Asure Software Inc (ASUR) 2019 Q4 法說會逐字稿

Good afternoon.

And welcome to Asure Software's Fourth Quarter and Full Year 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.

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

Cheryl?

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 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 on the Investor Relations section of our website at www.asuresoftware.com.

Finally, I will note that we have posted some slides on our Investor Relations website regarding the quarter.

Please refer to the Events and Presentations section on our IR website.

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

Pat?

Thank you, Cheryl.

And thank you all for being on the call today.

We'd like to welcome everyone for the fourth quarter call and our 2019 earnings call.

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

We've posted some slides on the Asure, and that is -- IR website, as Cheryl discussed, and I will go through some of those slides after Kelyn's financial results commentary.

First of all, before we go to Kelyn, some big takeaways this year.

We sold the Workspace business for $121.5 million in the fourth quarter.

That all-cash deal really helped us position the company into a pure-play, human capital management company.

We went from a net-debt position to a cash-positive position.

The pure-play HCM, or human capital management, position, we'll go through some compares of companies in that space.

But it's a highly sought-after, highly valuable space, and we really like how we're positioning the company.

It's highly repetitive in reoccurring revenue where it's 90% plus.

We're now positioned as we go from -- we had net debt of almost $110 million or so when you have covenants.

We're growing our salespeople this year from 34 to over 55 to 60 at the end of the year.

This positions us really nicely organically in 2020.

You're going to see a steady increase in organic growth throughout the quarters of 2020.

I remind you, we also have acquisition opportunities.

Our go-to-market model is also with resellers.

We're signing up more and more resellers.

And we have now 195 resellers to be able to acquire ultimately, which puts us in a really nice position to grow long term.

2019, we spent a lot of calories and some dough on Amazon Web Services and NetSuite, in addition to our Domo analytics.

We now have the infrastructure to grow and grow over the long term.

And then finally, we're rebranding the company into Human Capital Management.

If you look at our website, new vision, mission, values.

Our employees are excited, and our clients are excited with the focus.

Kelyn will talk a little bit about our bookings success, revenue and EBITDA as we beat consensus in all areas.

Some of the analysts and some of the First Call data had the workspace business in for a full quarter.

We were very fortunate in working with FM:Systems, which is an Accel-KKR company, where we completed the acquisition almost a month earlier than some First Call estimates.

And that shows now for the year that we have a significant beat in each area.

Finally, from a Board of Directors' perspective, we approved the share repurchase program for $5 million in addition to some shares that we already had into place.

So we now have $5.3 million of opportunity to buy our shares.

We intend to be very opportunistic and thoughtful in deciding if we want to purchase those shares in the market, and that's in light of some of the macro conditions.

I'm going to talk a little bit about the macro conditions.

First of all, my heart and prayers go out to people that are affected with coronavirus and their family and extended family.

It is something that's kind of a crazy event here in the next couple of weeks or in the past couple of weeks and even leading to the NCAA just canceling moments ago.

What we have done is try to take in effect that macro event in the guidance we had in December.

We have now lowered our Fed funds rate, which Kelyn will talk about, in light of the coronavirus and the Fed actions.

And we have also lowered in our model where we traditionally had a 2% same-store sales, for 2 quarters, we're -- in 2020, we're going to have that flat.

So we're taking that down about 1 percentage point.

Despite those 2 areas where, really, we don't control those factors based on this event, we are maintaining 2020 guidance, and we're excited to be in a position to do that.

Also, I want to just take a step back.

I've been in the human capital management space now 35 years.

I've seen a lot of events, whether it's '87, 2007, et cetera, Y2K.

I want to remind people that in these times of toughness, our model, our business model is such that it's highly reoccurring.

We're aligned with the government.

You see that the government have proposed changes.

Companies need a valued partner to respond to those changes, and that's why we feel as an outsourcer and a human capital management partner, certainly, we're never recession-proof, but we do thrive when there's change in the marketplaces.

We're predictable.

We're reliable.

And these businesses in this space are very valuable in good times and bad, and companies need us all the more in times like this.

We're excited about what 2020 will bring despite the doom and gloom in the last 2 weeks, and we're excited to tell you why.

With that, though, before we go any further, I'd like Kelyn to talk about the financial results.

Kelyn?

Thank you, Pat, and good afternoon, everyone.

We are pleased with our 2019 full year results, which exceeded guidance in all categories.

Having said that, the sale of our Workspace Management division in the fourth quarter and the restructuring of our HCM division created anomalies in our quarter results.

We would point you to our full year results for the health of the company.

Now for 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.

During the quarter, HCM bookings grew 62% year-over-year.

This represents the focus of our go-forward HCM business and will be the best indicator of growth of Asure.

As Pat mentioned, we were pleased to report that 2019 HCM revenue came in at $73.2 million, ahead of our guidance of $72 million to $73 million.

HCM revenue for the fourth quarter increased 1% to $17.6 million from $17.4 million in Q4 of last year.

Recurring revenue grew 3% year-over-year, and recurring revenue in Q4 as a percentage of HCM revenue was 95% compared to 92% in Q4 of 2018.

Next, I will discuss our profitability metrics.

Q4 non-GAAP HCM gross profit was $9.6 million, equating to a non-GAAP gross margin of 54.8%.

This compares to $11.3 million or gross margin of 65.3% in Q4 of 2018.

For the fiscal year 2020, we expect gross margins to be in the high 50s.

Interest on client funds exceeded $400,000 in the fourth quarter, up from less than $80,000 in the fourth quarter of 2018.

Given the recent Fed fund rate reduction we expect 100 basis points of interest on client funds in Q1 and going forward.

Having said that, this is based on today's current portfolio holding and market rates.

Fiscal 2019 non-GAAP EBITDA was $12.1 million, above our guidance of $11 million to $12 million.

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

Now shifting gears to our balance sheet and cash flows.

Cash and cash equivalents was $28.9 million at the quarter end.

2019 operating cash flow improved year-over-year by some $6.7 million to operating outflow of $450,000.

We believe this will continue to improve through 2020.

We attribute the improvement to our cost-reduction and restructuring efforts during 2019, facilitated by our NetSuite implementation.

At December 31, 2019, we had $26.7 million in net debt, which are the amounts payable for seller notes in our term loan.

This was down dramatically from $124 million at the end of Q3 of 2019 as we paid down our institutional debt with the proceeds from the sale of Workspace, which closed in December.

During the quarter, we also amended our credit agreement with Wells Fargo.

The new agreement provides us with $20 million in term loans and a $10 million revolver.

Total deferred revenue on the balance sheet as of December 31, 2019, including both short and long-term combined, was $5.8 million.

DSO in Q4 was 24 days, up from 22 days in the year-ago quarter.

Overall headcount decreased sequentially by 13 employees in Q4, with ending headcount of 413.

Before I turn the call back over to Pat, I want to update you on our client fund initiative.

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

We have begun protecting against short-term interest rate fluctuations by extending the tenor of certain investments to as much as 3 to 5 years.

However, given the recent basis point decline in federal fund rate, we expect our blended annual rate to decline to 1% to 1.25 as of today.

When we initiated this effort, we started out with 60 accounts spread across 11 banks, and we are still working hard to rationalize the banking and investments.

Currently, we've consolidated 75% of the client and operating funds across 9 banks.

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

Finally, we identified a deficiency related to the design effectiveness of the company's controls surrounding the safeguarding of assets.

Specifically, the company did not maintain appropriate access to certain systems and did not maintain appropriate segregation of duties related to processes associated with those systems.

We have implemented measures designed to remediate that efficiency and improve the internal control for the company.

There are -- or there were no material misstatements to the consolidated financial statements stemming from these deficiencies.

We are required to disclose any deficiency that creates a possibility that a material misstatement of the consolidated financial statements will not be prevented or detected on a timely basis.

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

Pat?

Thanks, Kelyn.

I want to refer you to the investment deck on the website.

I'll be going through a couple of slides.

On Slide 3, really, we talked about rebranding Asure, and Asure Software will now be Asure.

It reflects our reinventing for human capital management as a growth brand.

If you look at our vision, mission and values, we really now have rolled these out to all the employees in the company.

I personally visited with all the employees in the company in the first quarter.

I went on a listening tour, and really, we're set to rally the company around growth.

And that growth means employee growth, client growth, growth for shareholders and the communities we serve.

We're excited about the new branding, and we're focused on what it means to be successful.

On Slide 4, our long-term plan, which we introduced to you in the fourth quarter.

We want to double in size in revenue.

We want 10%-plus growth organically each year.

2020 is a transition year, and then we want to layer tuck-in acquisitions, many of which we own the technology, making it easy for us to be able to assimilate those acquisitions in the growth model.

And if we do that properly, we think that EBITDA will grow faster than revenue, therefore, enhancing shareholder value.

And we're excited about positioning.

And then from an employee growth perspective, we'll add employees, but not at the pace that we're going to add revenue because we'll get leverage in the model.

On Page 6, really, we talk about the big market.

It's a $42 million -- or $42 billion, with a B, TAM, growing at 7.6% CAGR.

60,000 clients we have, both indirect and direct.

That is a 90%-plus repetitive revenue, and they are very sticky.

They stay with us, on average, of 8 to 10 years.

And that is a long-term relationship that we enjoy with them, which makes this space so attractive.

And then finally, I referenced some companies that are in this space.

I pose their valuations.

They're great companies.

Some of them are bigger of which than we are.

We do have a scale as a $75 million company that far outweighs the capability of $75 million.

In that, about 50,000 of our clients are in a reseller relationship.

Right now, we believe the market undervalues the company.

And one of the reasons why we sold the space business is to really zero on that value gap or value opportunity in the human capital management space.

On Page 8, if you invested with us last year, you were $100 million in debt.

And what we have done with the Workspace business is now we have a self-sustaining capital structure where we have, as Kelyn mentioned, more cash than debt.

We have positive cash flow.

We pick up $9 million in cash just compared to last year's interest expense, and we can fund acquisitions.

On Page 9, I refer to you to the transition kind of year that we have in 2020.

We're going from 34 reps to 55 to 60 by the end of the year.

Organic growth is a priority for us.

You will see it tick up each quarter.

And in 2021, our expectation is we're double digits in organic growth, set up for a repeatable run for years to come.

We also want to layer tuck-in acquisitions now that our infrastructure is in place, and we believe the long-term margins of EBITDA will be 20% plus.

Finally, the quality of EBITDA will go up dramatically.

The onetime expenses, which we'll lay out for you in 2020 in our guidance, will show that the EBITDA, less 1x, will grow substantially in 2020.

On Page 12, we talk about the sales rep growth.

We did have some sales reps that went with the space business, and we're growing that.

Eyal Goldstein, our Chief Revenue Officer, did an outstanding job of hiring.

We have 43 in place right now.

And we're growing -- by the end of the year, we'll have 55 to 60 in place.

The cross-sell opportunity is big for us.

We feel, over time, that our beyond-payroll revenue will equal our payroll revenue.

It takes a while to cross-sell to do that.

One of the things that we did in our listening tour is, within the service model, now all the bag or all the products in the bag of a sales person, implementation person, service person are all in one location that's close to the customer.

And we can now sell, implement and service solutions that a customer needs where they don't have to call additional people.

We have a unique channel that we talk about on Page 13 where we have 180 resellers, another 15 in our backlog.

And if we were to look at what their revenue is to the Street, it's another $220 million or so.

That's the opportunity that we can grow.

When we sell the resellers, we have a partner-for-life concept where we'll give them access to our software.

But also, over time, if they wish to exit the business for any reason, we're the logical long-term partner of that acquisition.

Finally, on 17, we have a stable, growing base of reoccurring revenue.

We're going to accelerate it, both in the reseller as well as the organic sales people, and we're going to grow that in a very predictable fashion.

On Page 18, I remind you a couple of things.

One, I have over 750,000 shares, plus options.

I've never sold a share.

I really like how we're positioned.

We're focused.

We're going to grow.

And we're going to grow in every aspect of the business, employee, client satisfaction as well as revenue and, finally, income to the shareholders.

So with that, I know times are tough with the corona.

There's some uncertainty around the market and what decisions are going to be made.

But I'm very certain that we're going to be a long-term success in this business.

And with that, I open the floor for questions.

(Operator Instructions)

Our first question comes from Ryan MacDonald with Needham.

I guess first on what's going on right now.

Pat, maybe you can sort of talk a little bit more about what you're seeing as you're kind of going through the year in terms of just everyday business practices, conversations you're having with customers.

Are you seeing any changes in activity in terms of buying patterns from those customers at all?

Ryan, thank you.

I would say, through the first 2 months, bookings have been strong.

Fourth quarter was strong.

I would say, in the last week, there's been some hesitation.

And I think, let's face it, with the NBA canceling and NCAA canceling, et cetera, that was reported in the last week, but it wasn't anything major at all.

We feel confident in our pipeline.

We're getting really good salespeople, and we have a good pipeline in the salespeople.

But we feel pretty good on the sales side.

I think the same emphasis that I just said where if there's caution at all with this business model, retention, that also helps retention because customers sometimes are hunkering down, et cetera.

I think people are turning to small businesses that we serve.

I remind you that we don't have any more international exposure.

Our businesses are more local.

They can pick -- we can pick up the phone.

We can talk to them.

I talked to several restaurants that were local.

They're seeing emphasis on takeout orders versus inside.

So business has been okay so far.

From an employment perspective, we have seen and payroll's traditionally a little bit of a lagger indicator, but employment levels have been pretty good.

We did block in that maybe hiring would slow down a little bit.

We, despite that, reaffirm our guidance because we feel pretty good about the visibility so far.

But in this real-time environment, that's how I see it.

Excellent.

And then just as a follow-up.

Great to see that you're making some nice progress with the reps that you've already added this year and your targets for year-end.

But in the event that we do see, I guess, an additional slowdown, what sort of levers can you pull on in terms of those investments that you're planning to make on headcount?

Yes.

And I appreciate it, Ryan.

What I would say is from a sales perspective, I take the long-term view.

I believe we were underserved in the marketplace from a sales perspective.

I'm confident we have a value proposition that we can sell.

We are reinventing this company as a growth company, and we are going to hire salespeople.

I think from a nondiscretionary -- or excuse me, nonsales opportunity, we could slow down some of our infrastructure investment, and some of it will take advantage of that.

We have been thoughtful in that area.

We're winding down the TSA in the second quarter, a transition service agreement, that separates us from FM:Systems.

That's going really well.

So we do have levers we can pull.

And then from a travel perspective, nonessential meetings also can be held based on -- our client conference, for example, is going to be now in a virtual environment as opposed to going to a location.

So there are levers we can pull.

But I would tell you, we're really going to put the emphasis on growth.

Our view is this, too, shall pass and really set up 2021 and 2022 where this is a growth company.

And we'll do business a little bit differently.

We've had Zoom and other enablers from a technology perspective.

We're a low-touch sale, and a low-touch and high-touch delivery in a way that customers need us now more than ever.

And if you think about some of the legislation that's being floated by the government to have a trusted third-party, to be able to navigate that is invaluable in these times.

And our next question comes from Derrick Wood with Cowen and Company.

It's Andrew Sherman on for Derrick.

Pat, it looks like HCM bookings were up a nice 62% -- or Pat or Kelyn, actually.

That was a big acceleration from last quarter.

Maybe just flush out the drivers of that and the delta versus revenue growth and kind of when we should see that show up in revenue.

Yes.

No.

I think great question.

A couple of things.

So first of all, what I think the separation of space business and HCM.

In the space business, we had some very large customers, the Morgan Stanleys of the world, companies that are multinational in big sales cycles.

With the separation of space, we can now really laser focus on human capital management.

And I think when I look and talk to Eyal Goldstein and his team, really, it's about focus.

We're hiring the right people.

Fourth quarter is a good quarter anyway.

And then I would say the resellers have had some good success this year, and we got a lot of momentum in that area.

So those are some of the reasons for success.

Going forward, we're fortunate enough that we -- both Eyal and I have been in the business a long time, and some of our leaders have been in the business a long time.

We do have a good LinkedIn and Rolodex and areas that we can pick up high-quality sales people that can produce and produce right away.

And we're going to leverage those relationships to continue to grow.

Great.

And maybe one for Kelyn.

I think there was a comment that cash flow will continue to improve.

But maybe just talk about how we should think about that this year and beyond in comparison to EBITDA and any other initiatives you have to improve that.

Well, I think what you're going to see, we're going to continue to improve in 2020.

It is a transition year for us.

But having said that, as we start to -- and we want to introduce that we want to start reporting both EBITDA and adjusted EBITDA.

I think you're going to see as we go through the year and give guidance that the quality of our earnings are going to go up.

So in other words, kind of acquisition costs and one-times are going to be significantly lower than what you've seen in the past.

And if you think about EBITDA and then adjusted, the delta between them will be much smaller, which improves the quality of our earnings.

Our next question comes from Ryan Meyers with Lake Street Capital.

First one for me.

If you could just start by talking about how some of the investment in sales reps have paid off for you so far.

Yes, Ryan.

Thank you.

And tell Eric we miss him.

But what I would say from the investment in salespeople, when we look -- I think it's probably a little early.

You'll see organic growth go up through the year in 2020.

But where I would say we've been very fortunate is that we've hired some people that are industry-leading.

And just the energy they're bringing to deals, we've had immediate success, as evidenced by the 62% growth.

But also, more importantly, they're starting to bring other cadre of people relationships.

And one of the aspects of our model that's important is when we go to a tier 2 or a tier 3 city, we look to really solidify banking relationships, CPA relationship, benefit broker relationships.

Some of our valued competitors are starting to go after some of that business.

We're taking the approach where we're welcoming them to help sell a whole solution, and we get value from that.

And some of those folks that we're bringing on have deep relationships that are able to fast forward pretty quickly.

I think of a relationship of somebody that we brought on in January.

We are in front of a pretty good size West Coast bank this past week, and we'll be getting hundreds of leads from that bank over the course of 2020.

So that's an example where somebody can make an impact pretty quickly. .

Okay.

That's helpful.

And then just one more.

Can you provide us with some more details around the cross-sell opportunities that you guys have seen so far?

Yes.

I think from a cross-sell opportunity perspective, there are a couple of things that really are resonating with us.

First of all, we put all the solutions into the salesperson's bag as well as implement and service.

And when we can offer, for example, HR consulting or online HR consulting advice, employee handbooks, HR products and services, time and labor all as part of a payroll package.

And then we can able to take employee calls or they can do the work.

Now you have an opportunity that resonates with them because you're really solving their problem.

And if you think about either the coronavirus where people might work from home or work in a virtual environment, if -- some of them don't have PCs.

Some of them have workstations.

And they can use us as a valued partner.

We're seeing those opportunities pop up in the marketplace.

(Operator Instructions) And our next question comes from Jeff Van Rhee with Craig-Hallum.

Great.

So several for me.

I want to start on the reps.

Just jumping back a little further, how did you end '18 in terms of HCM reps?

And then at the end of '19, I want to be clear, it was 34, and the current number was 43.

Just maybe validate those numbers.

And then with respect to the sales heads now and the -- and particularly, the sales heads you're adding, you've obviously got a multitiered or multi-focused sales model.

Specifically, where are the new heads dropping in?

So on the revenue, let me do that first.

I think you asked where the full year finished for '18.

It was $63.6 million versus a 2019 full year of $73.2 million.

Yes.

Actually, sorry, I didn't word that very well.

What I was asking was HCM reps, the actual sales rep headcount at the end '18, yes.

Sorry.

You said reps, and I heard rev.

So sorry about that.

And reps drive rev, okay?

So Jeff, we had about a 65-35 mix in space reps to HCM reps.

We ended the year at about 34 HCM space.

Now we're at around 43.

We have a nice pipeline of candidates.

We'll finish the year between 55 and 60.

The second half of the year will be about 2 a month or so that we have net adds in the plan.

So that's, I think, a positive driver.

When we sold the space business, some of the reps, when we look at it, they were selling all the products.

Some went away.

Now we have people focused direct in the small middle market.

We're looking at tier 2, tier 3 cities.

We've beefed up the West Coast with a nice hire.

We also have looked at our channel strategy.

We've been on fire with our resellers.

And we have bolstered that area as well in selected areas of the country.

So I would say we've really looked at it from a balancing out our U.S.A.

presence, balancing out our channel strategies where we can align with a CPA banker and/or benefit broker in cities where we can leverage those relationships.

So that's been the strategy thus far.

Got it.

And then, I guess, Kelyn, a couple of model questions.

With respect to the target model of 20% EBITDA margins, what kind of gross margin -- trying to get a sense of trajectory on gross margin because you've got some, obviously, extra costs you're carrying at this point.

But maybe working backwards, what did gross margin look like in that target model?

And then just secondly, as it relates to the deficiencies for the audit.

Is that ultimately we've got to wait for the K to get acknowledgment from the auditors that, that's been formally cleared or just catch us up how that's likely to play?

Okay.

So let's start with gross margin first.

As you can see that we were in the 50s in Q4.

What I said in the -- what I said in my remarks is that we're looking at the high 50s.

And the reason for that -- and that's primarily in 2021 -- 2020.

As we sold the Workspace business, we basically have -- whether it's AWS or additional headcount as we start to prepare to scale up.

So we're carrying in this transition year a little more heavier cost, but they're in place now and allows us to grow and scale through an acquisition or through organic growth.

We're still a public company, but we lost $30 million of revenue on the Workspace business.

And so it still continues to have costs there in both OpEx and in gross margin.

As to the deficiency, you will see in the 8-K -- in the 10-K that we have a material weakness over these controls.

We have remediated those.

You won't see that necessarily in the K because by the time that we found the problem, given the fact that we were coming off Great Plains and into NetSuite and trying to get it all up and running in Q3 and Q4, we didn't have enough months left to be able to demonstrate the remediation even though that we had done it.

So you -- I would expect to see that, that deficiency roll off and be remediated in Q1, if not early Q2.

Got it.

Got it.

And just to complete the thought on the gross margin.

The question was, going forward, so in the target model of 20% EBITDA margin, what is the implicit gross margin at that point?

It would be in the high 50s, I would say.

High 50s, okay.

Yes.

58 to 60.

Yes.

Jeff, I think, long term, long term, we have an opportunity to improve from that.

And then from a 20% target of EBITDA, we have done that before.

I think the TSA will get rid of it in the second quarter and then scale the growth of the acquisition, and/or the organic salespeople will continue to improve the gross margin in the long-term plan.

And so we feel good about the tactics that we're doing.

We'll give further guidance as we make progress throughout the year for the long-term model in the out years of 2021, 2022.

Got it.

I'll sneak in one last one real quick then, if I could, on the cross-sell.

Can you expand on that just a bit?

Obviously, you're getting after on headcount.

And with respect to the cross-sell, what are the gating factors?

How should we think about this?

Is it a matter of training?

Do you need to add some incremental products or product upgrades?

How are you going to measure what are the benchmarks there in terms of how you expect cross-sell to accelerate?

Yes.

I think if you -- Jeff, I don't want to dodge that question.

But in a month or less than a month, I guess a little bit more in a month, in the first quarter earnings call, we're going to lay out guidance.

And with the implementation of NetSuite, we have plans internally by market, by cross-sell, and we'll have some metrics for you that we can sink our teeth in together.

But suffice to say, there is some product work going on around the integration of the one Asure and the one Asure from a mobile device, from an integration perspective, primarily around time and payroll, in addition to HR and payroll.

And then finally, consulting.

We worked really hard on a low-touch consulting model that also expands in a repetitive way, and we're pretty excited about that.

And then from a service model perspective, our listening tour has really brought all products and services to a salesperson implementation service.

And we think that there'll be some pretty big demand, and we're already seeing it.

But we'll lay out those metrics on the first quarter earnings call.

Our last question comes from Vincent Colicchio with Barrington Research.

Yes.

Pat, congrats on the quarter.

Most of mine were asked.

I just -- what has to happen to hit the high end of your financial guidance?

First of all, from a guidance perspective, we don't think we're too heroic by any means.

Now we're in a tough macro environment.

We get that.

I think if we continue to keep our customers, we grow our customers from a growth perspective.

I'd remind you that no acquisitions are in the guidance.

We feel like it's pretty well balanced at this point.

We think the model's pretty repetitive.

So we're positioned, I think, pretty well.

But to beat the guidance or get to the high end, it's -- keep our customers, love them up, have them buy more, get our sales people hired and growing.

And then from a cost perspective, we're well on our way to separate the business.

We feel we're on target to meet that need in the second quarter and then really get the flywheel going and then couple of acquisitions or really just the organic progress.

I think you're going to see us through the quarter continue to grow.

And if we execute and when we execute, good things will happen.

Thank you, Vince.

Well, I think that concludes our questions.

I will -- first of all, I want to acknowledge the 417employees.

If you think about this year, it was a transformative year for us, selling the space business and doing it with a great partner of KKR and FM:Systems, that went really smooth.

It puts us into a reinvention position where we can talk today about a business that we weren't even in 4 years ago and we have really high hopes for.

We think we're at the right time of a market opportunity.

We're in the right segment of the marketplace.

We have access to the right people to grow the business.

We could do something really special here.

So some days, when you think about the uncertainty in the world, et cetera, there's going to be payroll, there's going to be a human capital management services, and there's going to be clients that need help.

And we're going to be positioned quite nicely to help them.

We believe the value will catch up when this thing goes away.

And when people see that this company doesn't have debt and they're growing organically, and they have this type of acquisition opportunity, and they see the execution that this team is capable of, we think we're poised nicely.

So I appreciate your interest.

We'll continue to be here.

And I've been here 10 years.

I haven't sold a share.

I'm more confident today than at any point in the 10-year history that I've been at Asure.

So I thank you for your interest.

Ladies and gentlemen, this concludes today's conference call.

Thank you for your participation, you may now disconnect.