Asure Software Inc

Good afternoon and welcome to Assure Software's first quarter 2026 earnings conference call. Joining us today's call are Chairman and CEO Pat Keppel, 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 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 Software's first quarter 2026 earnings results call. Following the close of the market, 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 our 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. The 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. I'll hand the call over to Pat in a moment, but I just wanted to take a moment to remind people of our upcoming investor relations activities. On May 13th, we are attending the 21st Annual Needham TMT Conference in New York. And on May 14th, the Fullerhan Loki One Conference, also in New York. On May 28th, we will attend the Craig Hallam Conference in Minneapolis. On June 23rd, we will participate in the Northland Capital Markets Conference, which is being held virtually. We also are in the process of scheduling some non-deal roadshows. Investor outreach is very important to Assure, and I would like to thank all of those that assist us in our efforts to connect with investors. Finally, I would like to 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 like to now turn the call over to Pat Geppel, Chairman and CEO. Pat?

Thank you, Patrick, and welcome everyone to Assure Software's first quarter 2026 earnings results call. I'm joined on this call by our CFO, John Pence, and we will provide a business update for Quarter 1, 2026 results, as well as our updated outlook for the remainder of the year. We are very pleased to report a strong start in 2026. First quarter revenues came in at $42.8 million, representing growth of 23% compared to Q1 of 2025. This performance reflects continued momentum across our core business lines and validates the investments we've made in our platform, Salesforce, and AI capabilities over the past year. Our organic growth rate for quarter one 2026 was 7%, compared with 3% in quarter one 2025, and 3.5% in quarter one 2024. This is a significant acceleration in a quarter, which historically has shown some seasonality. We're encouraged by the drivers behind it, increasing attach rates with our existing client space, as well as continued new logo wins. Given global uncertainty, we're taking a conservative stance on operating the business. However, we remain very bullish on the customer response to our platform improvements, and we believe we can deliver double-digit organic growth as we move through the remainder of 2026. Since the launch of Assure Central in October 2025, adoption has continued at a rapid pace, and we believe that by the end of the second quarter of 2026, the majority of our approximately 30,000 direct clients will be on the platform with the majority of our direct client base now on a single unified platform. We believe we're increasingly well positioned to accelerate cross-sell and and attach rates throughout the remainder of 2026. Our multi-product attach rates continue to improve. The number of clients purchasing multiple products in our payroll business grew by 15% in quarter one compared to quarter one of 2025. We continue to work toward our internal goal of moving clients from an average of two products to four or more products per relationship. Earlier this year, at our sales kickoff, We introduced AssureWorks, which is our administrative services outsourcing or ASO model, which allows clients to delegate key payroll and HR compliance processes to Assure. We are scaling AssureWorks thoughtfully, building sales, implementation, and support capacity based on early results. It's still early days. However, the reception has been very positive. Our pipeline is growing and we've started to win new clients. We're seeing interest across multiple types of buyers, small hotel chains, restaurants, HVAC companies are among the early adopters, which is consistent with our broader client base of Main Street businesses that need payroll and HR compliance support, but lack the internal resources to manage it themselves. We currently have six sales reps dedicated to AssureWorks, in the pilot effort and plan to add a few more in the near term. This offering is strategically important. Clients who adopt managed payroll and compliance services typically represent two to three times the revenue of a payroll-only client. Importantly, it sure works if it's not a PEO model. We're not taking on co-employment risk. So for clients constrained by the costs or rigidity of a traditional PEO, We believe AssureWorks is a compelling, flexible alternative. We are on track toward our full-year target of 150 sales reps and continue to invest in training and enablement. Sales leadership upon our President's Chief Revenue Officer, Al Goldstein, is driving focus on both new logo acquisition and multi-product cross-sell within our existing base. With the goal of transitioning our mix over time, towards approximately 35% new logos and 65% base expansion. Our new bookings and our core human capital management payroll continue at a strong pace in quarter one, up 13% versus last year, and our contracted backlog remains healthy at approximately 85.6 million. We expect to convert approximately 38% of that backlog over the next 12 months. are client-based, primarily small and mid-sized businesses in payroll-intensive compliance-driven industries remains resilient. We have not observed meaningful changes in sales cycle dynamics or competitive behavior in quarter one. I want to take a moment to reiterate our thoughts on AI and what it means for our business. Much of the disruption narrative applies to productivity and workflow software, Tools where AI can replicate or replace the core function of a software that the software performs. Payroll and HR compliance is not in that category. We move approximately $20 billion annually on behalf of our clients. And to do so, we hold money transmitter licenses in every state. It requires them a regulatory infrastructure that takes years to build. It represents a significant barrier to entry. We interface directly with the IRS, state and local tax agencies and banking institutions. Our clients carry seven or more years of employment history, complex multi-jurisdictional tax obligations and real-time compliance requirements where the margin of error is effectively zero. These are not functions that a generic AI layer can absorb. The regulatory complexity does not go away. In fact, it compounds. What makes it sure a system of record rather than a workflow tool is precisely this. We are embedded in the legal and financial infrastructure of our clients' businesses. Switching costs are high. Our revenue model is consumption-based on headcount, and payroll runs rather than a seat license, and our client base is concentrated in the frontline essential workforce economy, plumbers, hotel workers, tradespeople, those work is among the most resilient to automation. At the same time, we believe AI is a meaningful accelerator for us. Luna, our AI agent, has been adopted by greater than 15% of potential users today without any active marketing or onboarding from Assure. In quarter one, Luna interactions increased by nearly 50% over the prior quarter. To date, we have transcribed, categorized, and scored approximately 80,000 support calls for sentiment, and our ticket mining capability analyzes more than 100,000 cases monthly. These numbers reflect AI working across both the client-facing and operational sides of the business. deflecting support volume, enabling employees and administrators to self-serve across payroll, benefits, and compliance workflows, and driving continuous product and service improvements. The result is a smarter, faster, and more responsive organization without reducing the compliance expertise and accountability our clients rely on us to provide. Our last call, we told you that Luna could perform over 50 actions, live, audible, and permission control. Since then, we've proved the model at scale. Our Canadian tax solution is the clearest example. A fully automated Luna AI-powered pipeline that converted a traditionally manual compliance workflow into a proactive, continuous monitored system. Our more periodic checks continuous coverage, that architecture is now a blueprint, and we're systematically replacing it across U.S. payroll, U.S. tax, and HR compliance. This is not a feature rollout. It is a platform-wide operating model shift from reactive to proactive, from human check to AI verified, from process dependent to infrastructure driven. That same shift that makes AssureWorks possible. We can now take on the work itself, not just deliver the software, because the AI layer gives us the efficiency and the auditability to do it at scale without scaling headcount literally. Through AssureCentral, every payroll specialist works from a unified action surface. Discrepancies, missing data, pending filings require approvals. surfaced in real time, not buried in reports. Luna identifies what needs attention. Central delivers it to the right person at the right moment. Detection, notification, action, closed loop. These capabilities compound. Every compliance workflow we automate strengthens our models across the entire client base, And when you're processing approximately $20 billion in payroll annually, that compounding effect on system-wide intelligence is very meaningful. Internally, the same AI foundation is accelerating product development, sharpening sales intelligence, and improving support operations, all of which we expect to continue to expand globally. the margin profile over time. The result, higher accuracy, greater efficiency, and a structural lower cost to serve with human accountability preserved for every compliance sensitive decision. In short, we are a system of record business with compounding data gravity operating in a highly regulated compliance critical environment. This is an entirely different category than the SaaS segments where disruption concerns are most valid, and we remain confident in both the durability of our model and the opportunity that AI creates for us going forward. With that, I'd like to turn the call over to John to discuss our quarter one financial results in more detail and provide an update on our 2026 guidance. John?