Asure Software Inc (ASUR) 2018 Q1 法說會逐字稿

Good [morning], and welcome to Asure Software's First Quarter 2018 Earnings Conference Call.

Joining us today for today's call are Asure's CEO, Pat Goepel; CFO, Kelyn Brannon; and Director of HR, Cheryl Trbula.

(Operator Instructions).

And as a reminder, the conference is being recorded.

With that, I would like to turn the call over to Cheryl, who will provide the necessary cautions regarding the forward-looking statements made by management during the call.

Please proceed.

Thank you [Amanda], and good afternoon, everyone.

Before we start, I would like to mention that some of the statements made by management during this call might include projections, estimates, and other forward-looking information.

This will include any discussion of the company's business outlook or guidance.

These particular forward-looking statements, and all of the statements that may be made on this call that are not historical, are subject to a number of risk and uncertainties that could affect their outcome.

You are urged to consider the risk factors relating to the company's business contained in our reports on file with the Securities and Exchange Commission.

These risk factors are important, and they could cause actual results to differ materially from expected results.

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

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

Pat?

Thank you, Cheryl, and I'd like to welcome everyone to Asure Software's first quarter 2018 earnings call.

We sure appreciate your interest and support whether you're an employee, client, investor, analyst, or valued third party.

Quarter one marked a terrific start for the year, highlighted by strong new logo and client expansion, a continued healthy pace on the acquisition front, and solid financial performance.

Let me give you, please, just a few key financial highlights for the first quarter.

Total revenue in the quarter grew 80% over the prior year.

Importantly, recurring revenue now represents 85% of our revenue mix, allowing for very strong visibility in future revenues.

Cloud revenue grew 110% from a year-ago quarter, and cloud bookings for quarter one were strong, and they were up over 225% year-over-year.

Clearly, our cloud offerings are resonating in the market, and new business activity has been really promising.

As a result of the strong business momentum Asure's been experiencing, I'm pleased to note that we're raising our annual revenue guidance for 2018.

We've chosen not to raise EBITDA guidance due to planned investments in IT infrastructure at this time.

We also closed three acquisitions since our last earnings call, bringing the total number of acquisitions we've completed this year to six.

These acquisitions enhance our scale, product, customers, cross-sell opportunities, and prepare us for future growth and margin expansion.

And we have a very active pipeline of prospects in the works.

What was our immediate goal of reaching $100 million is now clearly within our line of sight.

It's not if, it's when.

And key to enabling our acquisition opportunities, we recently expanded our credit facility with Wells Fargo and Goldman Sachs, all terrific partners, increasing our available capital to $175 million.

In parallel, we also increased our shelf registration to $175 million, up from the prior $60 million shelf.

As we've previously disclosed, we have no current plans to issue equity.

However, we felt it was prudent to allow for maximum flexibility as we progress on our growth initiatives, looking ahead.

During the quarter, we secured new wins across a wide range of industry verticals and continued new expansion with several customers.

New logos in the HCM marketplace included Basingstoke, Deane Borough Council, Douglas Fruit, among others.

We also extended our relationships with some very important existing clients with upsells and cross-sells, like Apple, Genpact, KPMG, Proctor & Gamble, PWC, among others.

Backlog was up over 160% year-over-year.

Notably, we're also seeing large opportunities in the workspace area, as well with our recent OccupEye acquisition.

Finally, I'm very pleased to note that Asure was named as the winner of a Bronze Stevie Award in the Best New Product or Service Category of the Year in the Human Capital Management solution.

This is the third time Asure has received this award in the last five years.

I'd personally like to thank our engineering team for their commitment to excellence by this industry-leading business award program.

For more detailed financial information, I'd like to turn the conversation over to our CFO, Kelyn Brannon.

Kelyn?

Thank you Pat, and good afternoon, everyone.

As you heard from Pat, the first quarter marked a strong start to the year, with several strategic acquisitions, customer expansion, and new logos, along with the upsell and cross-sell to our growing customer base.

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

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

I would also like to remind everyone that we adopted a new revenue recognition accounting standard, otherwise referred to as AFC-606 during the first quarter of 2018, on a modified retrospective basis.

This means that results for reporting periods beginning on or after January 1, 2018, are presented under the new revenue recognition standard, while prior period amounts before January 1, 2018 are not adjusted.

There is no significant impact to our revenue recognition.

Under 606, sales commission expense is extended to between five to 10 years, which resulted in a $126,000 reduction in commission expense for Q1 of 2018.

Now, let me review our financial results for the first quarter ended March 31, 2018.

Total revenue for the first quarter increased 80% to $19.3 million from $10.7 million in Q1 of last year.

The primary contributor of this increase was recurring cloud revenue, which more than doubled year-over-year, growing an impressive 110%.

In fact, cloud revenue grew almost $5 million sequentially and represented 85% of total revenue in Q1, up from 73% in Q1 of last year.

As Pat mentioned, we've been pleased with our ability to steer the business towards a visible recurring revenue-focused cloud company.

In Q1, recurring revenue, which includes the sum of cloud revenue and maintenance and support revenue, represented 91% of total revenue, up from 83% in the first quarter last year.

Q1 benefited from typical seasonality we experienced as a result of one-time W-2 and ACA processing.

To be more transparent, we've normalized these one-time benefits to disclose a normalized recurring revenue which represents 82% of total revenue, up from 80% the first quarter last year.

Hardware revenue in Q1 was $719,000, down from a little over $1 million in Q1 of last year.

The hardware line item on our P&L can fluctuate from quarter to quarter based on purchasing patterns.

That said, it isn't a material contributor to the business, contributing under 4% of total revenue during Q1.

We are pleased to see on-premises software decline, as it demonstrates our success in migrating any remaining customers to our cloud offering.

In Q1 2018, on-premise revenue represented less than 1% of total revenue.

As a result, we've combined the on-premise revenue with maintenance and support revenue on our P&L.

Maintenance and support revenue of $1.2 million was up 7% over Q1 of last year.

Professional services revenue for Q1 was $975,000, up from $701,000 in the year-ago quarter.

As a reminder, services revenue ebbs and flows based on a variety of factors.

We view services as an enabling function that is auxiliary to our cloud offerings, which drives the real growth and value to our shareholders.

Next, I'll discuss our profitability metrics.

GAAP gross profit for the first quarter of 2018 was $13.7 million, or 71.2% of total revenue, a $5.4 million improvement over the $8.3 million in the first quarter of 2017.

You'll note that our gross margin in Q1 was impacted due to the shift in revenue mix.

As you recall, we acquired three resellers at the beginning of the year.

These resellers typically carry lower gross margins and represented a larger portion of our revenue mix in the quarter, which resulted in the overall gross margin reduction.

As you'll see in today's press release, we are also disclosing non-GAAP gross profit, which adds back amortization and stock-based comp to GAAP gross profit.

For the first quarter, non-GAAP EBITDA, excluding acquisition costs and one-time items, totaled $3.8 million, an increase of 121%, a full step up of $2.1 million from $1.7 million in Q1 of last year.

Non-GAAP EBITDA as a percent of revenue was 19.6% versus 16% in Q1 of 2017.

As you know, Q1 typically trends down as a result of employer taxes and benefits as you kick off the year.

In addition, Q1 2018 was impacted by our recent acquisitions, which typically take six months or so to achieve plan synergies.

For the first quarter of 2018, our non-GAAP net income totaled $1.7 million, or $0.13 per share.

Asure previously disclosed non-GAAP net income, excluding the two one-time items, amortization expense and other one-time expenses, and stock-based compensation.

I'd like to note that, beginning in 2018, we are also adding back the noncash tax effects of acquired goodwill and amortization, since these can vary in size and frequency.

When we're moving these costs, our effective tax rate is approximately 0%.

We feel that this is a more (technical difficulty) in today's press release.

Based on our prior methodology, or what analysts previously modeled for non-GAAP EPS, our Q1 2018 non-GAAP EPS would have been $0.11 per share.

You'll note that we have shown both measures in this table, and going ahead, we will be disclosing non-GAAP net income loss and EPS under this new methodology.

As we begin to implement our new ERP system, we are able to make refinements to provide more detailed disclosures.

Shifting gears to our balance sheet, at quarter-end we had $26 million in cash and cash equivalents, and $115 million in debt.

Deferred revenue on the balance sheet as of March 31, 2018 was $13.2 million, an increase of 33% year-over-year.

Unbilled deferred revenue, which represents business that is contracted but unbilled and off-balance sheet, ended the first quarter at $14.1 million, up 422% year-over-year.

Backlog, which we define as the sum of deferred revenue and unbilled deferred revenue, was $27.3 million, up 167% year-over-year.

DSOs in Q1 were 80 days, down from 84 days in the year-ago quarter.

During Q1, we invested approximately $25 million in cash to consummate three acquisitions.

We added 81 employees in Q1, bringing our total headcount to 405.

Before I turn the call back to Pat, I want to congratulate him on being nominated as a finalist for the Ernst & Young Entrepreneur of the Year award.

I can speak for the entire Asure team when I say that Pat is an outstanding leader who has dramatically impacted the trajectory of Asure over the past nine years, and will continue to lead us during this exciting time for our company.

Now, I'll turn the call over to Pat.

Pat?

Thanks, Kelyn.

And I don't view it as Pat Goepel nomination.

I view it as Asure Software nomination.

And I'm glad a company and organization like Ernst & Young is recognizing our success.

But I'd like to shift gears and talk about our strategic tuck-in acquisition strategy and provide some detail of the three deals we recently completed.

Let me first talk about the acquisition of Wells Fargo Business Payroll Services Evolution human capital management client portfolio.

As a result of this acquisition, Wells Fargo's customers who use our payroll platform will transfer from Wells Fargo Business Payroll Services to Asure Software.

With the addition of these clients, we're able to provide them with the new tools to be successful.

Asure Solutions, such as workspace management, our time and labor product, HR consulting and benefits, will provide a new opportunity for these clients to experience the full suite of Asure Software Services.

The second acquisition, which is Austin HR, expands our HR consulting reach.

Austin HR is a professional services firm providing outsource human resource tactical and professional services, such as payroll, employee benefit services, recruiting training, development and strategic HR consulting.

Austin HR will be integrated under the Asure Consultant Services offering, and with it we acquired some really, really high quality people, and Laurie and Dave have done a great job historically with the business.

And then, finally, the third acquisition we completed was OccupEye, which is based in the U.K. OccupEye provides a sensor-based solution that we'll be able to offer worldwide that allows organizations across the world to streamline operations, create efficiencies, enhance productivity, and analyze employee engagement, which generates cost savings and creates a more employee-focused workplace.

OccupEye's technology, combined with our existing workplace management software and human capital management software, allows us to expand our technology solutions while adding its own complementary and proprietary sensor hardware and analytics.

We're now positioned to develop new innovations in the Internet of Things space while offering our clients the technology solution they'll need to improve their human capital management space utilization and overall employee experience.

From a business combination standpoint, the integration effort of all six acquisitions is well underway.

Our sales and marketing teams now are fully integrated.

They sell the whole suite of services.

They've been doing that since January 17, and we keep having success.

Our early bookings from the combined groups are much higher than the prior first quarter when these entities were independent operating businesses.

We're on track to hosting all our client support on one platform by quarter three.

And internally, Kelyn's finance team is beginning to implement a new cloud-based ERP system to allow for consolidated platform with initial phases to be completed this year.

Now, I'll turn to guidance.

I'm pleased to note we've raised our annual guidance twice now since our last earnings call.

We last updated our guidance about a month ago after the close of the first quarter.

Based on the strong reception we're seeing in the market for Asure Solutions, we're increasing our annual revenue guidance.

For the 2018 full year, we expect to achieve between $90 million and $93 million in revenue, with non-GAAP EBITDA to be $20 million to $23 million.

This guidance assumes an effective tax rate of 0%.

M&A activity remains healthy.

We have several potential deals in the pipeline, and we're looking at completing more transactions this year.

And as you know, these are not included in today's guidance.

Our organic and acquisition growth strategy initiatives continue to propel Asure for continued growth.

The momentum we've built upon in 2017 has accelerated the velocity of our cross-selling opportunities and allows us to achieve additional leverage in our financial model.

What was previously a mid-term goal of surpassing $100 million in revenue with 22% to 25% non-GAAP EBITDA margin is now a short-term goal, and we have it sharply within our line of sight.

It's not if, it's when.

I have a lot of confidence in our management team.

I've never felt this confident in Asure's opportunity to take share in a large and growing market that we compete in.

As a reminder, I bought shares through my tenure as a CEO, and I've never sold a share.

While quarter one posted good results, we still have a lot of work to do.

We're rolling up our sleeves, heads-down execution as we head into the rest of the year.

Our management team is hired, prepped up, and I feel really confident that we'll deliver.

In closing, we're excited to be hosting our annual client conference, C3, on May 15th through 18th in Orlando.

We're expecting attendance to more than double this year from last year.

We'll be showcasing our new technologies in the human capital management and Internet of Things space, and we'll take advantage of this opportunity to spend quality time with our clients, partners, and prospects.

And with that, we're open for your questions.

Operator?

[Operator Instructions.] Derrick Wood, Cowen and Company.

This is Nick Altmann on for Derrick.

Given the increase in the shelf a couple months ago, does that imply that the acquisitions are going to get a little bit bigger?

And then, how should we be thinking about M&A for the rest of the year?

Is there still a heavy focus on service bureaus, or are you guys thinking a little bit outside of that?

Thanks for the question, Nick.

We've laid out a strategy around acquisitions.

I think the shelf gives us maximum flexibility in environment that we have.

Our priority is around scale.

We like acquisitions where we own the technology, or we have partner capability today.

Those are examples of Austin HR, OccupEye, and then the reseller acquisitions.

I would look at acquiring scale first.

Down the road, if we decide to get wider, we will.

We've had success in acquisitions in the integration.

We like the model.

And we'll continue to drive to be opportunistic, and we have a strategy in that.

I would think we'd have more acquisitions.

As you know, acquisitions are difficult to forecast, so we don't have them in our guidance.

But we remain acquisition-hungry.

And then, does the OccupEye acquisition, does that provide a significant opportunity for expansion in Europe?

And then, can you guys just give us a sense as to how aggressive you may want the focus on Europe versus United States?

OccupEye is in Europe.

We have a terrific sales office and delivery service in London today, and we'll continue to expand our global reach and European reach in that area.

One of the things we're also excited about is that technology will now be delivered in the United States, as well.

We have several joint clients.

And one of the hottest trends in the Internet of Things, if you think about the tech companies, for example, the Apples and the Googles and the Facebooks of the world, the war for talent, they're winning the war for talent, because tech companies have had a real fast run at market cap and enterprise value.

Financial services firms, for example, there's a brain drain, and the brain drain is going to the tech companies.

What the leading companies in the financial services areas is realizing they're in a war for talent, and what they want to do is provide a human capital and Internet of Things strategy where people can work from home, they have business hoteling, they can collaborate.

And they want to provide a work environment that's cool.

And they can compete, then, with the tech companies for war for talent.

So what you're seeing is bigger deals, bigger worldwide rollouts in the Internet of Things space, and now we own the technology.

And it's not just for space management, but it also ties into heating and air conditioning.

And people can invest in maybe less space, but more of an upgraded feel, look and feel, and then a feel that allows for collaboration, because everybody's looking for the end-to-end process.

So that was the rationale between our acquisition.

We're already reselling a product today, so we're very familiar with the rollout.

We will grow in Europe, but certainly we're going to grow in the U.S. and these large multinational companies in the workspace arena.

Just one more quick one, if I may.

Does the new guidance, does that still imply roughly 10% organic growth on the year?

Yes.

I think maybe a little bit more, but we're in that 10% to 12% kind of space.

It's difficult with the amount of acquisitions we're doing.

We're going to give more clarity as we get to a common ERP system, but I think that's fair.

Scott Berg, Needham.

I have two quick questions here.

First of all, Pat, now that you're approaching that $100 million run rate, does the size of the business make your acquisitions, or your acquisition conversations easier?

And does it make these companies, or these owners, more willing to actually sell given your recent successes in the space?

Thanks for the question.

I think there's no question that people want to be associated with a winner that can execute.

And we've been really fortunate to have a great experience with the acquisitions we've done, and there's kind of a halo, or word-of-mouth effect.

People know that we will do what we say we're going to do, and that makes the next acquisition easier.

Long-term relationships make it easier.

We do see that we're having easier conversations.

And then, as a bigger company, your ability to execute, people have more confidence in it.

So I think those all bode well for us.

My second question for Kelyn, you had mentioned that, outside of the one-time payroll processing items in the quarter, revenue mix was 82% subscription, and obviously [attain] more services and any remaining license.

What do you think that mix looks like maybe over the next 12 to 24 months?

I didn't know if you're seeing shift with some of the acquisitions that you recently made, or maybe some of the things in the pipeline might move that one way or the other.

I would expect to see that.

When you get kind of north of 70% and 80%, you stop growing or increasing that as rapidly as you did before.

But I expect to see that kind of 82% go up over time, but it's kind of the law of big numbers.

It kind of gets a little slower as it's going up.

But we're thrilled where we are today, and we expect to see that to continue to grow.

David Hynes, Canaccord.

Nice set of numbers here.

Pat, I just want to ask a high-level question.

Six acquisitions year-to-date, obviously running the engine hot.

What have you learned in terms of takeaways about your biz dev team, the firm's ability to integrate?

Does it feel like you have the capacity to take on more right now?

Are we in digestion mode for a bit?

I guess anything you've learned about the team or the process that will carry into the go-forward M&A strategy.

Thanks, [DJ].

Really, first of all, I'm very pleased to have Kelyn with us.

She's been with us six months.

Eyal Goldstein's been with us 18 months, is a very strong leader, Joe Karbowski's been with us now six years, very strong leader, as well.

What I feel really good about is they're hiring great people, as well, and I'm really happy that we have a two-level team that can execute.

As far as our acquisition strategy, I think one thing is really important, is we're acquiring companies that we either provide the solution today or we own the technology.

And that makes the degree of difficulty a lot easier.

As we build out this business and our client selection acquisition selection, we're going after the best of the best and people that can help us, well-run operations.

We have tremendous insight into kind of what they do for us today and what they've done historically.

So I feel we do have more capacity this year.

I think we have no shortage of things to do.

But that's why we're not going to go far wider in our approach.

We're going to continue to get scale.

And I'll listen to the organization about how fast we go.

I don't know if we'll do six acquisitions every three or four months, but I will tell you, we'll continue to be acquisition-hungry, and I believe we can execute.

One for Kelyn on the numbers.

Just on the gross margins that you explained, obviously the shift in revenue mix as you bring resellers into the fold, should we think of Q1 as kind of trough gross margins?

Could it go lower before it goes higher?

How does that progress as we look to model out the next six to eight quarters?

Barring acquisitions, I would look and say that my gross margin, GAAP gross margin is going to range in the very low 70s, so that 70% to 72%.

Having said that, if we acquire more resellers out there and they become a larger piece of our mix, you might see some shifting there.

But I also think that, with our technology, you're going to start to see scaling also, so it won't be as veritable as you think it would be.

And if that should happen, I'll make sure that I'm transparent and give guidance.

But right now, I'd kind of use that 70% to 72%, but it's really that mix shift of HCM versus hardware versus cloud, which has very high gross margins, as you would expect.

So I would say between 70% and 72% at this time.

Rich Baldry, Roth Capital Partners.

Can you maybe give us an update on the sales team internally, the organic team as far as the rep headcounts or your plans there, how you feel about the growing tenure of people you've got in their seats and their pipelines?

Thanks.

Thanks, Rich.

Yes, we have about 50 people, salespeople today, or so.

I would say 60% have been here over two years, 40% under two years.

Typically, when we see maximum productivity, it's years three through five.

I think Eyal Goldstein's done a great job of bringing the sales team together.

It's the right mix of new talent and existing talent.

In January of '17, we started selling the whole solution together, and that's really led into a productivity mix.

And I think we've accelerated our stride in '18.

The morale's good.

The people we can attract, it keeps getting better.

People that we couldn't touch a couple years ago, now instead of us, hey, you want to work at Asure, now they're calling us and saying, “Hey, we want to be part of a winner and a winning team.” They're bringing tremendous skills to the team.

The management upgrades have been noticed by the marketplace.

Simply put, we're a whole new sales organization than we were three or five years ago, and a lot of it's leadership.

A lot of it's the product set and capabilities.

A lot of it's the acquisitions.

But we're where people want to be right now, and I don't want to oversell that, but boy, it's really a nice feeling.

So I think it'll bode well for 2018 and beyond.

And we've seen how accretive the acquisitions can be, so having started with six already this year but holding the EBITDA guidance where it is, can you maybe talk about where those incremental investments are going to go in the organization?

Yes, Rich.

One of the things that with Kelyn on board, and we've done a deep-dive in every area, and Joe Karbowski and the product group, we continue want to invest in product and invest in integration because we think it has huge upside, especially as our pipeline is so strong.

And then, secondly, our IT infrastructure, we're going to go from our legacy ERP system to a consolidated cloud-based ERP system.

And we're going to spend some not only money, but calories in that for the rest of the year.

So at this time, we're not going to upgrade our earnings guidance, but the revenue guidance is very strong, and that's why we [noticed] the upgrading.

Also curious, with C3 coming up, beyond just your customers showing up there, do some of your reseller -- the companies that could be acquisition prospects, also attend?

And does that have the potential to add more into your pipeline?

Thanks.

Thanks, Rich.

Last year, remember at this point in time, we had C3 both from a reseller perspective and a current client perspective, along with prospects.

And what we were really excited is the halo effect that comes from C3, because at that point in time, we had a lot of sales and/or acquisitions that we've since done that generated from either C3 or certainly were enhanced from C3.

Or I guess at that time C3 in May of last year.

With more than double the people signing up, we're really excited about the prospects for this next year, whether it's an acquisition, a cross-sell opportunity, a new engagement.

We think there'll be that similar halo effect.

And I know just in my one-on-one meetings and the management teams and the people who are there, we're booked solid, which should bode well for the rest of the year.

Mike Latimore, Northland Capital Markets.

Hi, this is [Oshi] for Mike Latimore.

Could you tell us how much was workspace revenue in the quarter?

We don't have a clean breakout of that.

I think historically it's about a third of our business or so, but we don't break it out by that.

We break it out by revenue type.

What are your renewal rates for cloud customers?

Our renewal rates are typically -- we have a model in a dual walk-up, if you will.

It's about 92% in revenue retention, about 2% organic growth in same-store sales, meaning people are hiring more or growing their booking rooms.

We have about a 3% price increase or so.

We have about an 8% cross-sell component, or upsell component, and then about 8% new logos.

So the value of a base customer ultimately as a walk-up is about 110%, 112%.

Eric Martinuzzi, Lake Street.

I know you didn't give specific guidance on the second quarter, but given the acquisitions, I just wondered if you could at least comment versus where the consensus estimates are.

Right now for the second quarter, it's $22.4 million of revenue and $4.8 million of adjusted EBITDA.

I think that captures the acquisitions, but I just wanted to make sure that, [of] those numbers, are you comfortable that you can meet or exceed those for Q2?

Eric, we don't give specific guidance.

And I think with three acquisitions in April, we're still going through some of those numbers, especially on intangible and goodwill.

We're going through understanding those businesses, et cetera.

I don't think $3 million or so in acquisitions is a million miles off.

There were some one-time revenues in the quarter with seasonality, but I think we're a growing, healthy business.

Some of the second-third quarter, you start to hit your employee limits and FUTA/SUTA, et cetera.

So typically, the margins tend to improve over time.

So I don't think we're a million miles away, but we don't give those specific numbers.

Going back to the acquisitions, obviously we finished the quarter, those numbers for both cash and debt are in the financial statements for March 31, but I have to confess, I haven't been able to keep up on some of the incremental cash spend (inaudible) taken on as far as pro forma, where we are for the three transactions that took place since the quarter-end.

Do you have a pro forma cash and a pro forma debt number?

I don't have that at hand, and I might want just a little bit more color on that to make sure I'm understanding correctly what you're looking for.

Well, I'm saying that you did three deals in Q1, and those are captured in the quarter-end balance sheet.

I'm just looking for kind of a pro forma for the three deals that you've done thus far in Q2, kind of an April (inaudible).

Well, I can tell you that the three acquisitions that we did in January, we utilized our own cash.

We put into place the amended debt agreement with Wells and with Goldman Sachs towards the end of the quarter, and then used some of that cash for the Q2 acquisitions.

And then, as you know, with Wells Fargo and Goldman, part of our new facility is a delayed debit draw on the loan.

So we have a acquisition facility, basically.

If it's down the fairway of our reseller agreements, we have $25 million available to us, we also have a $5 million revolver.

So we have plenty of needs.

I think our cash on hand is in the -- we're certainly not looking for cash.

So we don't give that specific number in the middle of a quarter, but we're fine on cash.

That's okay.

I can take it offline.

That's a good quarter, and a good outlook.

[Operator Instructions.] Brandon Osten, Venator.

Just in terms of your own internal modeling, I'm just looking at your $90 million revenue guidance, or $90 million-plus.

You said that you think organic growth's going to be a little more at the 10%.

I feel like it has to get there in order for the revenue guide to get there.

But can you give me a sense -- I know there's a lot of components to revenue, some of which isn't growing.

What do you think the organic growth in the cloud revenue line's going to be to get to that number, like ballpark?

Well, I think it's higher than the 10% I think in general, because first of all, on-premise declining, professional services isn't growing as fast, so cloud is obviously by nature a little bit more, although it's recurring, so it takes a little bit longer time.

We are acquiring, so we have a bigger base, but we feel really comfortable with our guidance.

Can you just remind me the acquisitions that you made on April 1?

What was the aggregate combined revenue of those businesses annualized?

We didn't break those out specifically, but I think if you just kind of look somewhere around $10 million or so for the rest of the year would be a good number.

So for the last three quarters?

Correct.

The last thing, if you can just give me a better understanding in the non-GAAP revenue breakout, there's a number here, acquisition costs and one-time expenses that I guess historically is a pretty big chunk.

But can you just remind me what that consists of in order for me to figure out what exactly I'm pulling out of my non-GAAP model?

So if you go back into the press release and you look at the table that is the GAAP to non-GAAP reconciliation, you'll see that there's acquisition costs and other one-time expenses, which include things like legal and professional services that are around that.

There was a little bit of severance in there as we had kind of a restructure in Q1, along with some recruitment and relocation around those acquisitions, and then just direct acquisition-related.

And then, you'll see an adjustment now based on taxes.

I pulled out basically taxes that relate to the acquisitions that are non-cash.

If you want the technical term, it's called a “naked tax credit,” and it can vary in size on a quarterly basis as we make these acquisitions.

So removing that out and really talking about what our effective tax rate, which is around 0%, is a better way to look at it.

And then, we kind of pull out any interest expense, one-time credit in one quarter depreciation.

So it all walks through that table, so it's very -- I think we've actually expanded the table and tried to be much more transparent about what's in and what's out.

Yes, you expanded the table.

That's why I'm asking the question.

We'll see you next week.

Thank you so much for your support, and we look forward to seeing you.

Thank you.

And at this time, there are no further questions.

I'd like to turn the conference back over to Mr. Pat Goepel, CEO, for closing remarks.

Well, hey, I hope you're excited as I am.

First quarter 2018 is off to a great start.

We're very pleased to be working for you, and we think we're really making healthy progress in the business.

We're excited about the events around our client conference and some of the activity that we're working on.

And we'll look forward to hearing from you and seeing you on the next conference call in the second quarter.

Thanks for your time today.

Ladies and gentlemen, thank you for your participation in today's conference.

This does conclude the program.

You may now disconnect.

Everyone have a great day.