Asure Software Inc

Good afternoon and welcome to Assure's second quarter 2022 earnings conference call. Joining us for today's call are Assure's chairman and CEO, Pat Geppel, Assure's chief financial officer, John Pence, and head of investor relations, Randall Rudnicki. 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 Randall Rudnicki for introductory remarks. Please go ahead.

Thanks, operator. Good afternoon, everyone, and thank you for joining us for Assure's second quarter 2022 earnings call. Following the close of markets, we released our financial results. The earnings release is available on the SEC's website and our IR website at investor.assuresoftware.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 the 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 Geppel, Chairman and CEO. Pat?

Thank you, Randall, and welcome everyone to Assure Software's second quarter earnings call. I will begin today's presentation with an update on our business highlights and strategy, and 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 remainder of the 2022 fiscal year. We will then conclude the session with time to answer your questions. The second quarter was an active period for Assure, and we made some significant strides in implementing our strategy. I'm very pleased with our progress in some of the key areas of the business, including new sales, development, product development, and our efficiency initiatives. I will address each of these items in a moment, but first, let's recap the second quarter results. We grew our second quarter revenues by 18% relative to prior year and non-GAAP EBITDA 23%. That makes This period, the fifth consecutive quarter, we have grown revenues by double-digit rates. We also maintained a healthy business mix with reoccurring revenues representing 94% of total revenues. In the quarter, our revenue growth was driven by acquisitions with organic growth being slightly positive as expected, led by our HR consulting and our tax products. As you can tell from our revenue guidance, we're expecting higher levels of organic growth in the second half of this year, particularly in Q4. Our guidance for that quarter implies approximately 10% revenue growth relative to prior year. Since we've not made any significant acquisitions since September 2021, that growth is primarily organic. In other words, we're expecting a strong finish to 2022 driven by our recent sales successes and launch of our new solutions. We will still need to execute and deliver, but we believe we're on track to do just that. The acquisitions we completed in September of last year have met our exceeded expectations, and the integrations are now essentially complete on time and on budget. Despite having some expense headwinds resulting from the reinstatement of last year's temporary COVID-related reductions and investments we're making across the business, we managed to hold our EBITDA margin in the quarter. We continue to target a 20% EBITDA margin longer term, and we believe we'll get there as we build scale in the business, grow high margin revenue streams, and enhance the efficiency of our operations. Let me now turn to the progress we made across the business in the second quarter. Beginning with sales development, in 2022, we focused on leveraging our unique strengths to bring value to existing and new customers while also enhancing our sales efforts by introducing new tools and investing in marketing to drive performance. These efforts have gained great traction in the market and helped drive an 80% seven percent increase in new sales bookings in the second quarter relative to prior year importantly growth in new sales was driven by reoccurring revenues which we expect to have installed and generating revenue in the second half of this year i previously highlighted the unique differentiation we have with our hr consulting and tax solutions we have focused on these segments to enhance cross-sell activity, expand our addressable market, and enhance our resale revenues. Our efforts in these areas are really paying off. And in the second quarter, we grew our HR consulting revenue by 19% relative to prior year, and we grew our tax revenues by 9%. Our cross-selling success is improving each quarter, and we see significant opportunities ahead within our existing base. These successes enabled us to penetrate 12% of our base with ERTC solutions in the first nine months from offering. We think we have just scratched the surface in our cross-selling efforts and believe we can generate more reoccurring revenue from our existing client base. We're also seeing significant client interest in the integration marketplace, which we introduced last quarter. This API-led initiative sets the stage for new partnerships and new revenue streams, such as our recently announced partnership with Equifax. It also provides a base to introduce solutions such as earned wage access, employer solutions such as benefit reconciliation, retirement solutions, and employee-focused solutions such as the Assure wallet and tax preparation. We believe the integration marketplace will be a meaningful source of revenue growth for Assure, and we expect that will begin to happen in the third quarter, and more notably in the fourth quarter, owing to the timing of product introductions. Turning now to product development. Our company's goal is to provide best-in-class human capital management products, To get there, we are consolidating to a single HCM and a single tax engine to allow us to offer a centralized human capital management ecosystem for both the employer and the employee. Our efforts will bring new levels of efficiency and automation, and we will drive high margin revenue streams for Assure. I'm really proud of the great work that our teams have accomplished in this area. So far in 2022, we've introduced several new initiatives that we're incredibly excited about. These include, number one, the integration marketplace, where we launched in the second quarter with 125 pre-built integrations to enable accelerated development with new partners. Our new treasury management solution that brings world-class automation for our clients. This solution is geared for human capital management providers and larger enterprises to enable them to operate more efficiently and reduce risk. We also announced new product developments with Employee Navigator for benefits, CertiG for unbanked employees, and QuickBooks for accountants and payroll clients. Last week, we announced the introduction of a new industry-leading tax portal. Our new portal gives employers real-time access to historic and current tax data in all tax information, including liabilities, deposit records, and copies of actual tax returns. It provides transparency and interactivity while making tax compliance easier for payroll clients. We believe this new solution is best in the industry and further demonstrates our leadership in the tax area. These initiatives are also expected to contribute to revenue performance in the second half of the tax year, helping drive higher levels of organic growth and improve client engagement. Turning now to some of the enterprise efficiency initiatives we're working on. Our initiatives in this area are geared to enhance standardization and centralization of our operations while delivering exceptional client service. To get there, we're consolidating back office functions creating centers of operational excellence with fewer locations and improved efficiency. Our initiatives also support our acquisition strategy and enable us to expedite synergies and timelines for integrating future assets. As we centralize our model, it will result in fewer bank accounts with enhanced float revenue potential and deliver an expected $5 million in annual cost savings as the program is implemented to the end of 2023. Earning acquisitions will continue to be opportunistic. While we've not pulled the trigger on any larger targets so far in 2022, we'll continually monitor the market. We will acquire assets that fit within our M&A model, and that will drive value creation for our shareholders. Finally, I hope my remarks give you a sense of the great amount of activity that is underway at Assure. We're making great progress in sales, product, and operations. Our commitment to provide leading-edge solutions that drive value for our clients and to be the most trusted partner for small businesses. We are in a labor environment of almost unprecedented change from the perspectives of regulation, mobility, and talent. Our innovative solutions will help guide our clients through this dynamic environment so they can focus on their core businesses. Now, I would like to hand off to John to discuss the financial results in more detail. John?