ASUR - Earnings call transcript Q3 2019

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Operator

Good afternoon and welcome to Asure Software’s Third Quarter 2019 Earnings Conference Call.

Joining us today for today’s call are Asure’s CEO, Pat Goepel; CFO, Kelyn Brannon; and Vice President of HR, Cheryl Trbula. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Instructions] [Operator

like Cheryl? call I’d for to turn remarks. introductory to that, over the Cheryl With

Cheryl Trbula

operator, good you, Thank and afternoon, everyone.

might of management Before mention we will outlook today’s include by company’s of information. that to estimates call during business that the some risks of any to other start, be made may the guidance. particular statements These that subject This I’d could that forward-looking or uncertainties forward-looking include are this and projections, like the and statements are call affect statements a historical and number discussion all of made outcome. not on their

You’re urged factors and materially they on relating reports file results. the to with results from could the expected cause are company’s important, actual Exchange factors to risk to business Securities differ contained These our the consider in and risk Commission.

remind at to it Investor this like website our will would made will and Relations available be I everyone on the www.asuresoftware.com. be of recorded that Finally, section call

Finally, that we transaction. some website the Investor posted I on IR would our Events website. regarding proposed to refer our Please note Presentations slides Relations section the on and have

I would to Goepel, to Pat? turn now the Pat call over like CEO. that, With

Pat Goepel

veterans to like party. I the whether also quarter sure employees everyone serve. appreciate there analyst and communities valued clients, some investors, interested Hi, you’re we’re investor, out or veterans the Cheryl, and to and have in your an earnings want call. thank you recognize I’d to third interest XXXX very our welcome as of We employee, we fortunate all client, to

service. your for you thank So

three’s financial of me let highlights. quarter Now, to some get

Relations on slides website. Cheryl As we mentioned, some the Asure’s posted Investor

remarks, to prepared slides. these some my of refer I’ll During

the consensus expectations distraction revenue attributable go-forward of per of sale Asure, in our EBITDA quarter, plan, midst third a we capital management non-GAAP internal business. beat little for as came earnings non-GAAP to the revenue, business the some that is of in but which the light During workspace we were share. Human and exceeded

Human revenue I’m revenue a Looking Recurring increase X% in revenue. growing XXXX pleased revenue at total revenue with expectation. the $XX.X was quarter. of quarter, as year-over-year margin million. revenue in third up of increased year-over-year was million, high and for our ahead with the to human total capital recurring an the percent quarter of third mix management $XX.X X% the from XX%, quarter in our at XX% capital management XX% recurring of QX

During bookings capital core the year-over-year. XX% management grew human quarter,

on wins. moving Now, client to

across range During Megha the Freedom third wins a quarter, including minor baseball of league Alliance, Software. management Startkleen companies, Legacy, and Asure capital the Florence secured human CRS team,

payroll We organizations to also small business added new reseller family. our XX

at workspace quarter Whole of Department Third wins Transportation. Texas included Foods

the news revenue on million our FX for visibility. Now, basis. overall debt overall cash for cash turning to recurring It’ll of cash XX%. new to will free our net workspace some importantly; States, notes. remove smooth the It seller be The currency Asure of will a existing also our more the to mix free big a in for improving benefits structure Slide in to simplify it will month’s this out I’ll right net transaction. capital Asure, sell this Asure position business $XXX significant a exposure. management a to debt close, transaction recurring This allows in nature, United announcement pure operate play company human revenue X, be our exceed the transition reiterate from capital will excluding And trends solely to our sizes our size. position, Asure management After company. last a

a of attractive be federal at if free – most liability pay a level. push the standpoint gain. The will in a taxes to substantial have from don’t so expect from for many will the tax very shareholders we shareholders tax represents use XXXX, tax Our a as any zero NOLs will transaction to the it

over sale allow capital from multiple. Asure a benefit the will a vendor higher believe and management we as associated the play the a long-term Lastly, pure new human higher to multiple peer attain

today. two update of on me close you closing perspective, timing Let track. expect completed have items From the completely a Hart-Scott-Rodino lists some now Asure during sale to punch where on December. items, assignments closing are have we and substantially Everything out stand remains – all clearance. and FM:Systems the we and the open

interim but fluctuation space shipments This solely mid the our fourth business, workspace be to there relates results, quarter and there as be some market, and quarter shipments. close timing will mid to respect timing the deal of of that the some will revenue it noise with recognition with the the to product Given in regard transaction, quarter timing. means in

a XXXX basis capital more management I’ll on guiding As be result the only, remainder that to of human our based later. on

we Workspace, I initiatives If Slide plan. in to with have the conjunction turn sale several of XX,

add invest building including variety we and for in to the ready in headcount time and resource features R&D all, functionality in and growth ahead. integration, we’ll of plan foundation perspective, new payroll. of years human our lay revenue attendance, an First XXXX, products, From software out double-digit the to a for

to and products. allow three sell, will the Asure have This service new implement to members team all

our here organization, had fulfill a close also and that business, consolidate best control a our transition agreement months. services look to As Asure. approximately with costs in relationships areas we from will million of across we’ll We’ll shared order deal entire services optimize vendor to FM:Systems rationalize six the to take new to $XXX

service national And hubs then California. lastly, over in Nashville, the Rochester, we a last with two years, built and Omaha footprint

support best all common this profitability. operations optimize across delivery, service practice center, will and for business our pricing, for implementation sales, our establish will We

our update me on you Next, organization. let sales

sales penetration hiring of If year, and you clients. this new both refer our deeper earlier Slide to X, we initiated our enable to current rep

growth. sales have organic and additional improved enough last year. feet simply to Our rep productivity street the We drive new on sales didn’t

to of Workspace, plans goal sale the our year, XX adjusted reps of was our recall, hire sales the the new accordingly. you given net onset we’ve approximately As at

And We now the reps for attainment reps quota currently their in Human as we’re Management of to blue productive existing achieving have XXXX, targets. at on dark remainder sales these XX see focus chart. the you’ll making Capital going bottom

As reps. to plan XXXX, in sales we look additional hire we to

organic Chief to in become of seven-year want largest CompuPay, one company payroll the Before over Charlie to South XX call States. Officer Kelyn, processing in Lathrop, the Management Chairman, the welcome years integral joined Workforce Directors. I time an and played tripling role rapidly at spent spent President the acquisitions. related the I of the of experience providers Charlie turn who and including to of in small Board focus space, of with CompuPay, recently leadership our size regional as on Charlie and Executive the a service growth and United Florida the

We’re juncture. at have a time Capital thrilled to such this executive join long Human us Management

me detailed to a more for over of let the call financials. Kelyn our Now discussion Kelyn? turn

Kelyn Brannon

Pat, you, and Thank everyone. afternoon, good

As sale and in distraction share. Pat revenue of for midst some our earnings non-GAAP this ahead HCM came we lower-than-expected the per expectations EBITDA as were Workspace of noted, during the exceeded third due internal a in non-GAAP quarter, came revenue of in to we business. but consensus plan,

details. the me let run Now through

reminder, non-GAAP, GAAP I as discuss a today as unless a them financial state I are usual, As figures all measure. will non-revenue

As press today’s a release. non-GAAP find from always, in you’ll reconciliation to results GAAP

is the introducing a growth grew the bookings core focus and XX% Asure. a for This the result quarter, will represents Workspace. go-forward of of new term we’re as of indicator HCM year-over-year. During be the the sale our best business HCM This of

X% last Recurring a of sale to and XX% QX $XX.X percentage increased in revenue X% XXXX. revenue services, Workspace QX compared prior the year. the XX% total to last year grew for revenue In last of revenue to of year-over-year. of to XX% And in QX hardware QX was in exceeded some X% distraction represented million to other of revenue decreased XX% the quarter grew third as Recurring and HCM due compared prior the Total decreased X% revenue our XX% QX $XX.X of XX% professional total related the over XX% million in in revenue was year. Workspace to compared expectations. year. of business. QX, from over the year-over-year revenue of HCM year. QX

of $XXX,XXX XXXX. exceeded I’ll our profit non-GAAP margin the basis increased gross from of to non-GAAP the to XX.X% in QX in from XXXX. XX.X%. funds $XX,XXX gross XXX QX QX’s This up prior increased third gross points of profitability on gross to non-GAAP a client margin quarter compares quarter, $XX.X quarter. metrics. in the million, third equating of Next, Interest $XX.X margin discuss million or

Non-GAAP year. in current line revenue as $X.X rate XXXX. roughly funds Given expect non-GAAP was forward. with QX level QX in this QX of going versus was and maintain interest XX.X% client in to percent a million, of of XX.X% interest QX we last EBITDA the on of environment, EBITDA

per net In QX, income share. $X.XX non-GAAP million totaled $X.X or

quarter, fourth tax the and effective to ahead X%, our expectations still performance. is this for our accurately we more Looking actual measures feel at rate non-GAAP guidance

at Shifting million gross $XXX.X gears At September in XXXX. $XXX as $XX.X as long-term XXXX. and million, revenue up from the – quarter at sheet. and million million we equivalents million the to cash XXXX, was balance had end. our debt, XX, Cash $XXX.X was balance of the XX, combined from XX, $XX.X of on XXXX, of June sheet Total deferred million short end included slightly of both QX $XX.X September down

from from employee XX our a quarter. management, by year on days headcount with to improving we Inventory was $X.X sequentially XXX. cash decreased quarter, to QX Post down XXX. at of DSO Overall was focus line head in the in QX million workspace expect ending ago normalize headcount benefiting approximately count sale XX collection. in with last in days one

positive XXXX, to of from quarter, in swing During operations $X.X generated compared the cash a QX million. $X.X million loss million of of a $X.X was positive third

call on our infrastructure fund implementation and initiatives. I to NetSuite activities the is back HCM, client complete. update Pat, to turn I and want our Before our you upgrade Within over backend

funds recent we we’ve taken client investment on As steps earnings calls, to to rate. consolidate a achieve higher blended discussed

by interest We short extending investments have fluctuations as tenure certain much begun term to the as years. of protecting against rate three

decline initiated this banks operating the hard out rationalize in funds. federal – to we’re spread rates funds working the recent XX we’ve of to investments. to However, accounts effort, we Currently, and XX XX federal annually. and expect our client we X% started X.X% point and decline blended given the we basis consolidated rate XX% across banking rates, the with to When in

the year. the This see our from to margin to high expect the lines. and be the of majority additional we’re pleased so stream, bottom of impacting very the revenue a top consolidated funds We acquisitions, by is end synergies

to Now, I’ll turn the Pat. call back Pat? over

Pat Goepel

given note I’ll Capital also sale, closing be of workspace Thanks, our to guiding large QX P&L due performance – I Also me at again, Kelyn. the XXXX the Management to we the will on which include gain that timing noise December. time to earlier, a only. as during the guidance, XXXX Human place turning mentioned of And based that, note QX, excuse capital expect take to

to XX, when year Human about million we $XX turn to be for non-GAAP transparent. Capital QX XX.X% to non-GAAP with If break completely We’ll the results, of report million, the I to Slide of expect out XXXX, full EBITDA $XX $XX so XX.X%. million equating Human margin Capital revenue between performance, EBITDA $XX we’re million our to we Management’s

the top Capital as organic continue sale result some will at reduced towards pay Human to transition year-over-year of a We’ll the the Management growth announcement discussed as line growth. year be of we XXXX, investment with a sale.

as incremental the in such, need EBITDA we’ll absorb However, to overhead this and will our from margins drag time XXXX. workspace, to some

The be offset of will by is the expense. elimination that million approximately of this interest $X news good annual

a absorption earlier, overhead for And agreement we’ll fulfilling transition upon XX mentioned the months. the will period to services months. be six incremental approximately take close approximately As

hires and making the We exiting XXXX organic throughout will complimented new positive sales such be by in organic as we expect growth acquisitions investments, growth XXXX year.

the specific you. today thought earnings XXXX present but a call, with next I’d you for framework guidance update I’ll I

on As organic Capital we about to we to basis. growth Human XXXX, about revenue an think year-over-year expect X% be flat

the contemplate transparent in we goals, as any as as activity to important I that set want Asure we basing possible. prudently to be new XXXX, feel guidance may acquisition achievable We’re this it’s excluding

XXXX execution. expand absorb feet our to on on focus focused operational Our on will our overhead, the be street consolidate and efficiencies, maniacally be

make mind, contribution Longer any accordingly this Keep organic longer the will growth I’ll XX. from term, include level not on we revise in to does believe X% acquisitions, Slide to we’ll In looking our refer financial future annually accelerate acquisitions. term framework, this to we XX% basis. from the you that guidance to as guidance grow at additional

our between in and X% allowing and we our also XX% five to XXXX Human in growth of that approximately growth between Management We believe can Capital X% bolster and the over via baseline inorganic generate revenue years. XX% long double of us annually, annually organic term, acquisition

believe to also lead that will margins. framework We plus the XX% long-term EBITDA

XX. our capital of go refer structure, I’ll terms forward In to Slide

Over In is the a goal cash seller structure, capital combination to positive the a acquisitions long-term, aiming opportunities. position to stock in for we’ll our debt service. a sustaining cover low where acquisition of of fund in cash self and notes, from operations generation both cash near be we’re flow with and investments term,

get already can we with on close, the debt bright a upsell, now structure future not the Management. Asure new to ahead, plan closing, laser-focused we we we’ll million organic In one cross-sell times institutional exceed internally growth can benefits our capacity, with have in our Post Capital as three very Human I $XX million efforts $XX initiatives a to business. believe And see to has little debt leverage on focused EBITDA. I

that, with Operator? for we’ll open And questions.

Operator

Thank comes our you. with Capital. first the line Richard Instructions] from And [Operator question Baldry ROTH of

Your line open. is now

Richard Baldry

Thanks.

NetSuite that’s of doing the implementation much far systems, implementations With be sort going can any might How carve talk you the think How entities IT, be through as you about done, of a any at you Thanks. challenge? to in of, the two other challenges I’m process that overlapping curious divestiture if do all you process? are you apart. sort

Kelyn Brannon

structure, going our I to through the continue hubs, is and thanks within going whether set enhance relatively we��ve we think up business. question. NetSuite. internally No, helpdesk, I’m AWS system. more IT agreement, our more up transition where think payroll comfortable continued It’s infrastructure of Rich do and see kind relatively that’s – we the I across about as for HCM to for What I’m move we it. opportunities is as our complete. are efficiencies to our you’re When harmonize to implemented

Richard Baldry

done I been, the in has past then, don’t when And can acquisitions even he Pat, if used. more debt maybe, you’ve know but this, answer or

having you think you the points involved? that? can be negotiations from think how sell? sellers are you So Any or back and to notes to those other factors that Thanks. concept Do currently more seller maybe willingness price the that more people of to there’d some stock maybe think will be looking conversations at the response like changes

Pat Goepel

Yes.

just Rich. a clear. of couple be want And I thanks, to So things

really, model that a pace all, where infrastructure’s I First of the becomes now manageable. point X% to I point you to, on we long-term to we year in plan the place if the XX% in acquisitions,

Now the AWS a that prudently, we the very did notes, place NetSuite node and combination hubs of make can infrastructure’s and seller in always feel and cash and indemnification. we the notes we service country, we seller acquisitions but for with across a have that

pace. much about not the It’s really So changes. all

each in debt brisk last And couple a the did feeds of then grew pace. on from on a have years just sales with whereas other, we self-sustaining reps, place a the that we We raises. layering capital and organic at now growth in use or also cross-selling hiring the model products model multiple the

in partner in Our scale starting measured now more a intent way, here business, the a to is FM:Systems. we’ll AKKR in get support little the scale, the of we have advantages and place of especially being in out off by XXXX. advantage great where of get grow And that year, space and the – years then the the have bit XXXX the and transition we

very about We’re our grow in months then six aligned into and that’ll area that well, and really take model.

get we’re the a understand acknowledge but and we which to can where the XXXX, is XXXX I about out. start want look of transition model to you good forward and And and now year, to really feel sure backside at XXXX as growth how make we positioned. are I we investors just long-term So to laid

Richard Baldry

adding appear be, growth surprised would target your the – last like of model, number. XX. side. look looks heads then to And higher organic is little It’s X-plus-percent you not the Slide of business it be at sales rate I’m a I new with a when the number target in growth

the the base relative you reps existing used now? have new how about If you existing that or talk et number of team business are to for retention, maybe in put kind to cetera, much terms

Pat Goepel

thank Rich, Yes, for question. the you

from First reps new a hiring we’re cross-sell new business. business, all, in of for

then X%, at to in and So part about hire, when then want that looking we’ll not I it reps, do kind have and we’ll only prudent be sell and of year as look those have to at be do that that. model cases to really part cases year. of to of also has We some the of but both And to items. of And we recognized. I’m ratably some we’re the have it it a combination going sales it as the second first far during really train we to line the in new install

So our want parts, we our exceed them. the time with think very really that. we long-term positioned given motto very be think XXXX, model we want the and we’re here. just we about XXXX, to and to In and conservative we parts we’re Over into moving numbers moving nail excited nicely and get

Richard Baldry

All Thanks. right.

Operator

line our Ryan next comes Thank and with of you. from Needham Company. MacDonald And the question

open. is line Your now

Ryan MacDonald

Kelyn. taking of detail side of costs that the of structure break with look Thanks. of afternoon, And what guidance for as us first EBITDA like guess, could divestiture? of out? give as and margin absorption I that of in costs on that the more XXXX, Good I those EBITDA the Pat sort taking on at look the Thanks my potentially guess a little you we sort absorption perhaps the parts moving you questions. off, down can Hi. heading the look and into sort at kind adjusted extent

Pat Goepel

to XXXX that’s $X I I kind now. it’s our depends months get discussion recoveries FM:Systems on tell into over then think how of and between quickly of will two, the we of some these a transition separating I of and it close probably on million model. and finalized. take into agreements six year in but some December out $X.X phased close of pointed really why services of get we’ll the quarter some items. our agreement, as we in being on being million, as premature transition think to business, as from think process long-term more that detail very mirror, Ryan, costs the a you, can and going with little now the fourth the view And some I XXXX are those to rear bit a is in speculate premature we’re we get the probably That’s here

Ryan MacDonald

terms about Got a it. we’re hires, the that get you think to in the sort of how follow-up quickly And going cadence sales can the should new how expected XXXX? And we I on of these guess or what’s productivity? ramp reps as

Pat Goepel

feel We Yes. on nine productivity Ryan this and productive the new then year. question. really is and and Thanks to based to rep between months full is that contributing business, sales the experience did for about a year, three we months a six

and like playbook feel we have cross-sell have do in we we then So initiatives with that a place. a playbook the are

of transitioning We distraction are fourth that in separating the and the through quarter. going business the

going mirror. about productivity of forward and from in will What human rear get management and I’m our all that’ll love, So I everybody’s attention the be think to with used is capital – a happen. that focus there our company, view excited

we’re So forward. real going excited

Ryan MacDonald

Thank very much. you Awesome.

Operator

the comes of next Derrick with Cowen line question from Wood our Thank and you. Company. And

is line now Your open.

Derrick Wood

ability this talked the spaces, your that without do impacting the retention about how you last still quarter through Great. sales about that guess, or now business I focus. you’re Thanks. quarter consulting software feel And reducing revenue to take plan? is sale given effort, down of a rates? you your this Pat,

Pat Goepel

a XXXX that’s onetime revenue. interested doing Explicitly Yes, less transition consulting for consulting point. in Derrick, being our good we’re a guidance getting for year, and sake in consulting

capital business. core in We’re growing more interested the human management

our but that of into XXXX put XX% as we And the where really well and is the that can revenue we’d value-add that we transition to organic acquisitions So so, on we really for both we’re XXXX. a when XX% repetitive growing jumping we’ve revenue year-over-year completely of guidance clip, lend and point, revenue, out that XXXX the type with clients, a of at kind away at off growing already as at margin plus. that that think focus be a system, like is to as from

Derrick Wood

but Kelyn, I a bookings you’re up growth mentioned HCM kind about then, HCM. no in core was you very like guess And which XX% core number, seems Okay. obviously year-on-year, that of talking impressive

just about the this you little color you out could figure more kind Perhaps, model? it impact it is? XX% how So think to should bookings define the as bit of and and on what how a we flush

Pat Goepel

remove into. really consulting Pat. It in SMB today, kind core is the of business this Derrick, a we’re what consulting, our solutions. areas But that’s human of, which voice now process I and started represents core make core management does sure wanted and the No. forward. her she’ll capital of bit that the recurring Yes. Kelyn’s to the management emphasizing capital going lost it human what along little but jump we’re deemphasizing. We with is

of of consulting, the the that Derrick. to the half leading the we growing bookings towards that is growth year and now growth, which we second model, which those at XX% anticipate ultimately indicator us be we you’ll past XXXX compares worked in outlined, through revenue So see long-term as onetime and have a will

Derrick Wood

Thank you. Okay.

Operator

Thank of Canaccord. our from line Hynes And you. David next with question comes the

open. now is line Your

David Hynes

doubling the how the thinking go-to-market to sales? the maybe SMB a it’s here. navigate Thanks of and on walk better been to helping of direct and going then why pretty is, the be all multipronged So guys. versus direct realize the is one historically question My Pat, kind thanks, on and with learn for hard and emphasis? a out folks direct the just cross-sell? just tack, sense these but that have congrats the one through to kind on initiatives numbers. and for curious those channel on there slides, strategic progress markets down Hey, sales why of color build I’m the several the key you I

Pat Goepel

think I things. of No, couple

to all, I and then detailed built we Slide Services, national business X put I headcount Internet and cities. services, in whether conversations CPA, our we in going Tier benefit see strategy. I national Downtown Tier Payroll out footprint vendors Tier cetera. have job And I X advantage you away. First And But really, banks, hubs, in and both we X it’s X need have integrated as do a have brokers, that If XX Manhattan a direct influence to but reseller how go. might sales X and an to we call – of four typically, et is go-to-market more either am take we a and were within now as refer Tier And of we’re consulting of have X.X we centers, can we teams. hour, cultivating good

take We halo and Now lot that the direct of that of when and a lot do effect a teams cities, overlap that. can partners. you’re there’s around type of in those a advantage think sales of we’ll

far referral continue cultivate As channels, we’ll leads. as those get them to to

to that reseller, the a graduate then a want cycle. finally, for have it’s they or then they and if a event they reseller. to life whatever are reseller to if Now business reason, whether want to And they become exit, option

exit strategy an to there provide them. for We’re

predictable very in advantage of approach, we think our have in And we a way, scale. we’re grow the think take and opportunity unique we revenue to this

grow the I’ve Typically, As ditch in the P&L. space. you in other a vendors studied

in of follow more cities, X emphasize a and channel in Tier lot then sales go-to-market we We past, Tier have success strategy. measured really do direct you reseller want the a had growth. If this we’ve where X, to where

We a of very doubling we predictable of yield same can become appropriate and over can EBITDA in that about. results talked We tripling get think as we size, couple in margin we we company years, kind the expansion. next the think in conceptually

and to kind think of we is on it. focused this been So the that’s go, we’ve the way way

David Hynes

Yes.

sequential is revenue. implicit Okay, XXXX, in numbers, the a on helpful for color. HCM And there the QX drop guide in so then

potential as disruption business? I a going and Or something mean Like XX.X% employees the think cause there if in this I HCM in things the those in business XX.X% have seat my impact are math, the like they midpoint. by guess to I at that, you of conservatism? it’s the now? are And that all could where on know just Is is factoring HCM how that? you happening QX? part thinking your side

Pat Goepel

great and We think because moving parts have sure No, lot the a make and want right. of all out. DJ, for calling business. sure want conservative, question, but thanks to we’re make we splitting happening we’re We we around, to going

sure we’re not sale going We’re – the sale quite when the is.

We are some going bit sale. with completing little that to have management a attention

feel and about we the good really Although, with FM:Systems partnership A-KKR.

perspective. consulting, mentioned around where Secondly, the now of deemphasizing HCM revenue onetime revenue, on we’re I the an at somewhere XX% repetitive up from even

business predictable. is our more So becoming

to say revenue. consulting of you that one-time lumpiness, the of if the want rid getting We’re

And months, place. our is in take headcount, six the getting we’re approximately we in transition that that of we’re XXXX, sales So service look SMB then us really agreement, which the factor at will guide. adding growing we’re as out

mentioned; referral; were the we pleased, of think at very technology XX acquire, our of the we four a as will you’ve finally, we’ve what had resellers new And channels: that also benefits to we want which acquire we resellers sold; and it great then of own can to then really month the if scale. Direct, developing they to reselling complete add

that’s the how So built short-term model long-term. of we and kind

David Hynes

good. for color. Very the Thanks

Pat Goepel

you. Thank

Operator

Street. with question next Eric our Martinuzzi line the comes of from And you. Thank Lake

is open. Your line now

Eric Martinuzzi

to versus new kind the business? out maybe you at contracts follow-up of I the Yes. XX% bookings – the parsing did translate re-upping wanted number, incremental of ARR, on that an into existing

Pat Goepel

Yes.

Eric. yet, We haven’t

look XXXX. we’ll think I at in more providing color

As completed that. mentioned, and we’re NetSuite Kelyn just finishing

good felt milestone. we So that about

bookings to We we measure a cross-sell new new is can data. perspective, new have way and report that some additional From on analytics bookings XX% we to start the revenue. where bookings

as We it can going get The reoccurring of some start we at on the out lead look those that’s ARR. business of kind haven’t metrics to though, you split business with focused. we and plus parsed a of good XX% revenue, when news, forward, is type

in we’ll edge my over leading time get deeper So is indicators. much more expectation the

Eric Martinuzzi

organic X% here. wired contracts? Okay. is so prices have event? then Slide growth, X% Or that be that target to range, are to the XX of And on into to kind that that The I’m pricing that referring is separate the would raising increases price a aspects, so technically,

Pat Goepel

raising our a to of and additional hubs. around newer – – the some couple but It’s the able three then reseller on that are is events. are of of It pricing not the market pricing It’s pricing there’s basically. to primarily Those It’s take nationalization that services only that’s some in cases. in already all in we’re harmonization three, And things, some sell, some place. advantage contractual the two prices

Eric Martinuzzi

taking the questions. for Thanks Okay.

Pat Goepel

you, Eric. Thank

Operator

our you. of Thank with the And Rhee comes question Van Craig-Hallum. Jeff line from next

line now open. Your is

Jeff Van Rhee

start Great. little just around bit more that. for context with the me. Several Maybe, Pat, just resellers, put a

think of trended? added just last you couple a us quarters, typically What there? in give said years, handful are trajectory I kind of you that quarter. the last How has XX the of

Pat Goepel

so, industry, really past been from disaster vendors keeping frankly, in there’s marketplace. time significantly front the to movement, move all our tell had a and have the But XX in our me. don’t scale there from events and have have of would which AWS to a I think payroll et exact had you from The I current money is events, that, over recovery, year the in cetera, are up systems, the on think, years. some you up or move And couple hard I of I is other so focus security. anytime what we’ve

resellers about we’re been come that. and to a been And flight company there’s we’ve to So excited our to several able get quality. to

We we’ve out the of reached some do as to referral really sources.

allow on with benefits, of valued area the us have to enabling as more our to we resellers as broker the less networks. – competitors the based And now as the have business, partnership. a will services, of of compete and national us but they Some of see et those banking, record even reseller in the competition we the affiliated where that footprint the cetera, or of grow well

of some on And then of been the delivered area. product that’s enhancements. So kind we’ve

do to place, place got And the they them checks, exit resellers things And You’ve we as a a be grow, product room at now, able And then we are channel But starting they get an grow. going grow. happen. been and always to some forward. can strategy to can for in still our good in Jeff.

momentum resellers So are. those what certainly, got so. at compares, ago And you to would five looking say, that’s of or a a three year over you are if lot where maybe were we I

significant seen movement. we’ve So

Jeff Van Rhee

Well.

is was does on EBITDA, to the XX%, Okay, I EBITDA that’s progress. What good What And that then for you guidance? think the XX%. QX? said imply QX XX%

Pat Goepel

of we had overall because we take I far don’t it of sale we is. the cetera. combination think, treat as guided business business a sale, on QX, disposition the specifically how for the when the as place, and et I potentially think the timing

So exercise, I a there. think range math backed small from we a into

couple of non-GAAP there of think I go. quarters, Kelyn, can and see were as And know if to have onetime parts provide moving anything we a more I the You that But provide add… really, don’t you items. we the around or color

Kelyn Brannon

it, almost gone. as I when at would teenage But looked that, to – we add I sound know my voice is just I operations. I’m boy. think a we there’s like discontinued sorry, about

to on for what As means, we that our restructuring. core HCM about and there’s focus opportunities think us

guide thought that around parts going breaking a moving fourth the versus it lot as for helpful? the So I of down the about year the kind into and because quarter be the that. of year Is first quarters there’s to three of kind

Jeff Van Rhee

It in of the et of base one. think of is lot a sales, expansion cross-sells, of had is. you one last XX% said discussion product. about heard I slides cetera. one on the I And The I guess, just that you

what’s people where what is of but about the And and thus and cross-sell beyond hasn’t there a near-term worked it was lot more the one of growth product? there part I low-hanging of get matrix, mean, that discussion. talk know worked, lot sort Just really does of accelerate some didn’t far? build you I see fruit just get the come? mean, it for a to I

Kelyn Brannon

going to and Pat. it would turn I then just start, to I’m over

slide If slide going at what investments, back you go do. deck our about and to where look we’re to the the

to our our focus HCM focus around web-based opportunities, our build that time now allow us solution see continuing just core you what allow that laser R&D is really we will and can advanced-HR think products, I organization on what’s for opportunities, to to HCM our businesses, and or out going fully be more that’s attendance, out that to an attendance blow – small cross-sell us.

is, in So our penetration news that nascent is really good on we’re the cross-sell.

those current to be in you deck. initiatives our go after see that with the So about able of we have slide to base XX%

from perspective company, know the excited. technology personally, I So I’m a me really for

Pat Goepel

is and benefit, And area whether HR. labor whether consulting, management, repeatable the HR and in cetera, it’s just quarterly. that us, those real events quick open performance like – do time it’s yearly think, hit management addition those over level HR, to et happen enrollment, time, of for events services, additional And I it’s think I a OSHA,

that systematically. very Now we what can go excited about. we’re That’s after

Jeff Van Rhee

it. Got

for Okay, Thanks question. great. taking my

Pat Goepel

Thank you.

Operator

the Barrington next Thank line question comes you. of from Research. our with And Vincent Colicchio

open. line now Your is

Vincent Colicchio

asked. Yes. Pat, were most of mine

business, to clear, be parts at You’re the consulting completely talked that that. the or on ago, you automating of Are doing about a Just quarter business? still so all? deemphasizing you

Pat Goepel

you No. how on client, software?" first how in payroll absolutely going part be No, to I to learn and implement software? clear to Or forward our you "How our is the use model this had site, us What is, be some with the that time. learn a is, manager. they strategy repeatable we consulting automating want being example, for second the because all We do say a people want we want when of thing do The And there events. use big software? can we aspects the I of part position the help be is to

to a in is we client be using – the one-to-many on department, them payroll model Our a could be and/or going help manager going best the software payroll not be practices to environment. be site, it’s to

our So a it’s in one-off critical of one and consulting us important deemphasizing. the is the strategy, part absolutely for consulting one-off engagement we’re that

Kelyn Brannon

consulting. this able to I repeatable at And that The to that bring we we’re consulting, the thing only in hubs. at have our our is cross-sell versus one add And We hub country. be that looking structure to now would can wonderful across location. look as more we locally that

And we until we So didn’t until in consolidated hub we scale. had opportunity. our structure, have had that the

transition So year. whilst XXXX is a

I think need move we our a is excellence hubs. we consulting, we we spread core think through to as it, have, this around repeatable business through can that which

Pat Goepel

good in in deliver been and on across those do we all position that. and finally, we’ve we’re location. everybody as a services of is one automation as can activities to working can implementing feel Vince, And train we especially then laser-focused the company, that we’re what And one and

Vincent Colicchio

EBITDA us for for clarity. could And months HCM. Kelyn, number first that Thanks the give you then, nine

Kelyn Brannon

that. were do I many lumps was I the that QX earlier, that at didn’t – it think that, about I is Yes. for because so year. explaining, there’s I moving opportunities restructuring parts And look thought for with it off just as looked I as us in I discontinued as those at

Vincent Colicchio

Thank you.

Kelyn Brannon

Thank you.

Operator

Heyer of from comes line with you. our the question Harry Thank MTX. next And

open. now is line Your

Harry Heyer

debt let’s Whether little down? talked of the analyst. in down? say, get how pay Hi, process the I – trying get understanding if the of cadence kind just much scale to acquisition What post will starting down? for again, intent and cost call up and and timing your change I’m debt of that just kind guys. Thanks of also, of from around terms debt is the taking a clarity possible? paying to you when pay about the acquisition [indiscernible] want activity, the And of of the the an you’re

Pat Goepel

Harry. thanks, Yes, Thanks.

included first $XX figure of to $XX million. So in deck, we of all, the a million

We into entered yet. that agreement haven’t

debt. of in would So that’s the carry expectation, kind that that we

our then last five we you today, look Wells in, as Goldman at out. think I far Fargo and And change. have as is the providers in last at if terms,

fair won’t have I you where need a structure you time, lenders, think have to over two it’s we say that one.

at I then And down, being be provider. we today, we’ll down similar $XX $XX then the and first the to And facility down vast carrying would pay debt, majority we’ll that and $XX to terms in of the our to will more $XX million out have look pay as million as we far pay XXX in, range. first million.

the arrangement institutional we exit that we’ll the So today. agreement of have

I to with you’ll debt out the first facility first Wells. in see be we that closer in, the think somewhere have level

should be, the go to that for I it think perspective, could And a would period have our if anticipate a Wells process. they’re been partner through partnership of not valued it’s long has of or I from partner we certainly Wells, time. ours. be

model X% acquisitions acquisitions, as a we far in to and that’s intent long-term As showed our XX% grow the why year. here, to is

year. matter Now see in transition XXXX, you AWS acquisitions see are would a course. in could the of in NetSuite And that and that place, then you as

structure So the and a debt a it low. becomes more from predictable capital being with lot

growth the we of and investors like and flow X%-plus a in We’ll really market years, a structure you reason. where come you You feedback businesses. was the we’re to couple the high. from from investors invest have too that EBITDA the the over structure, self-sustaining And debt market have a have capital salespeople good self-sustaining last we coming or at these We think if take heard model. for don’t can organic cash grow if to acquire, to now get EBITDA can

Harry Heyer

Thanks.

Operator

LLC. we have comes the of And question one And question. then you. more Thank last Flamholz time line David with Trading for from DF

Your now line open. is

David Flamholz

market for acquisitions that, it that had acquisitions. to value I a most you to revenue is for Asure were these of giving and of of going the of back the pay times you terms some at than hi. question, for seems you like in having that would market being go those two acquisition the two basically Are less being paying Yes, times value the you’re doesn’t to revenue seem acquisition? cost thinking the lowering and

Pat Goepel

Yes. Dave. Thanks for question, the

time believe rewarded workspace trailing to over – our a made which and that that pleased market really believe four the us that exit that outcome. things. area, we over in able that we a that were One, we’re with very times the we’re we little revenues, we and couple So product acquisitions

really we’re on focused laser Now, Capital Human Management.

street if able million cetera. higher way the acquisition, you reseller EBITDA, infrastructure be on $X million do a that was in the pipeline, ultimately the referral sources, you into can and to get put manageable of acquisitions put, priority to you or the feet of a et build million The acquisition simply had first $X to a kind leads to $X that the that and national

million million a put But book that business, of $X probably $X acquisition effectively. if do you couldn’t in you

we debt. and we what the higher, have So we heard the in have that, now that opportunities then get pricing don’t think infrastructure, advantage to growth about we’re our some now bank that salespeople three the take organic evaluation do And we two, can things: marketplace. is of in we investing

to We’re as able don’t about we much worry do covenants. where have that, to

is almost your out investors a be or for debt waiting a too raise waiting might short Two high, position.

hey, So that And build we just what to that really we we matter and away. scale, issue said margin. is, debt capital self-sustainable now three, take then let’s we’ve a going think structure built can forward margins add

to the are that do to So very that that visibility And profitable we we we’re going into us. have advantage to want that. we do take and for going to believe They have given They’re be technology of, add we acquisitions. scale.

that model adjust shareholders. said, and But a and pay at take models at forward, our will going make we’re from benefit we valuation think what for don’t going being we sure accordingly two times we to all looking we’re So advantage long.

David Flamholz

you. Thank Okay.

Operator

for session. question-and-answer turn Pat I’d the today’s closing to concludes that And any you. CEO call like now back Goepel, Thank to remarks.

Pat Goepel

through have a through very because to lot business. be model. and separation we questions going the the appreciative and the we’re of today of tried stuff the of went we Well, We thoughtful,

We’re track. excited that time

high partners strong good be a as degree going FM:Systems, for business good well. really that’s confidence to communication for and A-KKR and we We’re and our business excited have the forward of in their going that, very

value for this you transparency we we’re see during businesses, as moving the these And positioned going company. we then long-term ourselves to to three, do full believe transition we’re we’ve period, trying and of separate right the what’s of how nicely really have We Two, do what that. forward.

So this Asure all and over off pay we a is event for big it’ll time, shareholders. think seminal

you Thank time for we your talking you to investment you interest to We for and and your your look you. and thank soon. thank forward we

Operator

Thank Thank you you. Ladies participating. and for gentlemen, this concludes call. conference today’s

disconnect. now may You

Asure Software (ASUR) 11 Nov 192019 Q3 Earnings call transcript