Asure Software Inc (ASUR) 2021 Q4 法說會逐字稿

Good afternoon, and welcome to Asure's Fourth Quarter 2021 Earnings Conference Call. Joining us for today's call are Asure's Chairman and CEO, Pat Goepel; Asure's Chief Financial Officer, John Pence; and Head of Investor Relations, Randal Rudniski. Following their prepared remarks, there will be a question-and-answer session for the analysts and investors. I would now like to turn the call over to Randal Rudniski for introductory remarks. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Asure's Fourth Quarter 2021 Earnings Call. Following the close of markets, we released our financial results. The earnings release is available on the SEC's website and on our Investor Relations website at investor.asuresoftware.com, where you can also find the investor presentation.

During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items. A description and timing of these items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measures, can be found in our earnings release.

Today's call will also contain forward-looking statements that refer to future events and as such, involve some risks. We use words such as expects, believes and may to indicate forward-looking statements, and we encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations. Finally, I'd like to remind everyone that this call is being recorded, and it will be made available for replay via a link available on the Investor Relations section of our website.

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

Thank you, Randal, and welcome, everyone, to Asure Software's Fourth Quarter Earnings Call. We welcome all clients, partners, employees and investors. I'll begin today's presentation with an update on our business performance of 2021 and specifically fourth quarter. Then I'll turn the call over to our CFO, John Pence, for a more detailed review of our financial results and financial outlook for all of 2022 and first quarter of 2022. I'll then offer comments as we look forward to the year of 2022 and then conclude with a session of answering your questions of our performance.

We reported a very strong fourth quarter performance with revenues growing 29% to $21.1 million and EBITDA more than doubling to $2.4 million. We grew EBITDA margin strongly to 11% in the fourth quarter from 7% the year earlier. Notable has been our strong gross margin improvement over the last 2 years. As you recall, we sold our Workspace business in 2019, and this was our second year as a stand-alone Human Capital management business, we're very pleased with our gross margin improvement.

For the full year, we grew revenues by 16% to $76 million with about 1/4 from organic revenue growth and the remainder from acquisitions. Our new sales bookings rose by 29% relative to 2020, and we are guiding for another positive year in 2022 with revenues expected to reach $85 million to $90 million, approaching the important milestone of $100 million revenues where we gained critical scale benefits of our business.

In order to get there, we're executing against our 2022 plan. The first initiative I want to talk about is the transformation of our sales organization to drive accelerated levels of organic growth via new client wins and cross-sells. We have significant expansion of our direct sales staff underway, and it's supported by the investments in partners in sales and marketing, including lead generation activity. Not only are we expanding our reach, but we're more effectively targeting clients and investing in sales automation tools and support. These efforts are expected to accelerate time to productivity, reduce customer acquisition costs and enhance cross-selling activity.

Underpinning our sales objectives, we are spending more on digitizing and activating new targeted campaigns to feed our sales engine. We're off to a great start in 2022 with new sales bookings in January, rising by over 22% year-over-year, and we're just getting started.

We have grown by a factor of 3, the sales organization since we began as a pure-play human capital management provider 2 years ago. We're continuously optimizing our sales and marketing tactics and putting our resources behind the market opportunities that we think will bear the most fruit.

We're also leveraging key technologies within the Asure family that provide us with unique differentiation in the market that will enable us to expand our relationships and tap into larger client segments. A great example of a key asset that we're leveraging is our HR Consulting business. We feel this business is a differentiator for us, and it offers several technology and service options to suit the needs of small- and medium-sized businesses, ranging from self-service HR support, all the way up the value chain to fully outsource HR solutions.

Our solutions provide compliance with federal, state and local employment laws, replace an internal HR manager for a fraction of the cost and provide a team of certified HR professionals. We're really excited about the differentiation we have and the early wins are really encouraging.

Next, I'll turn over to our product strategy. There are 2 main objectives that drive our product strategy. One, the first is our focus on extending our platform. This was really all about moving from the legacy way of doing business in the human capital management world of providing transactional support to just businesses to reaching employee activities directly in ways that positively impact their lives. This is about moving from a fulfillment model to a future world where we deliver to electronic wallets, real-time pay, alternative currencies and become a trusted financial partner for employees.

The second is our focus on building platform connections. This is our drive to make connectivity of services, systems and application much more seamless and robust, not only within the walls of the Asure ecosystem, but by expanding needs to our community of partners. This provides new value for our clients by increasing automation and making administrative business processes easier to use and more efficient.

Long term, we see this as a big opportunity for Asure. Our product strategy is all about the future and positioning Asure with its unique collection of assets to deliver to businesses their employees' unique value. This is where we think the market is going, and we intend to be leaders in taking it there.

So let's talk about some of the recent product developments in that light. In the fourth quarter and with future announcements last week, we announced a new integration with Intuit QuickBooks. This enhancement allows Asure's clients to automatically sync their payroll data with QuickBooks Online, eliminating the need to enter payroll manually or duplicate information between the general ledger and accounting software. This makes it easier for our customers to do business with us and saves them time, allowing them to focus on their core businesses.

(inaudible) recently announced a new treasury management system to bring world-class automation to our clients. This system allows customers to be more effectively manage their treasury functions and provides instant visibility, thereby enabling them to operate more efficiently and reduce their risk. This solution is geared for human capital management providers and larger enterprises who need automation, and it is a compelling and innovative product in our view.

In the fourth quarter, we built functionality to integrate with Employee Navigator. Employee Navigator serves 60,000 companies and serves 10 million employees with benefit administration, onboarding, compliance and more. This solution creates a seamless connection between Employee Navigator and Asure's payroll and HR solutions, enabling benefit brokers to separate their offerings, create new value for their brokers and their clients.

Lastly, I want to touch on the unique value of our tax platform. Client interest continues to build, particularly among larger enterprises. Our solution has a distinctive position in the market and offers compelling value by enabling our customers to lower risk and seamlessly integrate with our accurate and trusted tax filing solutions. We're very excited about this business, and it really has the potential to significantly expand our addressable market and open up new client segments for us. We're experiencing strong demand for our tax solutions and have integrations underway with several new partners. We will keep you updated on our progress and successes.

While some of our product goals are future-oriented, and they represent a change from the way human capital management solutions have been traditionally consumed in the market, one thing is not changing, and that's our commitment to be the most trusted partner for small businesses and to deliver them effective solutions that enable them to focus on our core businesses. In the current environment, which features an unprecedented level of compliance and regulatory change, we are determined to be a valued partner.

With that, I'll turn it over to John Pence to talk about 2021 in his comments. John?

Thanks, Pat. As Randal mentioned at the beginning of this call, several of the financial figures discussed today are non-GAAP. You will find a description of our GAAP to non-GAAP reconciliations in the earnings release that was made available earlier today, and the reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at asuresoftware.com.

Now on to the results. Overall, we are pleased with our financial performance in the fourth quarter. Here are some of the highlights. In terms of revenues, the fourth quarter was our highest revenue quarter since we repositioned Asure as a pure-play HCM provider. Our Q4 revenues rose by 29% year-over-year in the fourth quarter to $21.1 million and were up 16% year-over-year for the full 2021 fiscal year to $76.1 million. Our revenue performance in the fourth quarter was driven by both acquisition and organic revenue growth.

Next, we grew our non-GAAP gross margins by 150 basis points in the fourth quarter relative to prior year with cost sales rising 19% relative to prior year on a 29% increase in revenues. Non-GAAP gross margin in the fourth quarter was 67.9% and for the full year 2021 was 67.5%, both marking strong gains relative to prior year. This marks Q4 as the fourth consecutive quarter in which we have grown our gross margin percentage. This performance is due to efforts to drive revenue growth while containing cost and has occurred despite the headwinds from higher pay and benefit increases. These factors drove gross margin dollars up 21% year-over-year.

EBITDA generation in the fourth quarter more than doubled relative to prior year to $2.4 million. This is a notable achievement given that prior year results were supported by temporary pay bonus and benefit reductions that were implemented in response to the impact of COVID on our business. We restored pay and benefit levels in 2021. And in the fourth quarter, we also absorbed the cost of the 2 acquisitions we completed in September. Despite those headwinds, we doubled our EBITDA in the fourth quarter on the strength of our revenue performance, combined with disciplined underlying cost control.

We think it's also instructive to look at our EBITDA margins on a sequential quarter-over-quarter basis. We believe that looking at our EBITDA margin this way provides further validation of our strategy to grow margins by increasing the scale of the business. In the fourth quarter, we grew revenues by $3.1 million relative to the third quarter to $21.1 million. Over that same period, we grew EBITDA by $1.2 million, representing an EBITDA conversion rate of 38% of revenues. That EBITDA conversion drove our non-GAAP EBITDA margin to 11% in the quarter from 7% in the previous quarter. That's an increase of 460 basis points relative to Q3. We believe this is a proof point on the scalability of our operating model, and we continue to target 20% EBITDA margins over the long term.

In 2022, we intend to reinvest a portion of our profit improvement to fuel the expansion of sales and marketing activities to drive further enhancements in our service capability as well as technical improvements that support our product strategy and business processes.

I would also like to point out that in the fourth quarter, we also began the integration process of 2 resellers that we acquired at the end of September 2021. The integration of the businesses into Asure has been proceeding as planned, and we are very excited to have them as part of the Asure family.

Turning now to the balance sheet. Client fund assets were $217.4 million at December 31, and interest on those funds was approximately $157,000 in the fourth quarter. Continuing with the balance sheet. We ended the quarter with cash and cash equivalents of $13.4 million and had debt of $35 million, which is comprised of the initial $30 million drawdown from structural capital and the balance is made up of seller notes from acquisitions.

Now I'm going to turn to guidance for the first quarter ending March 31, 2022. This guidance is offered with the backdrop of a continuing challenging environment to predict future economic results, given the ebbs and flows of employment trends, COVID and the other economic and political challenges of today and considers the impact of our recent acquisitions. It also is important to keep in mind that the first quarters are seasonally strong as recurring year-end W-2 and ACA revenue is recognized in this period.

We are providing the following guidance. Revenue in the first quarter of 2022 is expected to be in the range of between $23.25 million to $23.75 million. Non-GAAP EBITDA is guided to be in the range of between $3.3 million to $3.5 million. And non-GAAP EPS is guided to be between $0.04 and $0.06.

For 2022 fiscal year, we are maintaining the initial guidance we provided on our third quarter earnings call. As a reminder, revenue in 2022 is expected to be in the range of $85 million to $90 million. We also anticipate fiscal year 2022 non-GAAP EBITDA margin percentages to be in line with historical percentages and seasonal trends as we have experienced as a pure play SaaS-based human capital management enterprise.

Our guidance for 2022 reflects the uncertainties that continue to play a part with the current economic environment, but also reflects the anticipated investments to grow and enhance our direct sales force, to accelerate the pace of marketing activity and to build our product and technology to provide a foundation for the future growth and margin expansion. Consistent with our historical performance, we expect the first quarter of 2022 results will benefit from the revenue generated by the annual preparation of federal reporting regarding employee, employer, reporting of W-2 income and ACA compliance.

Overall, we are pleased with our fourth quarter and full year financial results. 2021 was a second year since we divested the Space business and focused on our core business of providing HR solutions to growing businesses. 2021 was all about resetting the foundation for future growth with our initiatives in standardizing and reducing controllable costs and integrating the individual components of Asure into a unified operation. At the same time, we are enhancing our solution offerings by leveraging our technology to provide innovative and trustworthy HCM offerings that enable our customers focus on successfully running their businesses. We are excited about what 2022 holds in store for Asure.

I will now turn the call back over to Pat for some final remarks.

Thanks, John. In summary, we're happy with our progression throughout 2021, which featured significant COVID-related challenges. We ended the year strongly on the back of both organic and acquisition-driven growth with quarter 4 revenues rising by 29% relative to the prior year. Our acquisition and organic strategy is bearing fruit in terms of margin gains. We continue to focus on a 20% EBITDA margin longer term and believe that as we gain scale to revenue growth, we'll get there over time. We ended 2021 much stronger than when we entered it, and we're very excited about 2022 and our potential longer term.

We are making significant progress with our product strategy. We are laser-focused on creating compelling solutions that create new ways of adding value to our clients and their employees. In 2022, you will see a stronger Asure, one that is approaching $100 million in sales, one that is improving in new markets, one that is focused on partner relationships and money movement, one that is -- we'll continue to see gross margin improvement and automation of our product and client relationships, one that will also be opportunistic for future acquisitions to continue to grow with scale.

With that, I will open the floor for questions. Operator?

(Operator Instructions) Your first question is from Bryan Bergin with Cowen.

Pat, I think I caught your January bookings performance, up 22% wrote down here. Did that strength carry through February, too? And can you just talk about the overall demand environment across employer size segments and maybe the direct versus reseller channel?

Yes. I'm not going to go into February right now, but I would say demand is strong. We feel pretty good about the environment. I think coming out of COVID, people were trying to survive and now they're trying to thrive. And yes, there might be some market noise with the war obviously and other things, but from a small business perspective, people they want to improve their businesses, they want to grow. And so I think demand for services is pretty good right now.

Okay. And then can you comment on retention levels, potentially gross retention or unit retention for the past year? And then just last one for you. Just an update on the 2 deals that you did in late September.

Yes. Just a couple of things. First of all, retention, overall, we've been pretty pleased with the initiatives we put in place, and that would also include January because January is a scorecard, if you will, on the year. So we've been very pleased with the efforts around our retention. As far as revenue retention historically has been maybe 2 points lower with COVID, I think that's bounced back.

So if you're thinking in that 10% range, that's kind of where we are, which given that we serve the small market, we think that's a pretty good level of retention. I also think the work we're doing with ERTC, or the earned retention tax credits, builds tremendous loyalty with our customers. We were able to give them over $200 million back. And when a provider helps them do that, that's big money for a small business. So we think we're getting a halo effect on that. And I also think some of the initiatives where we mentioned HR services and the money movement and tax filing. Those are starting to bear fruit for us and allow us to retain our clients value-add way. So very pleased with that.

As far as the 2 acquisitions, they're going along great. We are very fortunate, both were long-term resellers for us. Their employees are very experienced. They're very savvy on our products. They've been able to make a difference not only at their locations, but at the overall Asure. So we're very, very pleased with the acquisition of both of them and then also the forthcoming integration. We're on track and feel really good about it.

Your next question is from Joshua Reilly with Needham.

So given the uncertainty in the macro now, how are you thinking about the pace of acquisitions here in 2022, maybe versus your initial expectations kind of entering the year? And can you just remind us how much capacity do you have right now after the 2 most recent deals to make purchases?

Yes, Josh, just maybe a couple of things. One, I don't think we're going to be -- I don't think you'll see an imminent acquisition. We acquired a couple in October, and we're going to take the time to integrate them in the business.

I think as far as the macro environment, we're active and opportunistic. I would look towards the second half, not the first half. As far as capacity, we have plenty of room to do a couple of really good acquisitions. We have $20 million or so on the structural line if we want to use that, and then we also have in the teens on cash to use that as well.

So we're going to execute on the strategy. We're going to focus on organic growth. And some of the product developments, I think, frankly, are pretty exciting. And we'll do a good job there. And in the second half of the year, we'll look at our reseller channel and if acquisitions make sense, we'll take advantage of them.

Yes. Let me add one other thing, Josh. Just in terms of capacity, last year about the same time, I guess it was in the second quarter of last year, we reloaded our S-3. I think our -- I'm going from memory, we've got $150 million on that. And then we also filed an S-4 to put on the shelf, I think it was 12.5 million shares. Again, I'm going from memory. So we've got, I think, a lot of different mechanisms to prosecute the acquisition strategy.

Okay. Got it. And then you guys did a really good job with the ERTC in terms of -- with the clients and stuff in 2021. Can you just give us a sense of does that create any type of tough comparison here in '22 in terms of revenue you generated last year that you won't be able to generate this year as that either goes away or sunsets? Or how is that going to flow through?

Yes. I think, Josh, just from my perspective, I think 13% of our clients, we have processed, ERTC. We're getting inquiries by the day. So I think it will taper off over time. But certainly, our expectation is that we'll probably do a similar amount than last year this year. So if anything, it will wane down, will be a '23 or '24 issue. We don't anticipate too tough of a compare in '22.

Yes. I think just if I understand the way the program works, I mean, I think you have almost 5 years to go back and make those amended filings. So it's probably not going to be as robust in the out years, but there's still opportunity to go sell and deliver that value.

Your next question is from Eric Martinuzzi with Lake Street.

Yes. I was trying to peel back the growth rate for 2022 on an organic basis. If I've got my math right here, it looks like roughly $4 million from the acquired entities. I'm not sure the seasonality of that business, but what are we looking at for growth rate of the legacy business in 2022?

Yes. I think from us, Eric, I think what we're doing is we've kept same-store sales flat. We have a goal internally to get 10% to 12%. We probably guided in the single digits, maybe 3%, 4%, 5%. We believe that we have an opportunity to beat that, but we want to make sure the guide was relatively conservative and consistent with the fourth quarter. We do believe that we have an opportunity to beat that.

And I'll tell you, I think one of the things that you're going to see, and Pat mentioned in some of his comments earlier, really going to focus, I think, again, we mentioned on the last call how we were happy with the ability to cross-sell and upsell and deliver additional value to our customers. I think we're going to -- you're going to see more of that in the coming year, we're really focused specifically on selling consulting services. We really think that it's a differentiator. So if you think about it, it's a fractional HR ownership model. We think that's really a lot different than what you see with our competitors.

And again, it's really -- it's a good fit for our target market, right? So these are small businesses. They can't afford to have a full-time HR person, and it gives them access to fairly complicated problems and not having to pay for that full salary of an employee.

Yes. Just to shine a little bit more light on that. If you think of our average small business customers, somewhere around $2,700 a year in fees. The HR model, there's 3 flavors of it, but roughly it's $6,000, $15,000 and $30,000. So when you get a sense of that you can triple or almost 10x your revenue by adding HR services depending on the level of the model, that's pretty exciting. So already this quarter, we sold more than we've done last year, and that's in just this quarter.

So what's exciting about that for us is we think there's more runway ahead. And then coming out of the pandemic, more and more small businesses are realizing the value of HR, whether it's a hybrid strategy of where they work or just dealing with some of the issues around the great resignation, and we think that we have an opportunity to really move our business forward.

Okay. Last question for me. The -- you had been targeting, I think it was 80 on the direct sales force by year-end. Did you get to that number? And then what do you think about productivity of those reps that you hired?

Year-end, we're about 75. I think we'll exit the year this year probably somewhere over 90. So continuing to march on our journey there. As far as productivity, the average tenure of our sales force is 19 months. And we break out in our investor deck some of the productivity gains. So we're starting to get into a pretty decent area here where we expect productivity and we're happy with the sales efforts far, but we're going to put more and more gasoline on it with some of the initiatives.

And we also believe that you'll see a little bit of a tailwind based on the tenure and based on some of the initiatives that we talked about, whether it's digitizing the sales force and running some of the campaigns and really excited about the early results that we've done this year. So more to comment on future calls.

Yes. And I think one other point I'd make on this one, we're getting to a point where we're getting to some scale in that organization. And what that allows for us to do is create more of a career path. And what I mean by that is we can bring on people as a sales development rep, kind of lead gen. And if they show aptitude, we can move them into inside sales. And then again, if they show aptitude in that area, they can move over to a field sales rep -- field service rep.

So historically, we're just going out in field service reps, going after new logos. We now, again, Pat mentioned some of this in his prepared remarks, getting more into the digitization of lead generation. And we really think that we kind of now can create a farm system. And so it's a change in that -- in the dynamic of that sales force, but we think it's going to bear fruit again also going into our existing customer base and trying to deliver more value to them. So that would be my comments as it relates to going forward sales and marketing.

Your next question is from Jeff Van Rhee with Craig Hallum.

A couple. Maybe just for clarification, I think you referenced a couple of times that EBITDA margins would settle into the historical percentage range for the year, be a little more precise on what that is?

Yes, I think, again, we're still and we've given that guidance, I think that historically, I think -- what do we do this year, kind of 11%. I think we can do that if we want to. We're now at a point where we actually have some choices of where we want to place bets. If you remember, we talked about it, we were kind of at an inflection point at around $70 million. And where the company was kind of breakeven from a cash generation perspective, we're now obviously across that threshold. And as we look into 2022, we're going to be well above that threshold. And so now we have the luxury of kind of deciding do we want to place chips on total marketing, do we want to go through some of the technology initiatives that Pat mentioned.

But I would say, in general, historically, this last year, we did 11%. I don't think that's abnormal for the full year. It's obviously going to see adjusted based on first quarter versus with the W-2s and the ACA revenue. But in general, I think that's where we'll probably achieve 10% to 11% for the year.

Okay. That's helpful. And then on the -- a lot of new products, obviously, a lot of opportunity given the size and scope of your base. What -- how are you going to measure and how are you going to report so we can track your progress on cross-sell, upsell? I mean presumably the value potential for each seat on a full cross-sell as much [as are] now that it used to be. Are you going to give, I don't know, number of modules per average customer? Like how are you going to track yourself? And how are you going to report it in such a way that we can track it?

I think -- Jeff, I think more to come at the first quarter call. I think we've been pretty excited with the investments we made as a company around sales force and some of the reporting tools. We're also rolling out a number of initiatives around digital aspect of some of the campaigns and cross-sell into the base, et cetera. So more to come in the first quarter. But I think it'd be fair to assume that some of the initiatives that we talked about today with HR consulting, et cetera, that we would hold ourselves accountable throughout the year.

Yes. I think probably -- again, we need to bet it. But I would think something along the lines of what we talked about with ERTC about the penetration rates. So we'll try to keep track of that and track our progress that way, I would think.

Okay. And I guess last one for me as it relates to COVID recovery. Just pace per cycle, where did you end up and how sort of recovered or your average customers now versus where they were going into COVID?

Yes. I think from a COVID perspective, we have a couple of charts on the national economy and then on our economy or our base, if you will. But what I would say is, initially, it was shock and awe and the fact that COVID took about 25% of the pays per employee right away. And then slowly, they're coming back.

I know I looked at year-over-year and they go up consistently each quarter, but we're not all the way back on pace per control. And some of that, somebody will say, well, unemployment is at a historic low, but there are probably 5 million, 6 million people that we've lost out of the workforce, whether tighter immigration, more people retiring and the wealth around the stock market.

And in some of those second income earners where they've either had to take care of an elderly parent or they've had a home school or get their kids through the pressure of COVID and not being able to be back saying, we think some people left the workforce. We do believe quarter-over-quarter, that will get better. We've modeled 0 or flat, but the long answer or the short answer is we're still not all the way back. We believe we're probably off 4% or 5% from the from pre-COVID employment levels.

Yes. And I think 1 stat I saw, I think it was last week, there are 11 million job openings still in the U.S. So -- and I think most of those are in the small and midsized businesses. It's our target demographics.

Yes. And just to John's point there, what's exciting for us is the gross margin improvement has been really exciting because we're improving that, and we're not all the way back. So if you think about 1 employee or 2 employees getting added to a company, the gross margin impact of that 1 or 2 employees, we don't have to add service people. We don't have to add anybody. It goes right to top line and bottom line. So what I've been excited about is improving the business despite those headwinds. And I think as they turn, that will help the business going forward.

If I could maybe just sneak one last in. The -- obviously, a lot of the other I think a number of others in that sort of category you've talked about coming down market and having quite a bit of success doing it. To the extent you see them, what is that competitive interaction look like? What are you winning? And what are you losing? Like how is that squaring out? So how often and how does that square out when you see them?

Yes. I mean on our competitive areas, we really see 60% of our business comes from ADP and Paychex. We're not seeing competition outside of those 2, we see Paylocity once in a while, but A lot of the others we just don't see. And what I would say is when you have good referral sources and you have strong campaigns, this is a 1- or 2-person vendor decision. This isn't upper market where you're spreadsheeting 5 or 6 competitors. This is 1 or 2 in relationships and service and technology enablement kind of carry today. So we think we have opportunity to really grow and -- and I know we have healthy respect for all our competitors, but I think this is an opportunity where we can grow regardless of the competition.

And again, I just keep belaboring this point, but I really do think that the consulting offering that we've talked about is going to be a key differentiator against some of those competitors you named.

Your next question is from Vincent Colicchio with Barrington Research.

Yes. Pat, how are you doing in the mid-market? Are you seeing progress there?

Yes. What I would say, Vince, if -- there was a little bit of a disappointment in '21. I would say in the mid-market. I think we really took a hard look at some of the leadership and some of the right people. And we did go outside the leader that reports to Eyal Goldstein. And I think we're going to really make a concerted effort to get back on track in the mid-market. I've already seen early signs of growth and development. I think this is going to be a great year for the mid-market. I feel good about the product strategy. It's the sales execution that we probably fell down in 2021. In 2022, I think we're going to see some nice improvement.

And I think last quarter, you said you had 2 more quarters to be able to complete your centralization initiatives with AWS. Where does that stand? Is that on track?

Yes, it really is. I feel good. In fact, we converted one of our regional locations last week and had some good success and heard from the customer, speed was important in addition to increased reporting flexibility. So we're on track to finish, I would say, by the third quarter of this year and feel like we'll get the benefits, both financially as well as customer experience.

And as far as employee turnover, are those numbers remaining consistent given the tight labor market?

Yes. It is a tight labor market. I think we've had to be a little creative. We've communicated, I think, pretty effectively. And this past month, the management team as well as myself, went on an 8-city listening tour where really connected with some of the positives that we're doing in some of the areas of opportunity. And I've been pleased with our response and our connectivity with the line-level employees. So it's always a concern, but we've been proactive in some of our comp plan design, et cetera. And we think that we have a good strategy for 2022.

(Operator Instructions) Your last question is from Nate Nahirny with ThinkEquity.

Congratulations on the quarter, everyone. Just wanted to touch a little bit on the 2022 guidance and growth. Do you foresee a majority of that coming from acquiring or -- not acquiring, from signing up new customers? Or is the majority of that going to be come from stacking or bundling additional systems with your existing clients?

Yes. Nate, I think what you'll see is first of all, we believe that we're investing in products and services, and we're investing in salespeople, I think we'll have a good mix of new customers in addition to bundling, I do think you'll see stronger organic growth as the year proceeds or unfolds. And in the guidance, we don't have any acquisitions. So it's all organic growth at this point. And we do have an eye on $100 million. And over time, we want to get there, we believe that's the next important milestone.

And -- but as far as growth this year, we see a nice blend of new customers, in addition to increasing share of products and services, highlighted by some of our money movement tax filing services well as our HR consulting.

If there's no other questions, then that concludes our call today. I'll tell you, we're really excited about our progress, visibility is strong for future quarters and our growth, and can't wait to talk to you next time, and that will be in May for the first quarter results. Have a great day. Take care.

This concludes today's conference call. Thank you for participating. You may now disconnect. Stay safe and well. Have a great day.