Asure Software Inc

Good afternoon, and welcome to Assure's First Quarter 2021 Earnings Conference Call. Joining us for today's call are Assure's Chairman and CEO, Pat Gapul, John Pence, and Vice President of HR, Cheryl Chirula. After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Cheryl for introductory remarks. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Assure's First Quarter 2021 earnings call. After the market closed, we released our financial results. The earnings release is available on the SEC's website and our investor relations website at investor.assuresoftware.com, where you can also find the investor presentation. This teleconference is also being broadcast over the internet and will be archived and available on our IR website. 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 the reconciliation of non-GAAP measures, are the most comparable GAAP measures to be found in our earnings release. Today's call will also contain forward-looking statements that refer to future events, and as such involves some risk. 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 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. With that, I would now like to turn the call over to Pat Geppel, Chairman and CEO. Pat?

Thank you, Cheryl, and I'd like to welcome everyone to our first quarter earnings call. We sure appreciate your interest, whether you're an employee, a client, investor, analyst, or another interested third party. I'll start today's call with an update on some key metrics before reviewing business highlights for the first quarter. Then John Pence, our CFO, will review our financial results and provide an outlook for the second quarter 2021. Then he'll turn back over to me and I'll provide an update on our strategy as we look to the second quarter. Then we'll open it up for questions. And reflecting since December 2019, when we sold the workspace business, we increased our salespeople from 33 to 64 right in the middle of a COVID pandemic. And I think what's really important since that kind of progress has been made is This quarter was a really important inflection point for Assure Software because it was the first quarter that we posted positive year-over-year revenue growth. We view this as an important inflection point in the business and an important milestone as it sets us up nicely for 2021. The past 14 months or so have been different than any other we've experienced before. The mass shutdowns in response to COVID-19 forced us to find innovative ways to connect with our small, medium-sized business clients. and prospects, as well as our own employees to overcome these challenges. With more than a year passing since the pandemic began, I'm very proud of how the Assure team embraced the challenges and took a leadership role through this pandemic. For example, as part of our efforts to shepherd more than 80,000 SMB clients through the COVID pandemic, we recently introduced an employee retention tax credit, or what we call ERTC solution, to help clients efficiently maximize the tax credit. ERTC is part of the CARES Act, which encourages businesses to keep employees on their payroll. Also, we're enriching our partner program by providing industry-specific educational resources to help our CPAs, our brokers, and our bank referral sources grow and prosper. When they grow and prosper, we grow and prosper. While our sales channels continue to be impacted by the restrictions of face-to-face meetings, and delayed decision-making by prospects, we've experienced growth in many key sales metrics. We are well-positioned to take advantage of the opportunities as we transition back to normal market conditions. Demonstrating this point, our increased focus on small business continues to pay off in small business bookings, where most of the reps' focus increased more than 90% year over year for the third consecutive quarter, and more than 60% of new sales continue to adopt multiple solutions. We also continue to add reseller partners. And our total bookings this quarter increased over 20% year-over-year. Compared to the fourth quarter of 2020, first quarter revenue, EBITDA, non-GAAP EBITDA, and non-GAAP EPS all increased sequentially. As a reminder, the first quarter is seasonally strong because this is when we recognize our year-end W-2 and ACA reoccurring revenue. Even after backing out the year in revenue, we performed well compared with the first quarter 2020 in a very tough environment. The COVID-19 pandemic is still a headwind, primarily putting on same-store sales due to the sustained level of lower client employees on our platform that continues to impact our top line. This resulted in tempered year-over-year comparisons. As a reminder, first quarter 2020 was only partially impacted by COVID-driven higher unemployment. Drilling down into the COVID impact on a monthly basis of the 1,050 of our 10,000 direct customers that paused last March 2020, approximately 900 have returned through March 2021, resulting in about a 1% churn in our clients. Our pays-per-control, or what we call same-store sales, which roughly tracks national unemployment rates, was down 14% year over year in Q2 of 20. It improved to down 9% in the third quarter of 2020. It remained above that level in the fourth quarter of 2020. In the first quarter of 2021, it dipped initially and then recovered a bit in March. But the average for the quarter was down 13%. This is presented a headwind because in normal times, pays per control typically increase about 2% year over year. Still, since we've been adding more clients than we're losing, as same-store sales normalize over time, this will translate into increased revenue. Lastly, new sales bookings on a dollar basis were pressured as many small businesses continue to focus on surviving, adjusting their business models accordingly instead of changing payroll providers, even if they're willing to do so. However, we're pleased with the number of new clients booked is increasing and with the broad adoption of multiple solutions to boot. Our investments in sales reps are also bearing fruit. As a reminder, we began 2020 as a transition year with 33 sales reps, and at the end of first quarter 2021, we had 64. We expect to be between 75 and 80 by year end. Most of these new hires are very experienced, bringing strong referral relationships. The selling environment will likely continue to evolve with differences on a regional basis as COVID cases and the reopening trajectory stabilize. We are optimistic with the vaccine deployment progressing steadily. Our clients are in the best position since the pandemic started to begin making buying decisions Our buying decisions, our initiatives to reduce expenses while accelerating our go-to-market and product innovation investments have positioned us very well for growth as the pandemic situation improves. We have delivered solid client growth and demonstrated our unique value to our clients and partners through some of the most difficult times. Still... We believe that momentum with our business metrics will continue and the economic conditions will improve as national employment levels gradually return to pre-COVID levels. As for acquisitions, Integration of the small reseller based in the Northeast that we purchased in December is going well. We don't have any acquisitions pending. We do expect to be opportunistic in rolling up our reseller partners that white label our human capital management solution. This is in line with our Partners for Life strategy where our partners can provide referrals or white label and resell our solutions and then join the Assure family. As an essential small business, it sure remains committed to helping more than 70,000 indirect and 10,000 direct small business clients grow in a very challenging environment. We're committed to ethical business practices, a values-based culture, innovation, social responsibility, and leadership, as well as our support for small businesses throughout the United States. I would like to hand off to John to discuss our financial results in more detail. John?