Asure Software Inc

Good afternoon and welcome to Assure's third quarter 2021 earnings conference call. Joining us for today's call are Assure's chairman and CEO, Pat Goble, Assure's chief financial officer, John Pence, and head of investor relations, Randall Rudniewski. Following their prepared remarks will be a question and answer session with analysts and investors. I would now like to turn the call over to Randall Rudniewski for introductory remarks. Go ahead.

thank you operator good afternoon everyone and thank you for joining us for assure's third 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 our investor relations website at investor.assuresoftware.com where you can also find the investor presentation during our call today we will reference non-gap 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 would 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 Geppel, Chairman and CEO. Pat?

Thank you, Randall, and welcome, everyone, to Assure Software's third quarter earnings call. I will begin today's presentation with an update on our business performance and strategy. Then we'll turn the call over to our CFO, John Pence, for a more detailed review of our financial results and outlook for the fourth quarter of 2021 and fiscal year 2022. We will then conclude the session with time to answer your questions. We are pleased with our performance in the third quarter with revenues reaching almost $18 million, which was up 12% relative to prior year and up 5% versus prior quarter. Macroeconomic trends continue to improve in our markets, as is evidence in the decline of the unemployment rate. I would say, though, there remains lingering softness in some areas, owing really to the labor shortage that is affecting many small businesses across the country. However, overall, we are pleased to have grown our organic revenues 8% versus prior year in this economic environment, and our business is continuing to build positive momentum heading into 2022, driven by strong execution across the business. I also want to point out that third quarter was an important step forward in terms of executing our strategy. We divested the space business, if you recall, in 2019 in order to focus our portfolio and resources where we can make the biggest impact, and that is on the human capital management solutions for small businesses who need a strong partner so they can run their business. Then, really, we repositioned the board of directors and the management team in 2020 and 2021 in order to strengthen the organization's talent and leadership skills so we could execute on this big opportunity. And in 2021, we're making targeted investments in sales, product, and acquisitions so we can enhance growth and margins for sure while providing our valued customers with leading-edge solutions that enable them to be successful in their core business. The key to achieving the benefits of this strategy is execution. I believe we have the right people, the right resources, the right focus to successfully deliver against our long-term revenue goal of 20% growth in revenues driven roughly by equally organic improvements and acquisitions. So in terms of the three pillars of our strategy, which are sales expansion, product enhancements, and target acquisitions, let's start with the discussion around acquisitions. In the third quarter, we acquired two of our larger resellers, one based in New Jersey and the other based in Vermont. Both companies were acquired on the last day of the third quarter. It did not impact our results in this period. These resellers focus on providing payroll and related services to small and medium-sized businesses within their territories. The acquisitions expand our direct operating territories, providing cross-sell and up-sell opportunities, and we will believe they'll be highly synergistic to our core business. We're really excited to bring these companies into the Assure family and we expect them to be highly accretive to our business and our stakeholders over time. Both companies currently utilize our payroll solutions and accordingly system conversion requirements are limited as we integrate their operations into Assure's platform. We expect that this should result in a smooth integration while we pick up new operating territories as well as experienced staff. Acquisitions will remain an important part of our growth strategy and will continue to be opportunistic in rolling up our reseller partners that white label our human capital management solutions. We'll also consider acquisitions of other payroll businesses that complement and expand our capabilities as we build scale and scope to our solution offerings. Turning now to product. We're excited about the potential of our new human capital management solution we introduced in the market that combines the best features of our small business payroll and HR solutions into a single new solution with advanced customer experience tools. This significant enhancement simplifies the onboarding experience provides new tools for employer self-service option, and now is part of our standard payroll offering. Also in the third quarter, we launched a new partnership with Employee Navigator. We both have integrated our payroll platform with their system in order to provide employers with seamless communications and tracking across our combined networks. In addition to providing a much more integrated data solution, this partnership should lay the groundwork to enable us to move forward with our ambitions in the broker referral space. I also want to spend some time talking about our tax platform as well as HR for Health. Let's start with our tax platform. This is an asset we acquired in 2020. We feel it provides us with some outstanding differentiation in the human capital management marketplace. We've had significant client interest in our new tax capabilities, particularly among larger enterprise who see the unique position that we have in the marketplace. This business has the potential to significantly expand our total addressable market and to open up new client segments for us. We'll keep you updated on the integration as well as the product development that this business is, we're optimistic about the ability for this to be an important driver of revenues in the future, not only with tax filing, in addition to the money movement opportunities this opens up. HR for Health is another recent initiative we're excited about. This solution offers the healthcare industry full-service payroll and tax filing services We've had strong client interest for the solution, which is reoccurring revenues with a wholesale revenue model. It's growing and has a very attractive client retention characteristics. This solution has the potential to open up new end markets for us and to continue to grow our client base. So if you think of small dental offices, doctor offices, et cetera, that is the target audience here. It also fulfills our objective, and that enables clients to focus on running their healthcare practices rather than focusing on back office improvements. We deliver the improvements for them so they can run their businesses. Turning now to sales activity. We continue to invest in our sales channels, our people, and in lead generation activity for those salespeople. At the end of the third quarter, we had 72 direct sales reps, up from 65 at the end of the second quarter, and up from significantly from 31 when we started in 2020 after our space divestiture. At year-end 2021, we expect to have approximately 80 direct sales professionals. The average tenure of our sales team now is 14 months. It's up from about 10 months at the end of last quarter. Getting our sales staff to an average tenure of 18 months is an important milestone since at that point we see strong improvements in sales productivity, which then in turn drives revenues. With our recruitment and training efforts that we're getting closer to that important achievement while we continue to focus on the small business segment. These investments in sales and marketing are paying off. with total bookings up 43% year over year in the third quarter, while on a year-to-date basis, our small business bookings have doubled. I continue to be very proud of how the SURE team embraced these challenges and took a leadership role through the pandemic. For example, as part of our efforts to support more than 80,000 small business clients in navigating the complex COVID regulations, we introduced an employee retention tax credit, ERTC, solution to help them efficiently maximize this critical stimulus dollar program. I couldn't be prouder of our team as they have helped our clients file over $200 million in total tax credits at the end of the third quarter. These stimulus dollars can help our customers hire staff and grow their businesses. It also shows how our people and platform can respond to new and unique solutions and situations, and deliver impactful solutions to our clients. As an essential small business, Assure remains committed to helping more than 80,000 small business clients navigate unprecedented compliance changes and grow in a very challenging environment. We're committed to ethical business practices, of values-based culture, innovation, social responsibility, and leadership as well as our support for small businesses throughout the United States. In summary, we're pleased with the third quarter performance. We acquired two of our larger reseller partners, made significant strides in our product strategy, continue to invest in our sales teams, deliver another solid quarter of growth in an economy that continues to experience new and significant challenges as we move past the pandemic. We're excited about our acquisition model. We believe our model works as we combine the acquired businesses with the Shares platform. We see the opportunity to drive significant value creation and enhance margins longer term so that our future revenues can be effective in driving higher levels of EBITDA and cash flow. Now, I would like to hand off to John Pence to discuss our financial results in more detail. John? Thanks, Pat.