Asure Software (NASDAQ:ASUR), a provider of human capital management solutions, reported a robust first quarter in 2024 with revenues of $31.7 million, despite a net loss of $300,000 and a slight decrease in gross margins. The company's performance was bolstered by strategic initiatives, core business contributions, and recent acquisitions. Asure reaffirmed its 2024 revenue guidance of $125 million to $129 million, while projecting substantial margin improvements as the business scales.
The company is capitalizing on new legislation mandating 401(k) plans and has formed key partnerships to expand its offerings. Despite a decrease in cash balance due to seasonal factors and acquisitions, Asure is optimistic about its growth prospects, especially with the integration of artificial intelligence and technology enhancements into its services.
Key Takeaways
- Asure Software's Q1 2024 revenues reached $31.7 million, with a net loss of $300,000.
- Gross margins decreased to 71% from 74% in the previous year.
- The company expects substantial margin upside as it grows.
- Revenue guidance for 2024 is reaffirmed at $125 million to $129 million.
- Q2 2024 revenue is projected to be between $28 million and $29 million with adjusted EBITDA of $4 million to $5 million.
- Strategic partnerships with firms like Workday (NASDAQ:WDAY), SAP, and HRlogics have been established.
- Asure is focusing on 401(k) retirement solutions for small businesses.
- The company closed one acquisition in Q2 and spent a couple of million dollars on acquisitions in Q1.
Company Outlook
- Asure anticipates continued growth through both organic and inorganic means, with potential growth exceeding 25%.
- The business is considered right-sized for future success, with healthier growth rates expected in 2025.
- Asure aims to help small businesses manage human capital and streamline tax compliance for large enterprises.
Bearish Highlights
- Q1 saw a net loss of $300,000 compared to a net income of $300,000 in the previous year.
- Gross margins have decreased from the prior year.
- The cash balance declined from Q4 to Q1 due to seasonality, abnormal spending, and acquisitions.
Bullish Highlights
- The company has seen a 68% year-over-year increase in payroll sales.
- Asure plans to hire around 130 quota carriers by the year's end.
- The tax and treasury management business is projected to become a $100 million business unit over time.
- The yield on float increased from 3.5% to 4.5% year-over-year.
Misses
- The company experienced a decrease in cash balance due to seasonality, abnormal spending, and acquisition expenses.
Q&A Highlights
- Asure discussed its first-quarter acquisitions, valuations, and revenue assumptions.
- Interest income and the yield on float topics were addressed, with a forecast of a 0.5 point decrease in yield midyear.
- The growth potential of the tax business and its strategic importance to the company were emphasized.
- The company's strong sales pipeline and confident sales team were highlighted.
- Asure discussed the potential for growth in core business, tax filing, and marketplace add-ons, as well as early wins in the Workday and SAP areas.
Asure Software continues to navigate the challenges and opportunities of the current economic landscape with a strategic focus on growth and innovation. With a strong start to the year and a clear path forward, Asure is positioning itself to meet the evolving needs of the small business sector while pursuing a trajectory of increasing profitability and market presence.
InvestingPro Insights
Asure Software (ASUR) has demonstrated resilience in its Q1 2024 performance, with a notable revenue growth of 12.54% over the last twelve months as of Q1 2024. This growth is a testament to the company's strategic initiatives and acquisitions that continue to contribute to its top-line performance. Despite facing a net loss this quarter, Asure's gross profit margin remains impressive at 71.17%, showcasing the company's ability to maintain profitability at the core operational level.
InvestingPro Tips indicate that Asure is expected to see net income growth this year, with analysts predicting the company will turn profitable within the year. This aligns with the company's own projections of improved margins as it scales. Moreover, Asure holds a strategic financial position as it carries more cash than debt, giving it a solid foundation to navigate its growth strategy.
From an investment standpoint, Asure's stock price has experienced a significant drop of 22.98% over the last three months, which may present a potential entry point for investors considering the company's growth prospects and the anticipated return to profitability.
InvestingPro Data metrics reveal a market capitalization of $181.37 million and a Price / Book ratio of 0.92 as of the last twelve months up to Q1 2024, suggesting the stock might be undervalued relative to its assets. The company does not pay a dividend, which could be a factor for income-focused investors to consider.
For those interested in a deeper analysis, there are over 5 additional InvestingPro Tips available on the Asure Software page at https://www.investing.com/pro/ASUR. Readers looking to access these insights and more can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Asure Software Inc (ASUR) Q1 2024:
Operator: Good afternoon, and welcome to Asure's First Quarter 2024 Earnings Conference Call. Joining us today for today's call are Chairman and CEO, Pat Goepel; Chief Financial Officer, John Pence; and Vice President of Investor Relations, Patrick McKillop. Following the prepared remarks, there will be a question-and-answer session for the analysts and investors. I would now like to turn the call over to Patrick McKillop for introductory remarks. Please go ahead.
Patrick McKillop: Thank you, operator. Good afternoon, everyone, and thank you for joining us for Asure's first quarter 2024 earnings results call. Following the close of the markets, we released our financial results. The earnings release is available on the SEC's website and our Investor Relations website at investor.asuresoftware.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 those items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measures can be found in our earnings release. Today's 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 and 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. I will hand the call over to Pat in a moment, but I just want to take a moment to remind folks of our upcoming Investor Relations activities. On May 15, we will attend the 19th Annual Needham Tech, Media, Consumer Conference in New York. On May 16, we will attend the Jefferies HCM Summit in New York. On May 29, we will attend the 21st Annual Craig-Hallum Conference in Minneapolis. And on May 30, we will attend the 52nd Annual TD Cowen Tech, Media, Telecom Conference in New York. On June 4, we will attend the Stifel Cross Sector Insight Conference in Boston. And finally, we will participate in the Northland Capital Markets Virtual Growth Conference on June 25. Investor outreach is very important to Asure, and I would like to thank all those that assist us in our efforts to connect with investors. 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 Goepel, Chairman and CEO. Pat?
Pat Goepel: Thank you, Patrick, and welcome, everyone, to Asure Software's first quarter 2024 earnings results call. I am joined on this call by our CFO, John Pence, and we'll 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 questions. Our first quarter revenues were strong, coming in at $31.7 million. Our revenues were driven by our contributions from our core business, strategic initiatives and acquisitions, including our Asure Marketplace offering, Payroll Tax Management and interest earned from funds held for clients, which we refer to as float. We believe in 2024, our momentum will grow throughout the year, and we're off to a great start. Advancing our business through artificial intelligence, new technology enhancements, leading partnerships and strategic sales initiatives such as bundling of our 401(k) products with payroll to drive new client additions continues to be part of our strategy. Small businesses in the U.S. have traditionally not been or not had the resources to offer 401(k) retirement solutions. The SECURE Act 2.0 from the U.S. government is legislation that aims to increase employee participation and retirement plans by offering tax credits to support 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 401(k) plans for our small businesses. Asure has the solutions they need to set up the plan. Our announcements with Workday and the certification and joining the SAP PartnerEdge Open Ecosystem are really strong validation of advancing our technology and these partnerships will help us with more enterprise level clients. In today's 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 staff and team members incur payroll tax liabilities in multiple states each week. We're excited to win this business and look forward to achieving more opportunities with Workday. We also remain excited about our partnership with SAP, which allows us to enhance our payroll tax engine by integrating with the SAP system and streamlining payroll tax processes for our existing SAP client. We have also recently formed the partnership with the tax credit firm, HRlogics, 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 work opportunity tax credits, research and development and overall, tax credit programs. Our sales bookings helped drive growth and 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 we'll drive higher level of sales leads and productivity in 2024. Based on our current business trends, we're reiterating our 2024 revenue guide of $125 million to $129 million with adjusted EBITDA margins of 20% and 21%. As a reminder, this 2024 guidance excludes any potential contributions from ERTC 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 ERTC from 2023 revenues for comparison. Now, I would like to hand it off to John to discuss our financial results in more detail as well as our Q2 guidance. John?
John Pence: Thanks, Pat. As 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. Reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at investor.asuresoftware.com. Now on to the first quarter results. First quarter revenues were $31.7 million, decreasing by 4% relative to prior year. However, excluding ERTC 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 ERTC, recurring revenues were up 9% from the prior year. First quarter recurring revenues grew on the strength of our HR Compliance solutions, our tax solutions, Asure Marketplace and increased interest revenues with the average client balances of approximately $240 million throughout the quarter. Net loss for the first quarter was $300,000 versus net income of $300,000 during the prior year. Gross margins for the first quarter decreased to 71% from 74% in prior year. Non-GAAP gross margins for the first quarter decreased to 75% from 78% in the prior year. The decrease in gross margins for the first quarter is primarily attributable to decrease in non-recurring ERTC revenue. We continue to believe, there's substantial margin upside over the longer term as the business scales. EBITDA for the first quarter was $4.4 million, down from $6.8 million in the prior year. 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% in the quarter compared with 25% in the prior year. We ended the first quarter with cash and cash equivalents of $23.2 million and we have debt of $5.3 million. Now in terms of guidance for the second quarter of 2024, we are guiding second quarter revenues to be in the range of $28 million to $29 million. Adjusted EBITDA for the second quarter is anticipated to be between $4 million and $5 million. We are reiterating our 2024 revenue guidance to be in the range of $125 million to $129 million with adjusted EBITDA margins of between 20% to 21%. As Pat mentioned in his comments earlier these guidance figures exclude any contribution from BRTC revenues, but assume a combination of organic and inorganic growth. Our pipeline of potential acquisitions remains strong and we feel confident about reaching our objectives. We also remain excited about the outlook for core products such as our payroll tax offering, which brings additional client fund balances and the resulting flow revenues, as well as potential for numerous new initiatives we have recently launched such as the 401(k). In conclusion, we are excited about the remainder of 2024 and look forward to 2024 as being a great year for sure and driving profitable growth and leveraging the initiatives we've implemented across the business to drive sustainable growth and create shareholder value. With that, I will turn the call back to Pat for closing remarks.
Pat Goepel: Thanks, John. We're pleased to have delivered strong 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 business and we're happy to see positive impressions from our client base. The improvement of our solutions 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 AI agent into our enterprise payroll tax management platform, which will assist in complex multi-state tax compliance inquiries, is another example of our efforts. Our business has multiple growth drivers in our core payroll business, Asure Marketplace, Payroll Tax Management and our 401(k) offering in addition to tuck-in acquisitions, small business owners in the US 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 to ease 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 increasing complexity of doing business day-to-day. We've added benefit in insurance capabilities in the insured marketplace and we expect to grow going forward. Our Payroll Tax Management solution has also great potential as evidenced by the recent news of our first Workday client, a major league baseball team go online and we remain excited about what lies ahead for this business. Our sales initiative and bundling 401(k) with payroll has gotten positive reception and the SECURE 2.0 Act will allow to implement many more 401(k) plan, which states are mandating now and we expect more to pass mandates in the future. Our guidance for 2024 reflects our expectation for continued growth and we expect to be delivered with a combination of organic and inorganic growth when we view the business excluding ERTC, core revenues continue to grow at a very strong rate and our guidance for 2024 implies 25% plus potential growth. We hope that our discussion today helps illustrates our plan as we move on from ERTC. 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 performance in Q1 against the backdrop, have some unfavorable year-over-year comparisons, which we will be up against for the next few quarters. The unfavorable year-over-year comparisons will start to lift away in Q4, especially and assuming we achieve our goals, the growth rates will be much healthier as we exit Q4 and enter into 2025. We'll continue to provide innovative human capital management solutions that help small businesses thrive, human capital management providers to grow their base and large enterprise streamline tax compliance. Thank you for listening to our prepared remarks. So with that, I'll turn the call back to the operator for the Q&A session. Operator?
Operator: Thank you. At time we will be conducting a question-and-answer session [Operator Instructions] Our first question comes from Joshua Reilly with Needham & Company. Please proceed with your question.
Q – Joshua Reilly: All right. Thanks for taking my questions and nice job on the quarter here. 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 assumptions that you laid out in the guide initially for the year?
Pat Goepel: Yes. Josh, thank you. And just by the way -- and we're fortunate enough to have Eyal Goldstein, our President and Chief Revenue Officer with us as well to help answer questions. But as far as acquisitions, we've made really good progress in the first quarter and anticipate to make a very similar process in the second quarter. We have probably done 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, what I would suffice to say is, I think we are absolutely on track, if not maybe slightly ahead of on track, around acquiring. Now some of whom have to implement and some implement very, very quickly and some it takes a month or so. But we're right on track in doing now. What I would say and on the purchase price, we're probably just slightly under two times. We're thrilled with that kind of purchase price amount, so far. And it's been a combination of either equity where we've done some small equity deals, as well as cash and loans. 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 have gone very, very well.
Q – Joshua Reilly: Got it. That's helpful. And then, could we get some more details? What was interest income in the quarter and maybe compared to last year in the same quarter. And is the yield on the float bounces up, year-over-year or is that consistent with what it was last year? Just some more detail there would be helpful. Thank you.
John Pence: Yes, Josh. This is John. So last year rough numbers about 3.5% is what we earned on the client funds balances, this year roughly 4.5% the balances have ticked up a little bit, but that gives you a rough order of magnitude as to kind of how that's progressed.
Q – Joshua Reilly: Got it. That's helpful. And then maybe just last follow-up on that. Do you expect it to be 4.5% for the rest of the year or is there more upside, potential for the yield to increase Thank you guys.
Pat Goepel: Yes. So, what we factored into our numbers Josh was a 0.5 point decrease midyear. 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 0.5 point. So there might be little upside in into our model depending on what happens on the balance.
Q – Joshua Reilly: Thank you, guys.
Pat Goepel: Thanks, Josh.
Operator: Our next question comes from Bryan Bergin with TD Cowen. Please proceed with your question.
Q – Bryan Bergin: Hey guys, good afternoon and thank you. So, obviously, a big emphasis on your tax solutions in the prepared comments and good to hear about that first Workday, client going live. Can you give us a sense of how you're thinking about the growth potential of the tax business and the potential scale as a mix of the overall company over the medium term?
Pat Goepel: I think from our perspective. First of all, these are enterprise deals both SAP as well as Workday And we have opportunities in the reseller mix as well. But as enterprise deals, if I thought about it, John and I were talking the other day and when we acquired PTM, our kind of payroll businesses was roughly 40% or so of our float. So our standalone business, if you will is 60%. Float and tax, it's all part of our value proposition. Now since then, we've spent some calories and time and tears and smiles really growing tax where we're thrilled as we have some of these enterprise partners in addition to PEO partner and Prism and certainly, we're going to grow that business. What I would say implicit in our guide around repetitive revenue, last year, we were about with ERTC, about 84% or so repetitive revenue. This year we'll finish in the high 90%s. Tax is a big part of that. It's profitable, it's sticky. And the book-to-bill in some of these enterprise clients are a little bit longer than our small business. But suffice to say over a multiyear plan, we think we can grow tax quite a bit. It will be a mixture of fees and flow, and that's all part of the value proposition. But as I was reflecting even on 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. Tax 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 will also be growth this year as well.
John Pence: And I'll just put a little bit finer point on what Pat just to make sure it was clear. When we think about those client fund balances probably about 60% are specific to this tax business. So, it's a key part of the strategy. So, it's part of how we price, it as part of the recurring revenue because of that, right? 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.
Bryan Bergin: All right. That makes sense. Good detail. My follow-up here, so I guess versus three months ago, how would you characterize the overall ACM demand environment as well as kind of the competitive and pricing environment dynamics in the market?
Pat Goepel: Yes. And I'll let, Eyal, if you want to jump in but just in general, what I would say is we specifically pivoted from ERTC. We've leaned into some of the value proposition around access to capital around getting good people to work as well as to be compliant. And I think that value proposition, we pivoted a bit away from ERTC, but that was always part of our value proposition anyway. And we've leaned into some new products and services. What we're really thrilled is this first quarter payroll sales were up 68% over last year. And its evidence that, if you get the right value proposition, the right bundles, you can grow. Now, I mean it sound easy for Eyal to execute. There's a whole lot of sweat that goes into that but Eyal, maybe just your comments on the market.
Eyal Goldstein: Yeah. Thanks, Pat. So Bryan, so specifically, we're not seeing any pricing pressures or any issues around pricing for new deals and for up-sells within our customer base. We are seeing great growth. Listen, we're -- a lot of our competitors, and they've said it, 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 that's helpful for us just in terms of deal cycle time, and the ability to win more deals. But we're not seeing any pressure specifically on pricing there.
Bryan Bergin: Okay. Good. Thank you.
Pat Goepel: Thanks, Bryan.
Operator: Our next question is from Richard Baldry with ROTH MKM. Please proceed with your question.
Richard 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 or goals throughout the year? How is the sales tenure trending? And maybe do you feel like that was geographically or vertically pretty broad or is there any concentration inside of that? Thanks.
Pat Goepel: Yeah. I think just from my level, I'm very pleased with the sales execution. I think, the pivot is probably took us about a quarter or so. And then I think in some areas we reference standalone tax or the new 401-K. The book-to-bill is probably elongated about a quarter. What I would say is the ability to hire, the ability to grow, the ability to sell. You know I think Eyal’s team has done very well, but Eyal may be as 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 Eyal if you want to go back but that.
Eyal Goldstein: Yes, in -- the goal would be to get to about 130 quota carriers by the end of the year. And I'm really happy with the pivot with some of the numbers Pat mentioned was 68% growth in those payroll sales. And just from a new payroll unit it's almost 100% growth in that area. So those are great healthy ARR bookings that come with tax. They come with marketplace add-ons, they come with some of the additional 401k 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 our ability to pivot that quickly and in to grow that core business year-over-year is great and it's only going to accelerate. So the reps that we have doing really, really well high productivity with are those -- with leading with ERTC are basically on par this year from a productivity perspective but doing it with our ERTC. with really good core payroll HCM ARR sales and that's fantastic. That's just going to grow for us as we get more people comfortable with for 401k, get more people comfortable with some of the tax credit solutions that we announced earlier this week and where we could just continue to capitalize on it.
Richard Baldry: May be switch back to the tax side on the Workday SAP area, maybe look at now with early wins obviously would build some referenceability. How big can that space be with just those two sort of end market players? I don't know if there's a way to think about the ARPU 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 referenceable bases than their sellers will push the growth in that? Thanks.
Pat Goepel: Yes I think sometimes it has a phrase you know two comma deals. In small business where your average sale is somewhere a little over $3,000. You don't adhere to comma deals. You know, we’re in some could – two comma pursuits which are really exciting for us. You know over time this could be $100 million business and you know that doesn't mean you should spreadsheet that in 2025. But I will tell you we have an opportunity here both in treasury management and as well as tax filing. And it's not just the two enterprise partners that are world-class companies. There's the PEL group. There is in our software group. We have interest level is really, really high. And then some of the development that we're doing on we really feel good about -- our bundling of treasury management of tax filing et cetera. So it's a $100 billion business unit by itself over time and we're just getting started. Eyal, I don't know if you’d want to highlighting? Thanks.
Eyal Goldstein: We the pipeline -- the pipeline reaches multiple times year-over-year. I would our sales team is you know we're fully staffed on that side from individual contributor perspective. And we've got folks that I am very confident in that have sold on this type of sale specifically before we understand the competitive landscape extremely well. We're very, very excited about the modernization of the platform and what our CTO has done with the solution. And frankly, we're getting pulled into a lot of opportunities rather than pushing our ways in and that's always refreshing to see. And then on the deal size like Pat mentioned on the higher end too as you have six figure deals and then on the lower end probably you know four or five times what a normal payroll direct deal is today.
Pat Goepel: And then lastly we brought in an operational leader as staff that work [indiscernible] in the past. He's run a $100 million plus business in [indiscernible]. We really beefed up our personnel, the operational staff. So, we have the right technology people, right operations, the right salespeople and then the right market at the right time. So, this is going to be a foundational growth item. It'll take a while because of book-to-bill and because there are enterprise sales and in growth.
Richard Baldry: We don't know the internals are base numbers, sort of, curious without a lot of commitment to this, but if the payroll sales were kept up at a clip like the 68% year-over-year, would that imply or a longer term sustained ability to keep up the 25% organic growth rate? Or is that number sort of faces tough comparisons and by definition have to come down a little bit over time?
John Pence: I'll give you my perspective Rich. I don't think we've ever claim that this is going to be a 25% organic business. We know that it's going to be a combination of that roll-up strategy and the organic is it was going to get us 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 inorganic side of the house and do you think that's achievable?
Pat Goepel: Yes, and then the -- yes, 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 then we'll be in a really nice position where we're high 90s repetitive growth that as we launch in 2025, we'll come when there's a lot of momentum. So, that's what we're planning for and that's our [indiscernible].
Richard Baldry: Great. Thanks.
Operator: Our next question comes from Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed with your question.
Jeff Van Rhee: Great. Thanks for taking my questions. Several just want to clarify on the 68% of payroll sales increase, are you -- is that the comparable number to what you would typically quote is your total bookings year-over-year for the quarter?
Pat Goepel: Yes. No, Jeff we had some noise there with ERTC and some of that. Rather than kind of parse everything out, we just said this year where especially the first three quarters. We have all these comparisons with ERTC. We have some bundles whatever. This was just you know -- obviously we're a payroll business and it's a good majority of our revenue. We wanted to highlight that because you know that some that I think people will feel really good about. And it's clearly an emphasis with our bundles whether it's for 410(k) or some of the new products that we have.
Jeff Van Rhee: Okay. And then on the prior acquired revenue target was $10 million to $15 million. I was unclear, it sounded like you said you're running a little bit ahead of where you thought you'd be. Are you still expecting to be in that $10 million to $15 million of annual acquired revenue?
Pat Goepel: Absolutely. I would say we've had a very strong first quarter first half. Those -- just to start if we didn't acquire anybody after that, we'd be very close to the low end of the range. So, we'll continue to acquire into this, but yes we're on pace.
John Pence: Yes, I'll just -- I'll make a quick comment on this and Pat can add to it. I think we've talked about it I think on some of these calls previously, there's a unique situation kind of going on in the industry, right? It's kind of opportunistic for us. But with the changing regulatory landscape, a lot of the states are now saying that payroll processing businesses need to be regulated like a bank. And so when we were I think pretty early on -- I think we resisted it because we thought it was pretty aggressive move off at this stage. But I would say that three years ago, we decided to embrace it. And so we've gone down a path to get a license. It is going to 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 is it something they want to continue on with. And that was a [indiscernible]. I think I think we're going to have a lot of opportunities over the coming months and to kind of take people into our arms. So, that's just another kind of backdrop as regards to acquisitions.
Jeff Van Rhee: Yeah, definitely helpful, John. I was going to go down that path. I know, obviously, the 401(K) Secures Act has been an area of focus in Treasury also. Just on those two avenues, any other quantification you can give to give us a sense of the ramp in deal counts, bookings, pipeline, just any quantification in those two areas?
John Pence: I'll speak to Treasury, and then I'll let kind of Pat speak to 401K. We've, you know, we launched this with a partnership with J.P. Morgan. We have people that want to buy from us right now. We're just kind of holding them off as we get it up and running. We want to make sure it's bomber solid before we put them on. So I think we're holding that up a little bit just with our getting it launched. But so I think there's good demand, almost unsolicited demand for that product. And then I'll let Pat kind of talk on 401(K).
Pat Goepel: Yeah. And just on 401(k), I think first of all, we pivoted and launched on 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 months behind where I'd like to be on the marketing sales perspective, but we're cleaning -- we're really starting to pick up the pace. On the book, the bill, I would say just based on it's a new business for us, we're probably about three, four months behind. Well, 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 in about 60 days. It's somewhere around 120 right now. So we'll go through that just as we grow and learn and get the muscle memory, but that's where exactly where we are in the process.
Jeff Van Rhee: That's helpful. I appreciate it. Thanks, guys.
Operator: Our next question comes from Vincent Colicchio with Barrington Research. Please proceed with your question.
Vincent Colicchio: Yeah, Pat, curious. Can you characterize your employee base? Are they hiring currently? What does that look like?
Pat Goepel: Our employee base or the employee base, obviously our clients, I would say we're looking at that number. We're probably flattish. In some areas, they're hiring. In some areas, basically they're holding. I would say access to capital in the small business is still the biggest issue. Some of the regional banks aren't lending and interest rates are a little bit high. So, but on the same token, getting quality people is still a concern. So from my perspective, it's been flattish. I'd love to say it's -- I do think as we connect more people to small businesses, it's got a shot to go up 1% or 2% because there still is hiring demand. I would say they've been unable to execute or unable to get the capital they need to grow, but that's exactly where we are today.
Vincent Colicchio: And how did your bookings break down between new and existing clients?
Pat Goepel: We're, Elay, I'll let you answer that, but I believe we were, well, go ahead.
Eyal Goldstein: Yeah. 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 new business.
Pat Goepel: And where I'd like to go with that is, and we did want to highlight in our release around some of our technology initiatives, this common user interface with identity access management is going to be really good for us as far as the adoption around the marketplace, adoption around cross-sell. It allows us to get into 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 learnings here over this quarter and next. But as we get really solid with that, what I'd like to do is take that 70, 30 or so new sales more to ultimately, maybe reverse it. Now that's not going to happen overnight, but I think that's the opportunity we have. And 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 logo has been very strong while we get to that point.
Vincent Colicchio: Thanks, Pat. Nice quarter.
Pat Goepel: Thank you.
Operator: Our next question is from Eric Martinuzzi with Lake Street. Please proceed with your question.
Eric Martinuzzi: Curious on the decline in the cash balance from Q4 quarter end to Q1 quarter end were down $7.1 million. Can you help me bridge that?
John Pence: Yeah. I think I had a couple of things happen. As you know, the first quarter is always seasonally impacted by W2 revenues. We collect those funds, usually in December we defer that revenue. And we recognize that revenue in Q1. And also we pay a lot. We have a lot of annual events that happened in the first quarter whether it be bonuses or we have a sales kickoff. And so there's -- there's some abnormal spending that always happens in the first quarter and in the fourth quarter is a little bit inflated usually because of that W-2 cash coming in. And then obviously we spent some money on some acquisitions as well.
Eric Martinuzzi: How much did you spend on the acquisitions in Q1?
Pat Goepel: I don't have -- I don't have it right in front of me. I think it was a couple of million bucks going from -- order bank from my memory.
Eric Martinuzzi: And also in areas you know?
Pat Goepel: No I was more net all in, but because we had the people or the people strategy deal there was an 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 on it all come due in the first quarter. And then this quarter specifically we had two events where normally we have one. So now that -- we're pleased with the cash this quarter, but we do drain a little it of cash first quarter and then typically we're better as we go through the year.
Eric Martinuzzi: Last year your cash was up four million between Q4 and Q1 and this year its being down $7 million. But I'm just not.
Pat Goepel: Yeah. Happy to take it offline, Eric.
John Pence: I think I think there was a receivable. Yeah. I think it was like your tenancy will might have come in from the government last year, if I'm going from memory. So I think that might have been the dynamic is an unusual quarter last year for the first quarter.
Pat Goepel: And John, if I remember correctly that was close to $7 million, right?
John Pence: Yes. So Eric, that's a lot of the rate there.
Eric Martinuzzi: And have we closed any acquisitions in Q2?
John Pence: Yeah. I think there's one disclosed in the subsequent events that we got closed yesterday.
Eric Martinuzzi: Thanks for taking my questions.
Pat Goepel: Yeah. Thank you, Eric.
Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Pat Goepel, for closing comments.
Pat Goepel: Yeah. I appreciate everybody's time today on Lackawanna and at Asure, it's a great time to be here. We appreciate all of you. Patrick mentioned, we have a lot of investor outreach here over the next quarter. We hope to see you soon. So thank you.
Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.
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