Asure Software Inc

Good afternoon and welcome to Assure's third quarter 2024 earnings conference call. Joining us for today's call are Chairman and CEO Pat Gopal, Chief Financial Officer John Pence, and Vice President of Investor Relations Patrick McKillop. 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 Patrick McKillop for introductory remarks. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Assure's third quarter 2024 earnings results call. Long the close of the markets, we released our financial results for the quarter. 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 the 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 those items along with the reconciliation of non-GAAP measures to the 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. I will hand the call over to Pat in a moment, but I just wanted to take a moment to remind folks of our upcoming investor relations activities. On November 19th, we will be attending the Craig Hallam Alpha Select Conference in New York, followed by the Roth Technology Conference on November 20th, also taking place in New York. On November 21st, we will attend the Stevens Annual Investment Conference in Nashville and have an executive team member attend the Needham SAS Virtual Conference that day. During the month of December, we will attend two virtual conferences, the TD Cowan Human Capital Management Summit on December 9th and on December 12th, the Northland Capital Markets Conference. Investor outreach is very important to Assure, and I would like to thank all those that assist us in our efforts to connect with investors. 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, Patrick, and welcome everyone to Assure Software's third quarter 2024 earnings results call. I'm joined on this call by our CFO, John Petz, and we will provide a business update for our third quarter 2024 results, as well as our outlook for the remainder of 2024 and our initial 2025 outlook. Following our remarks, we will be available to answer your questions. Our third quarter revenue was $29.3 million, which was flat relative to prior year, owing to an approximate $5 million decrease in non-reoccurring ERTC revenue. Excluding the ERTC comparison, total revenue and total reoccurring revenue both grew by 20% compared to last year. Importantly, recurring revenue in the third quarter was 98% of our total revenue compared with just 81% in the prior year's period. As you know, recurring revenue is significantly more valuable than non-recurring revenue. Our focus has been on replacing the lower value ERTC revenue with recurring revenue, and you can see the result of our efforts in the improved revenue mix in the third quarter key drivers of our revenue performance in the quarter include acquisitions and organic growth from expanding portfolio of solutions in terms of acquisitions we have acquired 12 companies over the past four quarters with repetitive revenue of approximately 15 million dollars the average purchase price is equivalent to about a 2.6 multiple on repetitive revenue. The acquisitions have been primarily of payroll resellers, but we've also been able to round out our solution set. For example, HireClick gives us a scalable solution for our clients to help them manage and have success with their hiring programs. We plan to expand HireClick's applicant tracking system nationally and believe it brings capabilities that fit a key need for our clients and thereby enables us to provide a more comprehensive solution set and capture wallet share. Turning to our organic performance, the 5% organic recurring revenue growth in the quarter did not meet our expectations. However, we believe we've had some really encouraging leading indicators and momentum in place as we finish 2024 and embark into 2025 that will accelerate our organic performance. Our sales bookings were up 141% compared to last year. Our current backlog has grown 35% sequentially from Q2 to Q3 2024 and is up 250% versus prior years. This will set us up nicely for double-digit organic growth in 2025. We also have a strong pipeline of tax solutions for large enterprises. In the past, we've shared our thoughts about the relatively unique assets we have in the tax space, and we're now beginning to capitalize on it with some very large deals in process of going live in a very robust pipeline. We're pleased to report that we went live with additional Workday and SAP clients. Important sales wins have included one of America's largest grocery store chains and a nationally known human capital management system integrator that assists large enterprises with Workday, SAP, and Oracle human capital management implementation. In the quarter, our repetitive growth was broad-based, and we've expanded our product offerings and our partnerships to better serve businesses of all sizes. Initiatives that we're excited about include 401K solutions for small businesses. This initiative leverages the government's SECURE 2.0 Act, which encourages adoption and provides funding for 401K plans for small businesses. In addition to our brokerage capability in the benefits space, We have also recently introduced work with compensation solutions as well as preventative healthcare solutions for small businesses. We're very excited about the upcoming launch of a new financial services product called AssurePay. AssurePay is an innovative alternative to online banking for working Americans while also providing advantages to employers with employee attraction, retention, and overall efficiency. Delivered via an easy to use mobile app, it will offer features such as a debit card, free ATM withdrawals, paycheck advances, and quite a bit more. Now, I'd like to spend a minute or two on operations. We have a multiple pronged approach to improve business processes, technology, and create scale economies from our continued revenue growth. Acquisitions are an important part of this strategy. We're pleased with our performance in this area. We've executed several payroll transactions that should lead to higher revenues and profitability over the coming years. We believe that our established playbook is highly effective in maximizing the margin potential of these new acquisitions. The playbook offers us to efficiently transition These acquisitions onto our platforms cross-sell our enhanced capabilities, which we believe will enhance profitability with scale. We continue to enhance our client experience with new technology with the goal of integrating all Assure solutions on a common modern user interface with leading capabilities. We'll continue to move the ball forward in this area and have several enhancements coming over the next several months. Now, turning over to 2024 guidance, based on our current business trends, we're updating our 2024 revenue guidance to a range of $119 to $121 million. We now expect adjusted EBITDA margins of between 18% and 19%. We're also giving our initial 2025 revenue guidance of $134 to $138 million and adjusted EBITDA margins of between 23% and 24%. The measured margin reflects the value of scaling the business. Now, I would like to hand it off to John to discuss our financial results in more detail. John? Thanks, Pat.