Asure Software Inc (ASUR) 2019 Q1 法說會逐字稿

Good afternoon, and welcome to Asure Software's First 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 (Operator Instructions) As a reminder, this call is being recorded.

With that, I would like to turn the call over to Cheryl for introductory remarks.

Cheryl, please proceed.

Thank you, operator, and good afternoon, everyone.

Before we start, I'd like to mention that some of the statements made by management during today's 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 risks and uncertainties that could affect their outcome.

You're 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 like to turn the call over to Pat Goepel, CEO.

Pat?

Thank you, Cheryl, and I'd like to welcome everyone to the first quarter 2019 earnings call.

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

Let me run through some of the financial highlights.

First, for the first quarter, we posted record revenue, record gross profit, record reoccurring revenue and record non-GAAP EBITDA.

And importantly, we generated very strong operating cash flow.

I'm pleased with the growing mix of high-margin reoccurring revenue.

Looking at the quarter, total revenue increased 39% year-over-year to $26.8 million.

Reoccurring revenue as a percent of total revenue in quarter 1 was 88%.

Net new bookings also grew over 40% year-over-year and the total backlog now exceeds $50 million.

We're pleased with the level of new business activity as well as the upsell/cross sell within our installed customer base.

Moving now on to some client wins.

During the first quarter, in Human Capital Management, we secured wins with the city of Paterson, in New Jersey and Clergy Financial Resources and Kids Care Home Health of Idaho.

In Workspace, we closed new deals with a leading content delivery network company, IHP Systems in Canada, the law firm of Thompson Coburn and a large telecommunication company in the Baltic states.

This is demonstrating our global reach in the Workspace business.

On our last call, I highlighted our generation 2 sensors within the workspace area.

These next-generation sensors, combined with our cloud-based software, provide Asure's enterprise clients with the ability to monitor environmental indicators such as CO2, lighting, heating, air conditioning and more.

Clearly, it separates us in building intelligence marketplace.

I'm thrilled to say, as a result of that, Asure recently won a 2019 Silver Edison Award with these new sensors.

This is one of the highest accolades a company can receive in the name of innovation, and we're elated to have won this prestigious award.

And it generated a lot of interest in our pipeline, and the big accounts and large companies that we competed with were elusive of innovation.

From a new business perspective, our Asure pipeline is -- in Workspace has 3 to 4 times year-over-year.

We're pleased with the caliber of enterprises interested in our solution, and perspective buyers range across all geographies and verticals and include both new logos to Asure as well as expansion opportunities with existing clients.

A terrific example of the recent workspace win that included the gen 2 sensors is a multiyear deal we closed during the quarter with a leading content delivery network company.

The company is conducting a large scale consolidation of their office footprint into one new state-of-the-art headquarters spanning 19 floors and over 600,000 square feet.

They selected Asure workspace solution for occupancy and utilization technology so they could actively monitor and analyze their space needs - real time.

This was a competitive RFP, and we're pleased to learn that we won it due to our superior technology, functionality, user-friendly dashboards, our integrated approach, global support, certifications and matured deployment experience.

This is an example of some similar opportunities that we have in our pipeline for offices of the future as companies look to modernize their physical footprints and gain an advantage in the war for talent.

On the Human Capital Management side, Clergy Financial Resources, based in Maple Grove Minnesota, has been serving clergy churches and denominations entities for over 38 years.

They currently work with more than 1,000 clients of all sizes.

They are a leading provider of tax services for clergy and payroll and HR exclusively for religious organizations.

The payroll division has over 500 clients and 4,000 employees that will be converting to Asure's platform over the next 12 months.

Clergy selected Asure to provide them the platform they need to rapidly grow their payroll business among current tax clients and to provide an avenue for future new business growth and payroll opportunities.

And we're seeing many more opportunities like Clergy Financial Resources.

Next, I'll provide an update on our go-to-market initiatives.

As I mentioned on our last call, we plan to hire additional sales reps this year to enable deeper penetration in both our current and new clients.

While our sales rep productivity improved last year, we simply didn't have enough feet on the street to drive additional organic growth.

Our goal is to hire approximately 20 new sales reps this year, and we're on pace to achieve that.

Profiles of these hires are tech and industry veterans with strong attainment backgrounds coming from the, payroll benefits, PEO and/or enterprise technology areas.

Keep in mind, the reps we hire this year will fuel our growth in 2020.

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

Kelyn?

Thank you, Pat, and good afternoon, everyone.

As Pat noted, the first quarter kicked off a good start to the year.

We posted record revenue, record gross profits, record recurring revenue and record non-GAAP EBITDA and record operating cash flow generation.

And as Pat mentioned, net new bookings grew over 40% year-over-year and the total backlog exceeds $50 million.

Now let me run through the details.

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

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

Also, starting this year, as a result of the success we've experienced in transitioning to a recurring revenue model, we are now breaking out our revenue into 2 lines: recurring revenue; and professional services and hardware and other.

Revenue from client fund investing is included within the recurring revenue line.

This presentation is consistent with that of our public peers, and we feel that it more accurately allows investors to assess the performance of our business.

Now let me review our financial results for the first quarter ended March 31, 2019.

Total revenue for the first quarter increased 38.6% to $26.8 million from $19.3 million in Q1 of last year.

Recurring revenue grew 34.7% year-over-year.

In Q1, professional services, hardware and other revenue grew to 75.9% over Q1 of the prior year.

As Pat discussed earlier, we are pleased with the large and growing pipeline of workspace opportunities that we are seeing developed in this area.

As we have said prior, we have implemented some new initiatives to drive additional growth in this area in 2019 and 2020.

We continue to focus on driving the business towards a visible recurring revenue focused cloud company.

Recurring revenue in Q1, as a percentage of total revenue, was 88% roughly in line with Q1 of 2018.

HCM revenue represented 76% of total, and workspace was 24%, in line with first quarter 2018.

HCM revenue grew 39% over Q1 of last year, workspace revenue grew 37% year-over-year.

As a reminder, HR consulting revenue is included in our HCM category.

As usual, Q1 benefited from typical seasonality we experienced as a result of onetime W-2 and ACA processing.

The remaining quarters of 2019 will not have this benefit.

Next, I'll discuss our profitability metrics.

Q1 non-GAAP gross profit increased 33.1% to $18.7 million, equating to a non-GAAP gross margin of 69.9%.

This compares to $14 million or gross margin of 72.8% in Q1 of 2018.

Gross margin benefited, again, by our standard seasonal W-2 and ACA processing, which impacts our first quarter and to a lesser extent by some recurring hardware as a service margin.

Given our increasing mix of HCM, along with increased hardware and HaaS mix, we expect non-GAAP gross margin to be in the range of 63% to 65% in the near future.

Q1 non-GAAP EBITDA was $6.9 million, an increase of 81.2% from $3.8 million in Q1 of last year.

Non-GAAP EBITDA as a percent of revenue was 25.6% versus 19.6% in Q1 of 2018.

Non-GAAP EBITDA was influenced by higher revenue and margin as a result of the aforementioned W-2 and ACA items.

As you know, Q2 revenue typically trends down sequentially from Q1 due to the W-2 and ACA onetime impact.

As we look into 2019, we will continue to see improvements on non-GAAP EBITDA as onetime expenses related to the many acquisitions we've completed over the last 2 years diminish and we fully integrate these assets.

In Q1, non-GAAP net income totaled $3.3 million or $0.22 per share.

Looking ahead in the second quarter, our non-GAAP effective tax rate guidance is still at 0%, and we feel this more appropriately measures our expectations for actual performance.

Shifting gears to our balance sheet.

Cash and cash equivalents was $16.6 million at the quarter end.

This is an increase of $1.1 million from the prior quarter.

The cash increase in Q1 primarily reflects the mix of HCM collections through ACH, strong cash collections and other back office optimization.

At March 31, 2019, we had $124.1 million in gross debt.

Total deferred revenue on the balance sheet as of March 31, 2019, including both short and long-term combined, was $12.1 million.

Short-term unbilled deferred revenue representing business that is contracted over the next 12 months, but unbilled in off balance sheet, ended the first quarter at $19.9 million.

Long-term or multiyear unbilled deferred revenue beyond the 12-month period was $21.1 million.

At March 31, 2019, short-term backlog, which we define as the sum of deferred revenue and unbilled deferred revenue within a 12-month horizon, was $31.2 million.

Total backlog, which includes both short and long term, currently exceeds $50 million.

We're pleased with the level of visibility enabled by our focus on recurring cloud revenue.

DSO in Q1 was 47 days down from 65 days in the year ago quarter, benefiting from the onetime W-2 and ACA processing and our focus on improving cash collections.

Inventory was up $1 million sequentially as we build our capacity to fulfill the strong workspace demand.

Head count increased sequentially by 10 employees in Q1, bringing our total to 554.

Before I turn the call back over to Pat, I want to update you on our back-end infrastructure upgrade activities and our client fund initiative.

Our NetSuite implementation remains on track.

We will have the procure to pay and hold to collect for NetSuite companies live by the beginning of July, and we plan to have the billing and invoicing for Great Plains and projects up in Q3.

Additionally, our client support will be fully hosted on the AWS cloud platform by this time.

We've also implemented salesforce, Domo, Mulesoft, Workiva, Concur and Wenta and some bolt-on tools, such as DealHub and HubSpot, to drive our modern enterprise architecture, which complements the excellent finance and accounting teams that are just now gaining traction.

As we discussed on our last call, we've initiated steps to consolidated client funds to achieve a higher blended investment rate of approximately 2% to 2.5% annually.

We started out with 60 accounts spread across 11 banks, and we're working hard to close the gap.

Currently, we've consolidated roughly 60% of the client and operating funds.

We expect the majority of the funds to be consolidated by the end of this year.

This is a very high-margin revenue stream, so we're pleased to see additional synergies from the acquisitions impact our top and bottom line.

We don't expect to realize this full benefit until 2020.

However, already in Q1, we've seen some nascent benefits of this initiative.

We expect this to continue to climb through the year, resulting in approximately $1 million to $1.1 million of additional recurring revenue for 2019, assuming interest rates remain consistent with today's market rate.

Now I'll turn the call over to Pat.

Pat?

Thanks, Kelyn.

Now I'll review our guidance.

Our business is on track in quarter 1, and we feel that we're on a good half for the year, so we can execute on a consistent basis.

We're reiterating our 2019 revenue guidance of $104 million to $107 million with non-GAAP EBITDA margin of 22% to 24%, which equates to an EBITDA of $23 million to $25 million.

From a revenue standpoint, as Kelyn mentioned, our Human Capital Management payroll business does experience stronger seasonality benefits in quarter 1. Please note, as we've outlined to you, the guidance does not include any contribution from future acquisition.

We'll revise our guidance after such acquisitions close.

We feel confident that we'll be cash flow positive from operations for the full year, which we believe is a very important step in realizing harmonization from the many acquisitions we've completed.

Given our lessening onetime expenses related to acquisitions this year as well as some of the onetime investments in ERP and AWS that Kelyn discussed that are going to lessen in the second half of the year, we feel very confident that we'll generate a better cash flow cadence moving forward.

So posting positive cash flow for 2019 is a key objective.

While we have an active pipeline of acquisition targets, we will be opportunistic in 2019 on this front.

As I mentioned on the last earnings call, I don't expect the pace of acquisitions to be similar of that of 2018.

It's really the integration of the acquisitions and the demonstration of the economic model that is the focus for 2019.

Finally, to close out the call, we've tipped off 2019 with solid momentum.

We're keenly focused on scaling our business.

We are laser focused this year to absorb our past acquisitions, generate revenue, realize cost synergies, produce margin improvement and cash generation, invest in product improvements and execute on our cross-selling opportunities.

In closing, I firmly believe we have the right products and the depth of offerings for the markets we serve, we have the right people in place, and we're focused to improve our financial leverage.

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

Operator?

(Operator Instructions) Our first question comes from Derrick Wood of Cowen.

Well, congratulations on a great quarter across the board.

Pat, you guys did change your revenue disclosures a little bit.

So I was hoping to get some color as to where the upside strength came in the quarter?

Derrick, from a revenue -- we were pretty consistent with our internal plan.

We did had some seasonality with W-2s and ACA.

From a sales perspective, we felt good about our repetitive revenue.

We do believe that for the year, we're right on plan with our $104 million to $107 million in revenue.

We believe some of the analysts were a little bit over on first -- or excuse me, a little bit light on first quarter and perhaps a little over second quarter.

But we believe we're really almost spot on with our plans, so we're excited about that and feel like we have some good momentum going into the business.

Okay.

And the large multiyear win with workspace, is that perpetual or a subscription?

And what are you seeing in terms of your pipeline, in terms of the mix between the 2?

No.

Great question.

88% of our revenue was repetitive and reoccurring, which we feel good about, and there was a mix in that large scale win.

What I would say, it's an example in workspace of some deals that are more repetitive in nature and what they are is, they're a proof of concept or kind of a pilot program, and we do believe that we have a multiyear market opportunity that's starting to gain a lot of traction.

It's a vibrant market, and we believe that there is repetitive revenue that's open as these organizations have global rollouts, that one particularly is with headquarters, but also have some upside going forward as well as some of our headquarter programs.

And they're mix of onetime and repetitive, but we believe at 88% in the first quarter around repetitive is in a million miles of where we're going to be for the year.

Got it.

And if I could squeeze one more?

Kelyn, sounds like you are on track with AWS.

Do you expect this to have a positive impact on gross margins in the second half?

Or where do you anticipate the cost savings to show up?

So I would say that on gross margins, the reason that I gave is 63% to 65% is -- as you know, we added a new payroll company, Payroll Maxx, at the beginning of Q1.

And so it is quite simply as we look short term that 63% to 65% is kind of there because of the mix of HCM, it's a total revenue.

Having said that, we have a number of initiatives that Pat's talked about on harmonization of our payroll businesses.

And I think as you see, you'll see head count coming out and technology improvements within our payroll platforms to drive additional scalability.

So as I look forward to the end of the year and out to 2020, I think, you're going to start to see upward momentum on the gross margins.

But for now, I'm comfortable at 63% to 65%.

Our next question comes from Scott Berg of Needham.

Kelyn, congratulations on a good quarter.

I guess first comment is a little mile from Maple Grove, Minnesota, I never expected that city name to be on public conference call.

But on -- I guess, on the quarter, I guess, couple question, Pat or Kelyn.

Generated positive free cash flow in the first quarter, cash numbers look pretty good.

How should we think about free cash flow for the rest of the year?

So I would say that for the rest of the year, what we've talked about is being at on operating cash flow positive.

We're expecting for 2019 -- as you know, we have some seller notes that are coming due throughout the year Q2 through Q3 and Q4.

So from a net cash flow, you'll probably see up and down, but we're expecting operating cash flow to be positive for 2019.

Okay.

Great.

That's helpful.

And then, Pat, you'd mentioned your sensor pipeline or should probably say workspace pipeline was up 3 to 4x year-over-year in the quarter.

I guess what's driving that growth?

Because your sales force clearly has not grown at a 3 or 4x rate or at least that's not what I'm expecting hear?

Yes.

No, productivity within the sales force the last few years has been 24% and 23%, and we're very pleased with that.

If you think about our strategy with workplace and specifically is, first of all, the market is hot and it's gaining some acceptance and some maturity and so the market's growing.

Where we're growing specifically and pleased about it is, if you think about our acquisitions, we've integrated hardware and software approach that's long term by nature, that's high ROI.

And then you combine that with the analytics that a company can benefit from it and they get a really heavy ROI on a long-term deployment of our workspace offering.

And we're uniquely offering this solution.

So when you look at some initiatives and some of the companies that have workforce of the future initiative, whether it's how to attract the millennials in a downtown environment, how do they make their space, go from a 1-to-1 desk to employee ratio to a 4:1, let's say, the only way they can do that is with analytics and with products and services that we can provide or others can try to provide.

And what the benefit there is with the heavy ROI, we believe we have a pipeline for the future and then we demonstrated success and now we'll roll that out globally.

We think the momentum in this business will continue over the long term.

We're cautiously optimistic, and sometimes timing is the tough part of these initiatives, but with the ROI, we know we're going to have a future and it's going to be very bright in workspace.

Our next question comes from Richard Baldry of Roth Capital.

Your run rate adjusted EBITDA in the first quarter is about $27.5 million, but you're guiding $23 million, $25 million.

Was there some onetime or any onetime impacts in that the first quarter?

Understanding second quarter seasonality and probably would take it down, but still feels like there is a lot of cost coming out through the balance of the year that would drive that number higher.

Yes.

Rich, I think, one of the things that we have an objective with, and I'll let Kelyn talk a little bit too, but basically, we want to provide consistent guidance.

We don't want to get ahead of ourselves.

We do believe we have some important initiatives around AWS and NetSuite.

The first quarter, we do benefit from the ACA and W-2 seasonality.

The onetimes, just sequentially from fourth quarter to first quarter, were down almost $2 million, and I think you'll see the onetimes go down in the business, so the quality of EBITDA will be very strong this year, which also translates to cash flow.

But we want to see the year play out and rather get ahead of ourselves, we just want to be prudent in guiding and making sure we have the right approach with the investors.

So barring incremental acquisitions, as the year unfolds, where do you think the positive cash flow we should expect to see it hits the balance sheet and add up the cash balances, look for debt reductions?

How should we think about the allocation of that?

Yes.

Thanks, Rich.

And from allocation perspective, first of all, what are some of the drivers.

Kelyn mentioned interest income and that's going to build throughout the year.

So we're pleased that we're going to get cash on some of the funds from that.

Two, as some of the projects wind down whether NetSuite or AWS.

AWS will be -- in fact it's near-complete now, but it will be finalized the second quarter.

NetSuite will be basically finalized overall in the third quarter.

So you'll see cash generate from there with a lessening of onetimes.

From a business perspective, we've settled down quite a bit.

Last couple of years, we've done a lot of acquisitions and just normalizing the build -- the model is going to generate cash.

And then finally, Kelyn's team and she's to humble to brag about it sometimes, but in AR and AP, we're miles ahead of where we were the last couple years and DSO's coming down, some of the ACH of funds, the mix of the business has helped us quite a bit.

And then, with AP putting in PO systems and centralization, in scrutiny, quite frankly, of the spend and not going quite as fast with acquisitions is leading us to future cash flow generation.

Our next question comes from David Hynes of Canaccord.

So 2 questions, both on the payroll HCM side.

So clearly, you guys have been very acquisitive there.

Now we've moved kind of -- we're maybe 6 or 12 months beyond a lot of those acquisitions having completed.

Can you just give us an update on what you're seeing from a client retention perspective among those acquired assets?

And then secondarily, just what you're seeing from cross-sell activity and kind of what you are doing to move that effort forward?

Yes.

No, thanks, DJ.

From a client retention perspective, first quarter, we're almost spot on the plan, maybe a hair over plan on client retention.

I would say, the smaller market is a little bit less from a retention perspective then the overall or the enterprise marketplace, and that's just based on the market dynamics of that.

So we're pleased with the retention in those areas.

Two, I think from -- as I look at the business model, the big improvement is adding to sales reps and the cross-sell components to it.

From a product perspective, we're integrating our HR, our time and labor management, our benefits.

We have some big initiatives that we're announcing at the client conference, which is in June as well as the second half of the year.

And then training of the sales reps will allow our productive sales force to even get more volume.

So those are the initiatives that we're working through on it.

But I would say retention is maybe 1% above plan in HCM.

As far as new sales, the ramping of reps is clearly the focus for us.

And then from the cross-selling initiative, we have the initiative around Wells Fargo that we're taking the learnings and then we're rolling that out nationally to really get some organic growth and productivity going forward.

Our next question comes from Jeff Van Rhee of Craig-Hallum.

A couple from me.

On the HCM side, on new opportunities, what's the competitive landscape?

Who are the top 1, 2, 3?

Who are you seeing?

It's interesting, Jeff.

Clearly, the old stalwarts of ADP and Paycheck's, they're still out there and just a number of feet on the street is going to leave them there.

I think there are some companies that have initiatives of coming downmarket that we haven't quite seen, but they have publicized, let's say, and that would probably be more of the Ps, if you will, whether it's Paylocity or Paycor or Paycom.

And then what I would say is you've had a lot of activity that you know whether Ultimate going private, et cetera.

What I think I've seen the focus on is some are selling more in the benefit PEO area and maybe less on the direct payroll space or human capital management space more into PEO, which I think actually has been good for our competitive marketplace and some of the wins that we've gotten.

Got it.

And then just -- you talked about the workspace on a year-over-year basis.

Just sort of 3 to 4x, was that a steady build in that pipeline over the year?

Or maybe asked differently, how did the workspace pipeline behave sequentially?

Yes.

When I look at -- first quarter is a quarter where people sometimes get start to the year with new budgets, et cetera.

So I think the pipeline was consistent with the fourth quarter.

We really started to see it build in the third and fourth quarter of last year.

And that -- with us bringing together the products of the sensors, the analytics and the cloud-based scheduling system, that's the kind of multiplication of those products and bringing them into one dashboard is really what's driving the growth for us.

And then two, where you have an initiative around the workforce of the future, where people want to attack it 2 ways: they want to attack it from a cost and quality of how do they get business hoteling into their workforce where they can save from a one-to-one real state spend; but in many cases, it's more important than that.

It's how do they attract the right millennials and the right workforce for the future in this era where unemployment is at a record low, and you really want to get the high-valued workers to work and attract to your organization.

So increasingly, HR is leading that charge in how to remake the locations to be attractive to -- for the war for talent.

And that's where we're seeing these workplace of the future, workforce of the future.

And I mentioned one case study, but I could have mentioned others, where you have 1 or 2 locations in a workplace of the future, and as they get done with that pilot, improve out the ROI, improve out the experience for people, they want to -- they're going to roll it out to, let's say, 10 or 15 or 20 locations worldwide, and that's where we get excited about some of the multiyear opportunities.

Yes.

Got it.

Got it.

And then just one sort of housekeeping numbers.

On the development side, what is the development capacity, like engineer head count look like now versus a year ago?

Head count in R&D, we have, on a normal basis, I don't have the exact number, but we've committed to about between inside and outside head count.

We've -- are going to be up about 15 heads with inside and outside, and that's what we've committed.

We're probably -- with hiring and with turnover, we're probably not quite at that number, but call it 2/3 of that number.

And we will continue some investment in that area over the course of the year.

We -- just following up on that, we do have some very important initiatives that's coming out of our R&D organization, whether that's mobile, looking at scalability within our HCM platform as well as enhancements as we think about things like visitor management or whatever with workspace.

(Operator Instructions) Our next question comes from Vincent Colicchio from Barrington Research.

Nice quarter, guys.

Just 1 or 2 from me here.

So Pat, any sense for what portion of the existing clients on the workspace are interested in the generation 2 sensors?

Vince, first of all, thanks for the kind words.

What I would say, sensors in general, we have generation 2 and generation 1. Generation 1 is more on occupancy, and it depends where they are in a life cycle.

So for example, in most early adopters of business hoteling, they're really focused on occupancy.

And still the large majority still like occupancy and gen 1 is fine.

On gen 2, you start to focus on the quality of the environment as it relates to the occupancy.

So if we're in a conference room with 10 people and you have 20 people, you might want to notice that there's a lot of CO2 in that conference room or perhaps there is the heating, the temperature -- just with 20 people in a room of 10, the temperature's going to go up, so you need the automatic air conditioning and stuff like that.

So what happens is that environmental focus is the next wave.

We believe we're ahead of that wave or in concert with leading companies.

But the opportunity, especially in the U.S., is still so great and worldwide is great that we think we have plenty of capacity for generation 1. But then generation 2, we're a thought leader going forward, and the analytics prove that out.

So where they are in a life cycle really determines what the right product that is.

But suffice to say, we feel like we're in the early innings of a big ball game.

And then on the sales force side, I'm sorry if I missed it, but did you add any sales win this quarter?

And how difficult is it to find quality people?

Quality salespeople is an ongoing journey, and we really look for and screen for attainment backgrounds.

We're not looking for people and we don't want to suffer fools that haven't delivered in the past.

We're focused on people that have those attainment background as the work for talent is clearly alive and well that we want to make sure we get the right people and they contribute to both the top line and the bottom line of Asure.

We are -- we have been picky.

What I would say in that we do feel that we'll get to full head count that we predicted of adding 20 sales reps.

But we're still in the middle of the movie, and we're pleased with the pipeline of people we've had.

The best pipeline is referrals and people that we've known based on our years in the space.

And so we feel like we've hired some really good people.

In fact, one of them just contributed a decent deal here over the quarter, and that person wasn't with us 2 years ago.

So we're getting the right people.

It is a process though that takes time, and we'll continue to build through the year.

There are no further questions.

I'd like to turn the call back over to Pat Goepel for any closing remarks.

Well, thank you for the call today.

We're pleased that we had the ability to talk to you today and answer questions.

We're excited about the business.

We have a lot of work to do, but I think this was an important stake in the ground for 2019.

And we're pleased that you have interest in Asure, whether you're an investor, a client, employee or potential investor, we want to thank you for your time today.

Take care.

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

This does conclude today's program, and you may all disconnect.

Everyone, have a great day.