Q1 2024 Asure Software Inc Earnings Call
Good afternoon, and welcome to assure as first quarter 'twenty 'twenty four earnings conference call.
Speaker Change: Joining us today for today's call are chairman and CEO, Pat Campbell, Chief Financial Officer, John Pence, and Vice President of Investor Relations Patrick Mckillop.
Speaker Change: Following their prepared remarks, there'll be a question and answer session for analysts and investors I would now like to turn the call over to Patrick Mckillop for introductory remarks.
Patrick McKillop: Please go ahead.
Patrick McKillop: Thank you operator, good afternoon, everyone and thank you for joining us for <unk> first quarter.
Patrick McKillop: 24 earnings results call.
Following the close of the markets, we released our financial results.
Patrick McKillop: The earnings release is available on the Sec's website, and our Investor Relations website at Investor Doc assure software Dot com.
Patrick McKillop: You can also find the investor presentation.
Patrick McKillop: 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.
Patrick McKillop: Scripting and timing of those items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measures can be found in our earnings release.
Patrick McKillop: Today's call will also contain forward looking statements that refer to future events and as such involve some risks.
Patrick McKillop: We use words, such as expects believes in may to indicate forward looking statements and we encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations.
Patrick McKillop: I will hand, the call over to Pat in a moment, but I just wanted to take a moment to remind folks of our upcoming investor relations activities.
Patrick McKillop: On May 15th we will attend the 19th annual Needham Tech Media Consumer conference in New York.
Patrick McKillop: On may 16th we will attend the Jefferies HCM summit in New York.
On may 29th we will attend the twenty-first annual Craig Hallum Conference in Minneapolis and.
Pat: And on May 30th we all tend to 52nd annual TD Cowen Tech Media Telecom Conference in New York.
Pat: On June 4th we will attend the Stifel Cross sector insight conference in Boston.
And finally, we all participate in the Northland capital markets Virtual growth conference on June 25th.
Pat: Investor outreach is very important to be sure and I would like to thank all those that assist us in our efforts to connect with investors.
Pat: Finally, I would 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.
Patrick McKillop: Thank you Patrick and welcome everyone to assure softwares first quarter 2024 earnings result call I am joined on this call by our CFO John <unk>.
Patrick McKillop: And we will provide a business update for our first quarter 2024 results as well as our outlook for 2024. Following our remarks, we will be available to answer your question. Our first quarter revenues were strong coming in at $31 7 billion, our revenues were driven.
Patrick McKillop: Contributions from our core business strategic initiatives and acquisitions, including our sure marketplace offering payroll tax management and interest earned from funds held for clients, which we referred to as well we believe in 2024.
Patrick McKillop: Momentum will grow throughout the year and we're off to a great start advancing our business through artificial intelligence, new technology enhancement, leading partnerships and strategic sales initiatives, such as bundling of our 401k products with payroll to drive new client.
Patrick McKillop: <unk> continues to be part of our strategy small businesses in the U S have traditionally not been or.
Pat: We're not had the resources to offer 401k retirement solutions that secures the act to point out from the U S. Government is legislation that aims to increase employee participation and retirement plans by offering tax credit.
Pat: Port the setup of employer based retirement plan currently there are around 20 or more states in the United States that have mandated. These plans also many more have introduced legislation mandating 401k plans for our small business says Oh sure as the solutions they need.
Just set up the plan, our announcements with workday and the certification and joining the FCP partner edge open ecosystem are really strong validation of advancing our technology and these partnerships will help us with more enterprise level clients and Ted.
Pat: <unk> press release, we highlighted that after receiving the workday certification. We went live with our first client which is a major league baseball team. This client is an example of the complexity of multi state payroll as the stack.
<unk> team members incur payroll tax liabilities in multiple states. Each week, we're excited the windows business and look forward to achieving more opportunities with workday. We also remain excited about our partnership with that say P, which allows us to enhance our payroll tax engine by integrator.
Pat: But yesterday <unk> system, and streamline streamlining payroll tax processes for our existing clients.
Pat: Clients. We have also recently formed a partnership with a tax credit firm HR logic, which will provide our small business clients with access to capital. The partnership will help small business owners with identifying employer tax credits that many are unaware of such as <unk>.
Work opportunity tax credit research and development and overall.
Pat: Tax credit program.
Pat: Our sales bookings helped drive growth in repetitive revenue for the quarter. Our pipeline is strong as we grow our product portfolio and enhance our technology. We are supporting our sales efforts with digital marketing and we believe will drive higher level of sales leads and productivity in 2024.
Based on our current business trends, we're reiterating our 'twenty 'twenty four revenue guide of 125 to 129 million with adjusted EBITDA margins of 20, and 21% as a reminder, this 2020 guidance excludes any potential contribution from.
Patrick McKillop: T SEC filing but does include our plans to continue to make acquisitions and grow organically our guidance for 2024 implies a 25% growth rate. If we exclude D. C from 2023 revenues for comparison now I.
Patrick McKillop: I'd like to hand, it off to John to discuss our financial results in more detail as well as our Q2 guidance chart.
John F. Pence: Thanks Pat.
John F. Pence: Patrick mentioned at the beginning of this call several of the financial figures discussed today are given on a non-GAAP or adjusted basis, you will find a description of these GAAP to non-GAAP reconciliations in the earnings release that was made available earlier today.
John F. Pence: Filiation themselves are also included in our most recent investor presentation.
John F. Pence: It in the Investor Relations section of our website.
John F. Pence: At Investor not assure software dotcom.
John F. Pence: Now onto the first quarter results.
John F. Pence: First quarter revenues were 31 7 million decreasing by 4% relative to prior year. However, excluding <unk> total revenues were up 10% from prior year recurring revenues in the first quarter grew 8% versus prior year to $30 3 million and excluding your T C.
John F. Pence: Revenues were up 9% from the prior year.
John F. Pence: First quarter recurring revenues grew on the strength of our HR compliance solutions are tax solutions assure marketplace and increased interest revenues with the average client balances of approximately 240 million throughout the quarter.
John F. Pence: Net loss for the first quarter was 300000 versus net income of 300000 during the prior year.
John F. Pence: Gross margins for the first quarter decreased to 71% from 74%.
John F. Pence: In prior year.
John F. Pence: non-GAAP gross margins for the first quarter decreased to 75%, 78% in the prior year. The decrease in gross margins for the first quarter is primarily attributable to decrease in nonrecurring E. R. A T C revenue.
John F. Pence: We continue to believe there is substantial margin upside over the longer term as the business scales.
John F. Pence: EBITDA.
John F. Pence: For the first quarter was $4 4 million down from $6 8 million in the prior year.
John F. Pence: Adjusted EBITDA for the first quarter decreased to $6 8 million from $8 2 million in the prior year and our adjusted EBITDA margin was 22%.
John F. Pence: In the quarter compared with 25% in the prior year.
John F. Pence: We ended the first quarter with cash and cash equivalents of $23 2 million and we have debt of $5 3 million.
Speaker Change: Now in terms of guidance for the second quarter of 2024.
John F. Pence: We're guiding second quarter revenues to be in the range of 28 million to $29 million.
John F. Pence: Adjusted EBITDA for the second quarter is anticipated to be between.
John F. Pence: $4 million and $5 million.
John F. Pence: We are reiterating our 2020 for revenue guidance to be in the range of $125 million to $129 million.
John F. Pence: With adjusted EBITDA margins of between 20% to 21%.
John F. Pence: As Pat mentioned in his comments earlier these guidance figures exclude any contribution from <unk> Our T C revenues.
John F. Pence: But assume a combination of organic and inorganic growth.
John F. Pence: Our pipeline of potential acquisitions remains strong and we feel confident about reaching our objectives.
John F. Pence: We also remain excited about the outlook.
John F. Pence: For our core products.
John F. Pence: Such as our payroll tax offering which brings additional client fund balances and the resulting flow revenues as.
John F. Pence: As well as potential for numerous new initiatives, we have recently launched such as the four one K solution.
John F. Pence: In conclusion, we are excited about the remainder of 2024 and look forward to 'twenty, one where it has been a great year for sure and driving profitable growth and are leveraging the initiatives, we've implemented across the business to drive sustainable growth and create shareholder value.
John F. Pence: With that I will turn the call back to Pat for closing remarks.
Patrick McKillop: Thanks, John we're pleased to have delivered solid results in the first quarter of 2024, we remain committed to creating products and technologies that make a difference for our clients the continuous improvement of our solutions over the last few years is being reflected by the growth of our beds.
John F. Pence: And we're happy to see positive impressions from our client base the improvement of our solution is ongoing and a few recent examples include launching a best in class employee self service and role based identity access software embedding a new way I agent into our <unk>.
John F. Pence: Enterprise payroll tax management platform, which will assist in complex multi state tax compliance inquiries. It's another example of our efforts our business has multiple growth drivers in our core payroll business sure marketplace payroll tax management, and our 401k offering.
John F. Pence: In addition to tuck in acquisitions small business owners in the U S are tasked with an enormous challenge trying to navigate all the regulations that have been put in place over the years and we're offering multiple solutions to these business owners.
John F. Pence: He's the demands of their time and resources, we anticipate demand for our HR compliance solutions will continue to be healthy as businesses increasingly seek to supplement their internal capabilities with external experts, who can help them navigate the increasingly complex.
John F. Pence: City of doing business day to day, we've added benefit and insurance capabilities and the insurer marketplace and we expect to grow going forward, our payroll tax management solution as also great potential as evidenced by the recent news of our first workday quiet.
John F. Pence: Peter League Baseball team go alive, and we remain excited about what lies ahead for this business our sales initiative and bundling 401k with payroll has gotten positive reception.
John F. Pence: And the secure 2.0 Act.
John F. Pence: Wow us to implement many more 401k plans, which states are mandated now and we expect more to pass mandates in the future our guidance for 2024.
John F. Pence: Blacks, our expectation for continued growth and we expect to be delivered with a combination of organic and inorganic growth wouldn't be viewed a business. Excluding E. R. T. C core revenues continue to grow at a very strong rate and our guidance for 2024 implies 25.
John F. Pence: <unk> plus potential growth, we hope that our discussion today helps illustrates our plans as we move on from B R. T. C. We now feel the business is right sized for future success as we enter the remainder of 2024 in summary, we're pleased to have delivered another solid.
John F. Pence: <unk> performance in Q1 against the backdrop of some unfavorable year over year comparison, which we won't be up against for the next few quarters. The unfavorable year over year comparisons will start to lift away in Q4, especially.
John F. Pence: And assuming we achieve our goals the growth rates will be much healthier as we exit Q4 and enter into 2025, we will continue to provide innovative human capital management solutions that help small businesses drive human capital management providers to grow their base and large enterprise.
Speaker Change: Streamline tax compliance. Thank you for listening to our prepared remarks, so with that I'll send the call back to the operator for the Q&A session operator.
Speaker Change: Thank you.
Speaker Change: At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: My first question comes from Joshua Reilly with Needham and company. Please proceed with your question.
Joshua Christopher Reilly: Alright, Thanks for taking my questions and nice job on the corner here.
Joshua Christopher Reilly: Can we get an update on how many acquisitions you've made now year to date, how valuations are trending and where are you relative to the inorganic revenue.
Speaker Change: Assumptions that you laid out in the guide initially for the year.
Speaker Change: Yeah, Josh Thank you.
Speaker Change: Just by the way I, we're fortunate enough to have both.
Speaker Change: <unk> seen our president and Chief revenue officer, with Us as well to help answer questions, but as far as the acquisitions. We made really good progress in the first quarter and anticipate to make a very similar process in the second quarter.
Speaker Change: We are probably done you know more about a handful of acquisitions here I don't know if we want to get too much into the noise of what's closed and what's not.
Speaker Change: Suffice to say as you know I think we are absolutely on track if not maybe slightly ahead of on track around our acquiring.
Speaker Change: Now some of them have to you know implement and some implement very very quickly and some it takes a month or so but we're right on track and doing now what I would say and.
Speaker Change: The purchase price you know, we're probably just slightly under two times, we're thrilled with that kind of purchase price a mountain so far and it's been a combination.
Speaker Change: Either equity, where we've done some small equity deals as well as cash in la so suffice to say, we're really bullish about our plan not only for the year, but the first half of the year and the integration of those haven't gone very very well.
Speaker Change: Got it that's helpful and then could we get some more details you know what was the interest income in the quarter and maybe compared to last year in the same quarter and as the yield on our float balance is up year over year or is that consistent with what it was last year just some more details there would be helpful. Thank you.
Speaker Change: Yeah, Josh this is John so last year rough numbers about three 5% is what we earned on the client funds balances this year, roughly four and a half the balances it picked up a little bit.
John F. Pence: That gives you a rough order of magnitude.
John F. Pence: Kind of how that's progressed.
Josh: Got it that's helpful. And then maybe just last follow up on that do you expect it to be four and a half for the rest of the year or is there more upside potential for the yields to increase thank you guys.
Speaker Change: Yeah, So what we've factored into our numbers Josh was a half point decrease mid year. Obviously, we don't know if that's going to happen or not but when we kind of came up with our forecast for the year, we were assuming a half point.
Speaker Change: So there might be a little upside in to our model depending on what happens on the balance.
Speaker Change: Thank you guys.
Speaker Change: Thanks, Josh.
Josh: Our next question comes from Bryan Bergin with TD Cowen. Please proceed with your question.
Bryan C. Bergin: Hey, guys. Good afternoon. Thank you.
Bryan C. Bergin: So obviously, a big emphasis on your tax solutions and in the prepared comments and good to hear about that first port a client go lives can you give us a sense on how youre thinking about the growth potential of the tax business and and the potential scale as a mix of the overall company over the medium term.
Speaker Change: I think from our perspective first of all these are enterprise deals both S&P as well as workday and and then you know we have opportunities in the reseller mix as well, but as enterprise deals you know if I thought about a chatter and I were talking the other day and you know when we are.
Speaker Change: Acquired Pts.
Speaker Change: And we are kind of payroll business was roughly 40% or so of our float so our standalone business, if you will and 60%.
Speaker Change: Flawed and tax it's all part of our value proposition now since then.
Speaker Change: Spanish some calories and time in tiers, and then smiles really growing tax while we're thrilled as we have some of these enterprise partners. In addition, new PEO partner in Prism.
Speaker Change: And you know certainly more are going to grow that business. What I would say you know implicit in our guide around our repetitive revenue you know last year, we're about with your T. C about 84% ourself a repetitive revenue this year will finish in the high nineties tack.
Speaker Change: This is a big part of that it's profitable it's sticky and you know the book to Bill in in some of these enterprise clients are a little bit longer than our small business, but suffice to say over a multi year plan. We think we can grow tax quite a bed and it'll be a mixture of fees in Florida.
Speaker Change: That's all part of the value proposition, but sovereigns, reflecting even out our guidance. We started out repetitive revenue this quarter growing 10%. If you think about our guidance, we're going to finish the year much stronger than that just based on the numbers.
Speaker Change: <unk> filing is going to lead and be part of that value proposition. So we think there's huge opportunity and this will be multiyear, but it'll also be growth this year as well.
Speaker Change: But a little bit finer point on what Pat said just to just make sure. It was clear when we think about that those clients on balances.
Speaker Change: About 60% are specific to this tax business. So it's a key part of the strategy. So it is part of how we price. It it's part of the recurring revenue because of that price. So that's a really important thing that I think is a little bit nuanced relative to some other payroll companies that don't have that as part of their product and go to market strategy.
Speaker Change: Right that makes sense good detail.
Speaker Change: My follow up here. So I guess first just three months ago, how how would you characterize the overall ATM demand environment as well as kind of the competitive and pricing environment dynamics in the market.
Speaker Change: Yeah, and I'll, let you know if you want to jump in but just just in general what I would say as you know, we specifically pivoted from me our T. C. We've leaned into some of the value proposition around access to capital all around getting good people are too.
Speaker Change: Work as well as to be compliant and I think that value proposition, we pivoted a bed away from me our T C. But that was always part of our value proposition anyway, and we've leaned into some new products and services you know what we're really thrilled. This this first quarter payroll sales.
Speaker Change: We're we're up 68% over last year and it's evidence that if you get the right value proposition. The right bundles you can grow now I mean, it sound easy for you all to execute.
Speaker Change: A whole lot a sweat that goes into that but it or maybe just your comments on market. Yes. Thanks, Pat So Brian So specifically, we're not seeing any pricing pressures or any issues around pricing.
Speaker Change: For new deals and for up sells within our customer base.
Speaker Change: We are seeing great growth listen we're a lot of our competitors are in.
Speaker Change: They've said that they've decided to continue to go more and more up market. So we continue to see an underserved market under that 200 employee range and and that's helpful. For US just in terms of deal cycle time, and the ability to win more deals, but we're not we're not seeing any pressure specifically on pricing there.
Speaker Change: Okay. Good thank you.
Speaker Change: Thanks, Brian.
Speaker Change: Our next question is from Richard Baldry with Roth M. Cam. Please proceed with your question.
Richard Kenneth Baldry: Thanks, maybe looking deeper at that 68% increase in payroll sales year over year can you talk about how comfortable you are with your sales capacity now hiring plans our goals throughout the year how is the sales tenure trending.
Richard Kenneth Baldry: Maybe how do you feel like that was geographically or vertically pretty broad or is there any concentration inside of that thanks.
Speaker Change: Yeah, I think just.
Speaker Change: From from my level, you know I'm very pleased with the sales execution I think the pivot is probably took US you know about.
Richard Kenneth Baldry: A quarter or so and then I think in some areas, we referenced standalone tax or the new 401K. The book to Bill is probably along at about a quarter. What I would say is the ability to hire and ability to grow the ability to sell.
Richard Kenneth Baldry: <unk> team has done very well, but you know maybe it's you see throughout the year I think from a hiring we anticipate around 130, we're probably you know we're very judicious about who we hire and how many people were under that a little bit today, but maybe al. If you wanted to talk about that yeah in in.
al: And the goal would be to get to about 130 quota carriers by the end of the year I'm really happy with the pivot what what some of the numbers that I mentioned was 68%.
Speaker Change: In those payroll sales and just from a new payroll unit, it's almost 100%.
al: Growth in that area. So those are great healthy.
al: Our bookings that come with tax they come with marketplace add ons they come.
al: Some with some of the additional four one K four one K offering that we have and then the ability to cross sell more to these customers. Once they go live right. So a much healthier mix and in our ability to pivot that quickly and and and to grow that core business year over year.
al: It's great and it's only going to accelerate so the reps that we are doing.
al: Really really well high productivity with the.
al: With leading with E. R. T. C are basically on par this year from a productivity perspective, but doing them without E. RTC with really good core payroll HCM, a or our sales and that's fantastic. That's just going to grow for us as we get more people comfortable with 401k get more people.
al: Comfortable with some of the tax credit solutions that we announced earlier this week, where we could just continue to capitalize on it.
Richard Kenneth Baldry: Any such back to the tax side I'm not worked a S. A P area you may look.
Richard Kenneth Baldry: Look at now like with early wins.
Richard Kenneth Baldry: Obviously, it would build some reference ability.
Richard Kenneth Baldry: How big can that space be with just those two and sort of end market players I don't know if there's a way to think about the ARPA from your side to think about what a deal size would look like and what's your go to market ability to move the dial on those types of deals is or is it really sort of once they build some reference all basis than their sellers.
Richard Kenneth Baldry: We will push the growth of that thanks.
Richard Kenneth Baldry: Yeah, I think you know sometimes a L has a phrase two combo deals in small business you know where your average sale is somewhere a little over $3000. You don't want here to comedy else. We're in some two pursuits, which really is exciting for.
Richard Kenneth Baldry: US you know over time. This this can be 100 million dollar business.
Richard Kenneth Baldry: And that doesn't mean, you should spreadsheet them 25, but I will tell you you know we have an opportunity here, both in Treasury management and as well as tax filing and it's not just the two enterprise partner and center you know world.
Richard Kenneth Baldry: World Class companies, there's a P E R O a group there is.
Richard Kenneth Baldry: Software group there.
Richard Kenneth Baldry: Have a interest level is really really high and then some of the development that we're doing we really feel good about our bundling of Treasury management of tax filing et cetera. So that's 100 million dollar business in it by itself over time and and we're just getting started I don't know if you'd want to.
Richard Kenneth Baldry: In fact, we the pipeline the pipeline, which is multiple times year over year.
Richard Kenneth Baldry: Our sales team is.
Richard Kenneth Baldry: Were fully staffed on that on that side from a individual contributor perspective, and we've got folks that I am very confident and that have sold.
Richard Kenneth Baldry: This type of sale, specifically before we understand the competitive landscape extremely well.
Richard Kenneth Baldry: We're very very excited about the modernization of the platform and.
Richard Kenneth Baldry: Our CTO has done with the solution.
Richard Kenneth Baldry: And frankly, we're getting pulled into a lot of opportunities rather than pushing our ways in and Thats always.
Richard Kenneth Baldry: Refreshing to see and then on that on the deal size like pad mentioned on the Iran to.
Richard Kenneth Baldry: You have six figure deals and then on the lower end.
Richard Kenneth Baldry: Probably four or five times, what a normal payroll direct deal is today.
Richard Kenneth Baldry: And lastly, we brought in an operational leader and staff that worked with Bill Bock on the past he's run a billion dollar plus business in bags.
Richard Kenneth Baldry: It really picks up personnel the operational staff. So we have the right technology to people that write operations the right salespeople and then the right market at the right time. So this is gonna be a you know a foundational growth side I mean, it'll take a while because the book to bill and because of our enterprise sales and <unk>.
Richard Kenneth Baldry: And gross but you know we're really bullish on this opportunity.
Richard Kenneth Baldry: Because we don't know the internal sort of base number or is it sort of curious.
Richard Kenneth Baldry: Without you know a lot of commitment to this but if the payroll sales were kept up at a clip like the 68% year over year.
Richard Kenneth Baldry: Would that imply as a longer term sustained ability to keep up with 25% organic growth rate or is that number sort of faces a tough comparisons are by definition not to come down a little bit over time.
Speaker Change: Yeah, I'll give you my perspective, rich I don't think we've ever claim that they're going to be at 25% organic business, we know that.
Richard Kenneth Baldry: Is going to be a combination of that roll up strategy and the organic is always going to get us.
Richard Kenneth Baldry: To scale, so I would say we've been pretty consistently since I've been here that we think we're going to be a double digit organic grower I'm not sure we'll be at the 25% level, but I think when you combine with the <unk>.
Richard Kenneth Baldry: Organic side of the house I do think Thats achievable.
Richard Kenneth Baldry: Yeah, and then Anthony Yeah, and the only thing I'd say implicit in the guide is acquisitions and organic growth, but it's clearly going to accelerate through the year and.
Anthony: Then we'll be in a really nice position where were high ninety's repetitive.
Richard Kenneth Baldry: Gross said as we've launched it in 25, who have come in you know with a lot of them. So.
Richard Kenneth Baldry: That's what we're playing for and that's how we're seeing I'll call them.
Speaker Change: Great. Thanks.
Richard Kenneth Baldry: Our next question comes from Jeff Van <unk> with Craig Hallum Capital Corp. Please proceed with your question.
Jeffrey Lee Van Rhee: Great. Thanks for taking my questions.
Jeffrey Lee Van Rhee: Several I just want to clarify on the 68% a payroll sales increase are you.
Jeffrey Lee Van Rhee: The comparable number to what you would typically quarters your total bookings year over year for the quarter.
Jeffrey Lee Van Rhee: Yeah, No I you know, Jeff we had some noise in with Dr. T C and some of that rather than kind of parse everything out you know we just said this year, we're especially the first three quarters. We have all these compares with D. R. D. C. We have some bundles whatever this was just you know obviously.
Richard Kenneth Baldry: Where our payroll business and it's a good majority of our revenue we wanted to highlight that because you know that is something that I think people and feel really good about and you know and and it's clearly an emphasis with our bundles, whether its 401K or some of the new products that we have.
Richard Kenneth Baldry: Okay and then on the the prior acquired revenue target was 10 to 15 I was unclear. It sounded like you said you are running a little bit ahead of where you thought you'd be argued is still expecting to be in that 10 to 15 million of annual acquired revenue.
Richard Kenneth Baldry: Absolutely.
Speaker Change: No I would say we've had a very strong first quarter or first half you know those are just just to start if we didn't acquire you know anybody after that we'd be very close to the low end of the range. So we will continue to acquire into this but yeah.
Richard Kenneth Baldry: A quick comment on this in patent now Ken can add to it I think we've talked about it on some of these calls previously there's a unique situation kind of going on in the industry right.
Richard Kenneth Baldry: It's kind of opportunistic for us, but with the with the changing.
Richard Kenneth Baldry: Regulatory landscape a lot of the states are now, saying that payroll processing businesses need to be regulated like a bank and so we were I think pretty early on.
Ken: I think we've resisted it because we thought it was pretty pretty aggressively.
Ken: I have to say, but I would say about three years ago.
Ken: Okay.
Richard Kenneth Baldry: And so we've gone down a path to get licensed.
Richard Kenneth Baldry: It's gonna be hard for a lot of the smaller players some of our resellers to afford that compliance. That's why we launched the Treasury management solution, but again I think a lot of people are trying to decide this is something they want to continue on with and that's where the.
Richard Kenneth Baldry: The national clients. So I think I think we're going to have a lot of opportunities over the coming months.
Richard Kenneth Baldry: Kind of take people into our arms. So that's just another kind of backdrop as regards to acquisitions.
Speaker Change: Yeah definitely helpful. John I was sort of I was going to go down that path I know obviously the 401k Secures Act has been an area of focus in Treasury also.
Speaker Change: Just on those two avenues to any other quantification you can give to give us a sense of the ramp in deal count bookings pipeline, just any any quantification in those two areas.
John F. Pence: I'll speak to Treasury, and then I'll, let Pat speak to form okay.
John F. Pence: We launched this with partnership with JP Morgan, we have people that want to buy from US right. Now, we're just kind of hold them off as we get it up and running we want to make sure. It's it's a bomb resolved before we put them on so I think we're holding that up a little bit just with R. R.
John F. Pence: Getting it launched but yes, I think there's good demand almost unsolicited demand for that product and then I'll, let Pat talk on Portland.
Patrick McKillop: Yeah, just some 401 can see first of all we pivoted and lifestyle.
Patrick McKillop: Almost a week or two right. We had this plan, but we moved into sales motion and marketing motion very very quickly I would say right now we're probably a couple of months behind where I'd like to be in the marketing sales perspective, but we're cleaning you know we're really starting to.
John F. Pence: Pick up the pace on the book to Bill I would say just based on its a new business for us for probably about three four months behind what over time, what we want to be able to do is sell and start a 401, K probably I'd like to bring that number at about 60.
John F. Pence: Days.
Speaker Change: Our next question comes Saint Vincent Colicchio with Barrington Research. Please proceed with your question.
Speaker Change: Yeah, Pat curious.
Speaker Change: Can you characterize your employee base are they hiring currently what does that look like.
Speaker Change: Our employee base or the employee base, obviously, our clients I would say we're you know we're looking at that number we're probably flattish in some areas you know their hiring in some areas.
Speaker Change: You know basically their holding I havent say access to capital on the small business is still the biggest issue you know some of the regional banks aren't lending and interest rates are a little bit high so, but but on the same token getting quality people is still a concern.
Speaker Change: So you know from my perspective, it's been flattish I'd love to say, it's it's you know I do think as we connect more people to the small businesses. It's got a shot to go up one or 2% because there still is hiring demand I would say they've been unable to execute or unable to get to.
Speaker Change: The capital they need to grow, but that's exactly where we are today.
Speaker Change: And.
Speaker Change: How does your bookings breakdown between new and existing clients.
Speaker Change: No word bill I'll, let you answer that but I believe we were well go ahead and see where we are.
Bill Bock: We're still right around 70% is new business and 30% of the bookings is cross sell so again huge opportunity for us on the cross sell side, but the majority is still.
Bill Bock: New business, and where I'd like to go with that is in and we did want to highlight in our release around some of our technology initiatives. This common user interface with the identity access management is going to be really good for us as far as the adoption around the marketplace.
Speaker Change: That's a process that allows us to get in the event driven marketing in a big way. So we anticipate a lot of growth from that over time now we're rolling this out and there'll be some you know learnings here over this quarter and next but as we get really sad.
Speaker Change: But that what I'd like to do is take that 70, 30, or so new sales more to a you know.
Speaker Change: Ultimately maybe reverse it now that's not going to happen overnight, but I think that's the opportunity. We have in this technology Foundation that we introduced this quarter and some of the subsequent events, that's exactly where we're going so feel good about where we are and then the new logos.
Speaker Change: Thanks, Pat nice quarter.
Speaker Change: Thank you.
Speaker Change: Our next question is from Eric Martin Hosey with Lake Street. Please proceed with your question.
Speaker Change: I'm curious on the decline in the cash balance from Q4 quarter end to Q1 quarter and were down $7.1 million can you help me bridge that.
Speaker Change: Yeah, I think a couple of things happen.
Speaker Change: No.
Speaker Change: The first quarter is always seasonally impacted by W. Two revenues, we collect those funds and usually in December we defer that revenue and we recognize that revenue in the first quarter.
Speaker Change: Also we pay we have a lot of annual events that happened in the first quarter, whether it be bonuses or do we have a sales kickoff and so there's there's some abnormal spending that always happens in the first quarter and then the fourth quarter is a little bit inflated usually because of that that'd be two cash coming in and then obviously we spent some money on the on some acquisitions as well.
Speaker Change: How much did you spend on the acquisitions in Q1.
Speaker Change: Yeah, I don't have I don't have that right in front of me I think it was a couple of million Bucks a.
Speaker Change: Order of magnitude from my memory.
Speaker Change: It's also an area as you know.
Speaker Change: So it was more net all in but because you know as we had.
Speaker Change: People are the people strategy deal you know there was some equity component in that so that was that piece of it and then the other thing is the vendors spend we do have some annual renewals that you know come due in the first quarter and in this quarter, specifically, we had two events.
Speaker Change: Whereas normally we have one so.
Speaker Change: You know that.
Speaker Change: You know, we're pleased with the cash this quarter, but we do drain a little bit of cash first quarter and then typically you know were better as we go through the year.
Speaker Change: Last year, your cash was up $4 million between Q4, and Q1 and this year, it's being down $7 million I'm just not.
Speaker Change:
Speaker Change: Yeah happy to take it offline Eric I think I think there was a receivable yes, I think I think you are.
Speaker Change: Who might have come in from the government last year, if I'm going from memory. So.
Speaker Change: So I think that might've been the dynamic is an unusual quarter hour share for the first quarter.
Speaker Change: And Jonathan remember correctly that was close to $7 million right. Yeah. So Eric that's a lot of it right there.
Eric: Yes, I think it was one disclosed in the subsequent events that we closed yesterday.
Speaker Change: Thanks for taking my questions.
Speaker Change: Yeah. Thank you Eric.
Speaker Change: We have reached the end of the question and answer session I would now like to turn the call back over to Pat Campbell for closing comments.
Patrick McKillop: Yeah I appreciate everybody's time today, you know a lot going on I'm sure. It's a great time to be here and we appreciate all of you Patrick mentioned, we have a lot of investor outreach here over the next quarter and we hope to see you soon so thank you.
Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.