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?

Thanks, Pat. As Cheryl mentioned at the beginning of this call, several of the financial figures discussed today are non-GAAP. You will find a reconciliation from GAAP to non-GAAP results as part of the earnings release made available earlier today and included in our most recent investor presentation posted in the investor relations section of our website at AssureSoftware.com. As mentioned on our last earnings call, we continue to review the metrics used to explain our business performance. With a year behind us as a PurePlay HCM software provider, following the separation of the workspace business in 2019, it is a good time to simplify and add clarity to our reporting with the goal of making our progress on the execution of our strategy easier to follow. We believe this ultimately will require fewer GAAP to non-GAAP reconciling items to deliver that message. Additionally, we have added some additional slides to our investor presentation. We hope that this enhances the story around our results. We will continue to try and add more visibility and insight over the coming quarters. Both year-over-year and sequential quarterly revenue comparisons are challenging this quarter for different reasons. Year-over-year revenue comparisons are pressured largely due to lower volume of employees employed by our clients and ultimately paid across our HCM solutions. as would be expected because of the comparison of pre-COVID results in 2020 versus current year COVID impact results. Sequential quarter-over-quarter revenue comparisons need to be viewed with the acknowledgement of annual seasonal impact of year-end fees and client transitions. With those caveats in mind, revenue for the first quarter increased 20.5% to $19.8 million from $16.4 million in the fourth quarter of 2020. and 4.5% year-over-year. Recurring year-end revenue is driven by fees generated by annual preparation of federal reporting regarding employee-employer reporting of W-2 income and ACA compliance. Year-end recurring revenue was $3.6 million in the first quarter of 2021 and drove overall revenue growth both sequentially and year-over-year, as it increased from zero in the fourth quarter of 2020 and from $3.2 million in the first quarter of 2020. Additionally, we have added a slide to our investor deck to help visualize these revenue transitions. Finally, as a reminder about our seasonality, the first quarter of each calendar year is seasonally strong for revenue and profitability as year-end W-2 and ACA recurring revenue is recognized in this quarter. The seasonal boost we experienced this quarter does not exist in the second and third and fourth quarters. Recurring revenue continues to represent approximately 97 percent of our total revenue. Interest on client funds was approximately $400,000 in the first quarter, up from approximately $300,000 in the fourth quarter. The increase was primarily due to the change in the average balance of client funds held on behalf of our clients, increasing from an average of $185 million in the fourth quarter to approximately $234 million in the first quarter. As we consider the expenses, I will offer similar caveats regarding the expense comparisons. As we previously mentioned, In the first quarter of 2020, our employees had normal pay rates and benefits pre-COVID, both of which were reduced in the fourth quarter of 2020 to help the company manage the impact of the company's reduced revenue. We returned pay rates to normal levels in the first quarter of 2021 and anticipate returning to normalized benefit levels in the second half of 2021, depending on continued economic improvement. Compensation and benefits represent approximately 70% of our cash expenditures, so these adjustments have meaningful impact. This quarter, revenue growth had a significant impact on our profitability. Our sequential gross profit in the first quarter expanded by between 25% and 27%, depending on whether you use GAAP or non-GAAP gross profit as a performance metric. First quarter 2021 EBITDA was $2.6 million, representing 13.1% margin. up from negative 1.6 million in the fourth quarter. Compared with the first quarter of 2020, EBITDA increased about 30%. It is important to point out that while revenue increased a little over 800,000 year-over-year, EBITDA increased by 1.5 million after taking out approximately 900,000 of transition services agreement expenses related to the workspace sale. Non-GAAP EBITDA, which also removes stock compensation and one-time expenses from EBITDA, was 3.4 million representing a 17.3% margin, up from the fourth quarter, 1.1 million, representing a 7% margin. First quarter of 2020 was 4.3 million on this metric, but included more than 1.8 million of one-time expenses, add-backs versus approximately 200,000 of these types of add-backs in the current quarter. Turning to the balance sheet, we entered the quarter with cash and cash equivalents of 24.3 million. At March 31st, 2021, we had $22.6 million of debt which is comprised of $10 million term loan and $8.9 million PPP loan and the balance made up of seller notes from acquisitions. We have applied for forgiveness of the PPP loan and we hope to receive a decision from the Small Business Administration sometime in the next few months but have not been given any new indication of timing of this decision. Now I'm going to turn to guidance for the second quarter ending June 30th, 2021. This guidance is offered with the backdrop of a very challenging environment to predict future economic results as evidenced by the significant miss on expected employment results last Friday and the revisions to previous employment figures. We're providing the following guidance. Revenue for the second quarter of 2021 is guided to be in the range of between $16.5 million to $17 million. Non-GAAP EBITDA is guided to be in the range of between $700,000 and $900,000. And non-GAAP EPS is guided to be between negative three cents and negative one cent. While we continue to be cautiously optimistic with the potential tailwind of the improving economy, given the uncertainty of when America returns to work, we want to be prudent with how we are running the business and describing our prospects. Accordingly, we are not yet restarting annual guidance but expect to do so in the coming quarters as we gain additional visibility. To provide a sense of how revenue was impacted by COVID in relation to overall employment levels, we have included a slide in our investor presentation which is located at slide 28. And as I mentioned earlier, we have also added a slide to the presentation to help bridge the revenue transitions between quarterly comparisons and that slide is located at slide 29. And again, our investor presentation is located on our website in the investor relations section. And with that, I'll turn the call back to Pat.

Thanks, John. And I want to highlight John and the management team. I think they did an excellent job with the investor presentation and I think really gives a window of clarity into the business. As we enter our second year here with COVID, we remain diligent in helping businesses continue to navigate the pandemic and remain hopeful that the worst is behind us. Throughout every stage of the pandemic, we have demonstrated our commitment to helping clients in our multifaceted response. Our COVID-19 Resource Center webinars, for example, continue to help thousands of small businesses. We continue to listen to and work with small and mid-sized businesses to provide information, resources, and the support they need. We've assisted our clients in quickly applying for and obtaining PPP loans. We have also helped them claim paid in employee retention tax credits. Our experienced employees have really lived Assured's values of embracing change, leading with integrity, owning the outcome, delivering awesome, and being a good human. I give credit to the innovation, integrity, and hard work of our employees who have continued to show up for our clients, even while navigating the challenges of the pandemic in their own personal lives. And what this has done is that it really has helped our small, medium business clients get back to growth and help them navigate the complex stimulus legislation, develop return to office plans, and create vaccination policies. We're confident that our resilient business model, strong financial position, and dedicated employees and leadership team will help ensure finish 2021 even stronger than when we started it. We're particularly pleased with the trend line of revenue growth improvement. It dropped at an 18% year-over-year decline in second quarter of 2020, improved to a 10% decline in third quarter of 2020, to a 7% decline in the fourth quarter of 2020, to a 4.5% growth in the first quarter of 2021. And as John mentioned, our core operating metrics are now at a point where we're comfortable reintroducing quarterly guidance for the second quarter of 2021. We expect revenue to be in the range of $16.5 to $17 million. This range points to year-over-year growth of 17% to 20%, about half of this growth being organic and the other half inorganic. We believe that this points to an important milestone as we march towards our strategic goal of 10% organic growth, 10% growth generated through accretive acquisitions, and 20% EBITDA, which gets Assure more in line with the growth and profitability margins with some of the other publicly traded SaaS human capital management companies, which carry much higher valuations. Internally, We're getting back to normal. We're returning back to our vision of providing human capital management software that services that help companies grow while nurturing a culture of growth around us. And our mission is to help customers grow by getting the most from their human capital. We also want to help our employees grow personally and professionally, grow relationships in the communities that inspire goodness, And if we do all these things in a way that grows shareholder value, we'll all be happy. With that, we'll open it up for questions. Operator?

If you would like to ask a question at this time, please press the star and the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from the line of Ryan McDonald with Needham. Please go ahead.

Hey, guys. This is Josh on for Ryan. Congrats on the strong quarter. Just wanted to start off, you know, our checks and some of your competitor results indicate that the market improved in the month of March. Is that what you're seeing as well? And then how is rep productivity trending throughout the quarter?

Yeah, no, Josh and I'll let John chime in as well. I think January, February, if you think back, you know, we had a second wave of COVID. The election stimulus probably was a little bit delayed. So we saw some softness in January, February. March, you know, was relatively strong and started to bounce back a bit. You know, I think that's how we saw it. From a sales rep productivity perspective, you know, First of all, we've been really happy with the reps that we've been able to get, but our average tenure of the sales reps is 10 months. It is still a journey. I will tell you, I think our reps are developing really good referral sources. We're learning how to sell digitally, and I've done a really nice job in a tough environment. And we're cautiously optimistic that as America reopens, you know, we'll keep gaining productivity. But to be up in bookings over 20% in the first quarter year over year, you know, I was very happy with our sales rep performance.

Yeah, I agree with Pat's assessment. It was a little choppy January, February, but it did come back in March. You know, we're talking in May, right, so we've already forgotten the spike that happened kind of in that time frame, so. But anyway, it did come back a little bit in March.

Okay, great. And then following up on that, how should we think about the slower return to work that we're all very aware of here, given what's happened in the last week, particularly in the troubled industries impacting your same store sales later in the year here? And then can we get some more color on how you're factoring that into Q2 guidance here or what assumptions you're using? Thank you.

Yeah, just in general, we're not pounding the table on a huge improvement. We're kind of modeling steady state, if you will. I do think in the back half of the year towards September, we may have an opportunity that employment levels will start to go up a bit, but we'll take that on second quarter's call. But as far as modeling second quarter, we've really kind of looked at it as we're open for business, we're going to continue to drive results, and keep feeling the trajectory that we have, but we're not expecting anything more natural than that.

Thanks, guys.

Thanks, Josh.

Your next question is from the line of Richard Baldry with Roth Capital. Please go ahead.

Thanks. First, can you talk about what you're seeing at the leading edge of your pipeline for your marketing funnel, whether there's material changes to that and how that's been trending? And then maybe just kind of an easy one, but R&D was sort of flat as year over year below where it had been trending the last several quarters. Is this sort of a new level to base off of, or is there anything unusual in that number?

Yeah, I don't think you're saying – I'll answer that first question first, or that last question first, and then I'll turn it over to Pat. There was, I think, a little bit more capitalized this quarter, and it kind of just varies depending on what projects they're working on. So I think that's probably the transition more than anything. I don't think that you should read anything more into it than that. I think the levels are fairly consistent year over year.

I would agree with John, and I think as far as the leading edge of the funnel – What I would say, Rich, is I do think we're working on some really interesting stuff and some maybe bigger transformational projects. but they're early in the pipeline. And it's really a factor of some of our either resellers or some of our value-added partners are now turning to, hey, I have hundreds of clients. Boy, I could do something more meaningful. Let's talk to Assure. So I think we're in the early innings of some – pretty nice sales opportunities, but I don't anticipate anything immediate to that. But that's what I would say towards the back half of 2021 or 2022. You know, we certainly have some interesting opportunities, so we'll see how those play out.

And the last for me is maybe dig into the M&A backdrop a little bit. I'm sort of curious whether COVID's altered some of the willingness of people to entertain the concept of sale or how it changes your ability even to evaluate those companies, given their 2020 results would look a lot different than they might have otherwise. Thanks.

Yeah, just where we are in the business, we're really focusing on our employees, our clients, getting back to normal. We're built a business to scale, and we're going to take advantage of some opportunities to do that. You know, I would say right now we have some opportunities. I think in the back half of the year you will see some of those opportunities. I think in this first half of the year we kind of want to finish what we started. You know, we're pointing towards double-digit growth. You know, we have a plan to do that, and, you know, we anticipate to get there in 2021. And I think you'll layer tuck-in acquisitions as we go. As far as expectations, I do think people, whether it's capital gains or perhaps some of the new legislation, they're evaluating their options. And then as far as COVID-19, I think we've been able to understand the COVID impact on small and medium-sized businesses as well as anybody being a provider. And then we have a window into some of our resellers and other businesses of how it affected them. So from a pricing strategy, sometimes it's just really understanding that and understanding and matching expectations. I do think you'll see some deals as we get into end of 2021 and 2022.

Congrats on the return to growth and the guide for strong growth in the second quarter.

Rich, thank you.

Appreciate it.

Your next question is from the lineup Eric Martinuzzi with Lake Street. Please go ahead.

Yeah, I wanted to focus on the pay-for-control stats and when we start to see recovery there. I know a year ago this time you were doing kind of – I don't know if it was a daily war room or what the expression for the concentrating on the install base was, but what are your expectations there, given we had this 13% step down in Q1? How does that look in Q2?

Yeah, I'm going to go. I'll let John jump in, too. First of all, we do a daily call, you know, at 9 a.m. every day. Al Goldstein runs that call with the management team, and And, you know, really proud of... everybody showing up and really giving us the data we need to match our customer base and make sure that we're in sync with them. What I would say in the second quarter early on, there's two stories here. First of all, from a client perspective, if I think back to last year, companies really didn't know what to do. Were they going to go back into business? Were they going to go out of business? They needed funding. Are they going to get it from the government? Are they going to get it from their favorite uncle? Is their institution going to, you know, draw in their credit line? They really didn't know. What I would say is there's been a return to normalcy. You know, we lost probably one to one and a half percent of our businesses because of COVID. But I think the more important thing sad now is the employees, and when do the employees return to work? And, you know, we're not soothsayers. We don't know the future. What I would tell you is, you know, second quarter was down. We had improvement in the third quarter. Fourth quarter, it stalled. And if you think about the election and first quarter, you know, there was – there was a second wave or third wave of COVID that really reduced employment in that December, January, February timeframe. I think the vaccine has certainly helped, but now what you're seeing is, you know, with the stimulus and and employees get paid extra to navigate some of the unemployment. Now that there are jobs open, there's been sometimes not a workforce or a steady workforce. And then in some cases, there's supply chain challenges. And then finally, I think just if we look at it, some of the early indicators are If you're thinking about hiring people, your first step is going to pay more overtime to make sure you have demand, and then you hire. So I don't think we've seen the return to normal yet. I do think digital will – maybe some jobs will be lost forever, but we'll create other jobs, and there will be more employment opportunities. We've modeled some slight improvement. As we look into September, but not until then. And, John, I don't know if you want to add any color.

No, look, I wasn't here for the full impact in the second quarter of last year, obviously. But, you know, I've tried to educate myself on the business. And what I saw was a huge, obviously, decline in the employees served numbers. in the second quarter of last year. It's come back, as Pat mentioned, but it's nowhere close to where it was pre-COVID in terms of the overall employment levels. I mean, the client counts were roughly the same, but when we look at the overall employees served under those employers, still dramatically different than pre-COVID. So when that comes back to normal, I guess it's anybody's guess. And clearly, the economists are missing it as well. So there's tons of, obviously, demand out there. but it's unclear as to when the employees are actually going to show back up again.

And I think for us, I think what's important is, you know, we've modeled continued business improvement despite that uncertainty. I know just when I had two appointments recently, one at the Barber, A year and a half ago, that same time I go on a late Sunday afternoon after the Packer game, there's 12 barbers in that chair. A year and a half ago, there were three this year. Those nine employees for our business, that's top and bottom line. We have the same customer service people based on the companies that we serve, so that'll be accretive when they return. We can't wait for them to return, but we can model the business and run the business accordingly. even if they don't return quickly. Second, the dentist's office. The dentist is doing oral surgery. The dental hygienists have not quite yet gotten back to employment. They're increasing their hours, but not anywhere near you know, what that is. So that's an example of the two type of businesses that when employment does come back, you know, that'll be a good opportunity for us, top line, bottom line. We're going to be cautious in modeling that, but when it does, it'll be a nice tailwind for us.

Yeah, and again, just to close out Pat's point, I mean, we're trying to focus on things we can control, right? We can't control the overall economy and when people all go back to work, but we're trying to do the right things to take care of the business in the interim.

Mm-hmm. That takes me to my next question, which is on the gross profit. The gross margin's up nicely here. Any one-timers to the good that we should be aware of? How should we think about gross profit margin for Q2?

I think it'll be fairly consistent. There is not any one-timer. I think it'll get pressured potentially in the second half as we start to put the benefits back on. But I guess we'll get to that point when we start talking about the third and fourth quarter. But I don't think anything extraordinary changing between this quarter and next.

Yeah, Eric, I just think seasonally a little bit the W-2 and ACA revenue is, you know, it's the same every year in the first quarter. As John mentioned, you know, we've restored pay cuts in the first quarter to normal levels from an employee perspective. In the second half of the year, you know, we want to restore bonus and, and 401k match. So we're excited about that. But that will probably put a little bit of a damper on gross margin improvement. That being said, you know, we are getting more efficient. And our operations, I've been very proud about the group that's doing the work. You know, I think we're getting a higher level of standardization, harmonization of how we do business. We're getting efficiencies in our software and our technology projects. And that, you know, coupled with the economy, if we get a boost, we'll help gross margins as well.

And that's a fair point, Pat. I think I was looking at it more from a cost of sales perspective, not changing dramatically. But you're right, absolute dollars and percentage will probably go a little bit down with the transition in revenue. That's fair.

I understand. Thanks for taking my questions. Thanks, Eric. We really appreciate it.

Your next question is from the line of Derek Wood with Cowan & Company. Please go ahead.

Oh, great. Thanks for taking my questions. Pat, I just wanted to ask about the focus on mid-market versus kind of SMB and smaller organizations, particularly as you onboard new reps. And it seems like you could You know, go after target smaller companies with kind of higher volume level of new customers or target, you know, mid-market customers where there's bigger ASPs but perhaps maybe lumpier deal flow. So what's the strategic focus, particularly with a lot of the new reps onboarding?

You know, Derek, it's a little bit of both, right? And I think when you think about a partner strategy, and we've been very strong with the banks, the CPAs, and the benefit brokers, they will very often bring to you, whether it's 10 clients at a time, 50 clients, or 100 clients, We want to make sure, you know, we're very clear we're not going to be in the enterprise or the large end of the marketplace for payroll. But when you have the opportunity to gain somebody's book of business, you want to be able to serve their book of business because they don't want to, if possible, go to two or three providers and And we think we have a unique capability. In fact, our mid-market product, we're really excited about it. We've had some really good partner activity in that product. And the capability is strong. So we have opportunity to grow in both areas. But from a small business perspective, we've chosen to start there. Just if you think about kind of getting partners and getting clients involved, We want to get the vast majority of those small businesses over quickly, and we saw some opportunities in the middle of the pandemic. Now what we're also doing is taking a second stage and growing the mid-market. So we strategically grab reps in a small business. This next stage, over the second half of the year in 2022, we'll add more in the middle market. but we feel really good about the capability of both, both our product lines. And then when we prosecute the strategy around partners, we want to make sure that if we get a hundred clients, we can get all hundred of them served on behalf of our partner.

Yep. That makes sense. And maybe kind of a follow on would just be the, you know, maybe give us what your sense is of the competitive market and competitive landscape and, compare and contrast maybe how that was six, nine, 12 months ago?

Yeah, I think, you know, when you think about human capital management, I mean, clearly the, I think the upper end of the marketplace, I've been in this industry 30 years, you know, is a bit crowded and there's some world-class companies in that upper marketplace. And I think there, there's a number of clients or competitors that are fighting each other in that space and, I really like this small, medium-sized business. I think, first of all, we have good market adoption, good market opportunity to get share. I think in some of the Tier 2, Tier 3 cities, it's still underserved. And I think we have the opportunity to grab market share. We're going to continue to do that. And I think we're following a model that is very profitable in that segment of the marketplace. And then as far as the need, especially with COVID, I think people are coming out of COVID and they're wanting increased, you know, last year was survival. This year it's, hey, how do I grow and grow digitally? And I think there's going to be more opportunities for years to come.

That's great. Thanks for the color. Thanks, guys. Thank you, Derek.

And your next question is from the line of Jeff Zenry with Craig Holman. Please go ahead.

Hey, guys. This is Rudy on for Jeff. Just one for me. Pat, I think you mentioned you're seeing some good multi-product, some good cross-sell bundling in the quarter. Could you just go into a bit more color on what modules are seeing strong attach rates?

Time of attendance and HR both are increasing. And then what I would say, our tax product and money movement, you know, we do feel is embedded and has some opportunities in the future as well. So we feel really good about those product sets that we're seeing.

Great. Thanks.

Thank you.

And your next question is from the line of Vincent Coloco with Barrington Research. Please go ahead.

Yeah, Pat, did you add any resellers organically in the quarter? And what are your thoughts about going forward adding resellers organically?

Well, first of all, we're always willing and able to add resellers. We almost look at it, first of all, we're underserved in a lot of the Tier 2 and Tier 3 cities. in the United States. So we've identified probably 100 cities we'd like to go to with the right reseller partner. We probably added about three or four in this first quarter. We want to make sure, and we do believe that especially as we get to the second half of the year, Some of the resellers with COVID, if you're starting a business, it's tough to fund a business and start a business in the middle of COVID. So I do think you'll see that we'll get some resellers in the second half of the year or first part of 2022. And I think there'll be a return to normalcy there. And then I do think some folks that have been in reselling for us for a while will look at potentially capital gains and some of the other taxation where they might want to strategically partner in exiting the business in late 2021. uh to make sure that you know they're tax efficient as well so you know it's kind of a constant pursuit where we're opening cities we want to build a presence in those cities and then as we do strategically you know we can welcome them to the assure family and and get the growth that that we're building in this business so that's definitely part of our strategy

As you move forward hiring incremental salespeople this year, and you said the mix may change more towards midsize focus, what's your gut instinct? Will you be able to hire people with the same level of tenure as you did last year?

I think so. Last year we had an opportunity with the acquisition of CompuPay by ADP where we were fortunate that culturally we had some good sales reps that we could add. We're fortunate in that we have a management team that you know, President and Chief Revenue Officer Al Goldstein, our Chief of Staff Todd Walensky, myself, others, you know, that have been in the industry, you know, 30 years, 20 years, 15 years, 10 years. And with that, what happens is you, you know, you work with really some special people. And so it's always, it's hard to get really good salespeople. But by the same token, when you have tentacles that run pretty deep, you have opportunities to get talent. And what we feel really good about is we grow our business and really focus our business, that talent's becoming available. And, you know, luck is preparation meeting opportunity. And, you know, we think we have an environment where, you know, we can get some good people working for us and we can do something special. So that's how we see it.

Thanks, Pat.

Vince, always appreciate your time. Thank you.

And I'm showing no further questions at this time. I would like to turn the call back to Pat for closing.

Yeah, thank you so much, and I appreciate everybody being on the call today. I think just a couple takeaways. You know, it's a tough environment. We knew that this was going to be a tough environment. By the same token, we could see the other side. And when you think about the progress we made with today, revenue growth, first of all, pre-COVID compared versus post-COVID, That really bodes well for the future. I think you're going to see more revenue growth and more growth in the Assure business going forward. I think the trajectory we're on, when you think about some of the results we showed in the second quarter 2020 to now, we have some really good momentum in the business despite having some tough times and some uncertainty with COVID-19. I'm really confident that as we go through the year and go through next year, investors, clients, shareholders, and employees are going to be very fortunate that they stayed with Assure because I think we're going to make some great things happen. So I appreciate your time today and look forward to talking to you live next time.