring on people as a sales development rep kind of lead Gen and if they show aptitude. We can movement inside sales and then again. It makes you will have to do in that area. They can move over to a field sales Rep field service Rep. So historically, we were just going back and field service reps going after new logos we've now.
Again, Pat mentioned some of this in his prepared remarks.
Getting more into the Digitization of lead generation and we really think that we now can create a farm system and so.
The change in that and the dynamic that salesforce, but we think it's going to bear fruit again also going into our existing customer base and trying to deliver more value to them. So.
That would be my comments as it relates to going forward sales and marketing.
Got it thank you.
Thanks, Eric.
Your next question is from Jeff Van <unk> with Craig Hallum. Please go ahead.
Great. Thanks for taking my questions. A couple maybe just for clarification I think you referenced a couple of times that EBITDA margins would settle into the historical percentage range for the year be a little more precise on what that is.
Yes, I think again.
We're still I know, we've given that guidance.
That.
Historically I think what do we do this year.
Kind of 11% I think we can do that if we want to we're now at a point, where we actually have some choices of where we want to place bets. If you remember we talked about we were kind of at an inflection point at around $70 million of where the company is kind of breakeven from a cash generation perspective, we're now obviously have crossed that threshold.
And as we look into 2022, we're going to be well above that threshold and so now we have the luxury of kind of this place.
<unk> chips on sales and marketing that we want to.
Go through some of the technology initiatives that Pat mentioned, but I would say in general historically this last year, we did 11% I don't think thats abnormal for the full year.
Okay.
Adjusted based on first quarter versus.
W Twos and ACA revenue.
I think thats, where we would probably achieve 10 or 11% for the year.
Okay. That's helpful and then on the.
A lot of new products, obviously, a lot of opportunity given the size and scope of your base. What how are you going to measure and how are you going to report. So we can track your progress on cross sell up sell.
Presumably the value potential free seat on a full cross sell as much or now that it used to be are you going to give.
The number of modules per average customer like how are you going to track yourself and how are you going to report it in such a way that we can track it.
I think.
Jeff I think more to come at the first quarter call.
We've been pretty excited with the investments we've made as a company around sales force and some of the reporting tools we have.
Also rolling out.
A number of initiatives around the digital aspect of.
Some of the campaigns and cross sell into the base et cetera, So more to come in the first quarter, but I think it'd be fair to assume that so many initiatives that we talked about today with HR consulting et cetera that we would.
Hold ourselves accountable throughout the year, yes, I think probably again, we need to but I would think something along the lines of what we talked about with the RTC about the penetration rates. So we'll try to keep track of that.
Check our progress that way I would think.
Okay.
I guess last one for me as it relates to Covid recovery just.
<unk> per cycle, where did you end up and how.
Recovered or your average average customers now versus where they were going into COVID-19 .
Yes, I think from Covid perspective, we have a couple of charts and the national economy and then.
On our economy are.
Our base, if you will but what I would say is.
Initially it was shocking and the fact that Covid took about 25% of the pays per employee right away and then slowly they are coming back I know ive looked at year over year end.
They go up consistently each quarter, but we're not all the way back on pace for control and some of that somebody will say well unemployment is at a historic low, but they're probably $5 6 million people that we've lost out of the workforce whether tighter immigration.
More people retiring and the well to run the stock market and then some of those second income earners.
They've either had to take care of an elderly parent or they've had a homeschool or get their kids.
Through the pressure of Covid and not being able to be back, saying, we think some people have left the workforce, we do believe quarter over quarter that will get better we've modeled zero or flat.
But.
The long answer the short answer is we're still not all the way back.
We believe we're probably off four 5% from the.
No.
From pre Covid, our employment levels and I think once that I saw I think it was last week, there are $11 million job openings still in the U S. So I think most of those are.
In the small and midsized businesses.
It's our target.
Demographics, yes, just to John's point, there what's exciting for US is the gross margin improvement has been really exciting because we're improving that and we're not all the way back. So if you think about one employee or two employees getting added to accompany.
The gross margin impact of that one or two employees. We don't have to add service people. We don't have to add antibody. It goes right to topline and bottom line. So what I've been excited about is improvement in the business. Despite those headwinds and I think as they turn that will help the business going forward.
If I could maybe just sneak one last in the obviously a lot of the other I think pelosity a number of others in that sort of category you have talked about coming down market and having quite a bit of success doing it.
To the extent you should see them what is that competitive.
Interaction looked like when are you winning and when are you, losing like how is that squaring out so how often and how does that square out when you see them.
I mean, our competitive areas, we really see.
60% of our business comes from ADP and Paychex.
We're not seeing.
Competition outside of those two we will see pelosity once in a while but.
A lot of the others, we just don't see and what I would say is when you have good referral sources and you have.
Strong campaigns.
This is a one or two person vendor decision. This is ed.
Upper market, where your you know your spreadsheet in five or six competitors. This is one or two in relationships and service and technology enablement kind of carried today. So we think we have opportunity to really grow in.
<unk>.
I know I have healthy respect for all our competitors, but I think this is an opportunity where we can grow regardless of the competition and again I'll just keep belaboring. This point, but I really do think that the consulting.
Offering that we've talked about is going to be a key differentiator against some of the competitors you named.
Okay, great. Thanks for the color I appreciate it.
Asia.
Your next question is from Vincent Colicchio with Barrington Research. Please go ahead.
Yes, Pat.
Are you doing in the mid market are you seeing progress there.
Yes, what I would say that if there.
There was a little bit of a disappointment in 'twenty, one I would say in the mid market I think we really took a hard look at some of the leadership and some of the right people and we did go outside with the leader.
That reports to <unk> and I think we're going to we're going to really make a concerted effort to get back on track in the mid market I have already seen early signs of growth and development. I think this is going to be a great year for the mid market I feel good about the.
Our product strategy, it's the sales execution that we probably fell down in 2021 and 2022 I think we're going to see some nice improvement.
And I think last quarter, you said you had.
Two more quarters to go to complete your centralization initiatives with AWS.
Where does that stand is that on track.
Yes, it really is.
Good in fact.
We converted one of our regional locations last week and had some good success.
From a customers' speed was important.
In addition to increased reporting flexibility so we're on track to finish.
I would say by the third quarter of this year.
And feel like we will get that benefits, both financially as well as customer.
Customer experience.
And as far as employee turnover or are those.
Numbers remain consistent given the tight labor market.
Yes. It is a tight labor market I think we've had to be a little creative.
We've communicated I think pretty effectively.
This past month, the management team as well as myself went out to eight cities listening tour, where really connected with some of.
The positive so we are doing and then some of the areas of opportunity.
And I've been pleased with.
Our response and our connectivity with the line level employees. So it's always a concern, but we've been proactive in some of our comp plan design et cetera, and we think we have a good strategy for 2022.
Okay.
That's it for me nice quarter.
Thanks, Matt appreciate it.
Once again, if you have a question. Please press star one now again star one on your telephone keypad.
Your last question is from Nathan Nahirny with think equity.
<unk> equity. Please go ahead.
Thank you congratulations on the quarter everyone.
Just wanted to touch a little bit on the 'twenty to 'twenty two guidance and growth do you foresee a majority of that coming from acquiring or not acquiring from signing up new customers or is the majority of that going to be come from stacking our bundling additional systems with your existing clients.
Yes.
I think what.
What youll see is.
First of all we believe that we're investing in products and services and we're investing in salespeople I think we'll have a good mix of new customers. In addition to bundling.
I do think youll see stronger organic growth as the year proceeds or unfolds.
And in the guidance, we don't have any acquisition. So it is all organic growth at this point.
And we do have an eye on $100 million and over time, we want to get there. We believe that's sort of the next important milestone and.
But as far as growth this year, we see.
A nice blend of new customers. In addition to increasing share of products and services highlighted by some of our money movement tax filing services as well as our HR consulting.
Got it thank you.
Thanks, Dave appreciate the question.
If theres no other questions.
If theres no other questions then.
That concludes our.
Our call today I'll tell you, we're really excited about our progress.
Visibility is strong for future quarters and our growth.
Can't wait to talk to you next time and that'll be in May for the first quarter results have a great day take care.
This concludes today's conference call. Thank you for participating you may now disconnect. Thanks, Nathan will have a great day.
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