Asure Software Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2024

There are 9 speakers on the call.

Operator

Good afternoon, and welcome to Asure's First Quarter 2024 Earnings Conference Call. Joining us today for today's call are Chairman and CEO, Pat Geppel 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.

Speaker 1

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Asure's Q1 2024 earnings results call. Following the close of the markets, we released our financial results. The earnings release is available on the SEC's website and our Investor Relations website at investor. Asuresoftware.com, where you can also find the investor presentation.

Speaker 1

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 those 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.

Speaker 1

I will hand the call over to Pat in a moment, but I just want to take a moment to remind folks of our upcoming Investor Relations activities. On May 15, we will attend the 19th Annual Needham Tech Media Consumer Conference in New York. On May 16, we will attend the Jefferies HCM Summit in New York. On May 29, we will attend the 21st Annual Craig Hallum Conference in Minneapolis. And on May 30, we will attend the 52nd Annual TD Cowen Tech Media Telecom Conference in New York.

Speaker 1

On June 4, we will attend the Stifel Cross Sector Insight Conference in Boston. And finally, we will participate in the Northland Capital Markets Virtual Growth Conference on June 25. Investor outreach is very important to Asure, 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.

Speaker 1

Pat?

Speaker 2

Thank you, Patrick, and welcome everyone to Asure Software's Q1 2024 Earnings Result Call. I am joined on this call by our CFO, John Petz, and will provide a business update for our Q1 2024 results as well as our outlook for 2024. Following our remarks, we will be available to answer your questions. Our first quarter revenues were strong coming in at $31,700,000 Our revenues were driven by our contributions from our core business, strategic initiatives and acquisitions, including our Assure marketplace offering, payroll tax management and interest earned from funds held for clients, which we refer to as flow. We believe in 2024, our momentum will grow throughout the year and we're off to a great start.

Speaker 2

Advancing our business through artificial intelligence, new technology enhancements, leading partnerships and strategic sales initiatives such as bundling of our 401 products with payroll to drive new client additions continues to be part of our strategy. Small businesses in the U. S. Have traditionally not been or not had the resources to offer 401 retirement solutions. The SECURE Act 2.0 from the U.

Speaker 2

S. Government is legislation that aims to increase employee participation in retirement plans by offering tax credits to support the setup of employer based retirement plans. Currently, there are around 20 or more states in the United States that have mandated these plans. Also, many more have introduced legislation mandating 401 plans for our small businesses. Assure has the solutions they need to set up the plans.

Speaker 2

Our announcements with Workday and the certification and joining the SAP PartnerEdge Open Ecosystem are really strong validations of advancing our technology and these partnerships will help us with more enterprise level clients. In today's press release, we highlighted that after receiving the Workday certification, we went live with our first client, which is a Major League Baseball team. This client is an example of the complexity of multi state payroll as the staff and team members incur payroll tax liabilities in multiple states each week. We're excited to win this business and look forward to achieving more opportunities with Workday. We also remain excited about our partnership with SAP, which allows us to enhance our payroll tax engine by integrating with the SAP system and streamlining payroll tax processes for our existing SAP clients.

Speaker 2

We have also recently formed a partnership with the tax credit firm, HR Logics, which will provide our small business clients with access to capital. The partnership will help small business owners with identifying employer tax credits that many are unaware of such as work opportunity tax credits, research and development and overall tax credit programs. Our sales bookings helped drive growth and repetitive revenue for the quarter. Our pipeline is strong as we grow our product portfolio and enhance our technology. We are supporting our sales efforts with digital marketing and we believe will drive higher level of sales leads and productivity in 2020 4.

Speaker 2

Based on our current business trends, we are reiterating our 2024 revenue guidance of $125,000,000 to $129,000,000 dollars with adjusted EBITDA margins of 20% 21%. As a reminder, this 2024 guidance excludes any potential contributions from ERTC filings, but does include our plans to continue to make acquisitions and grow organically. Our guidance for 2024 implies a 25% growth rate if we exclude ERDC from 2023 revenues for comparison. Now, I would like to hand it off to John to discuss our financial results in more detail as well as our Q2 guidance.

Speaker 3

John? Thanks, Pat. As Patrick mentioned at the beginning of this call, several of the financial figures discussed today are given on a non GAAP or adjusted basis. You will find a description of these GAAP to non GAAP reconciliations in the earnings release that was made available earlier today. Reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at investor.

Speaker 3

Asuresoftware.com. Now on to the first quarter results. 1st quarter revenues were $31,700,000 decreasing by 4% relative to prior year. However, excluding ERTC, total revenues were up 10% from prior year. Recurring revenues in the Q1 grew 8% versus prior year to $30,300,000 and excluding ERTC, recurring revenues were up 9% from the prior year.

Speaker 3

1st quarter recurring revenues grew on the strength of our HR compliance solutions, our tax solutions, Assure marketplace and increased interest revenues with the average client balances of approximately $240,000,000 throughout the quarter. Net loss for the Q1 was $300,000 versus net income of $300,000 during the prior year. Gross margins for the Q1 decreased to 71% from 74% in prior year. Non GAAP gross margins for the Q1 decreased to 75% from 78% in the prior year. The decrease in gross margins for the Q1 is primarily attributable to decrease in non recurring ERTC revenue.

Speaker 3

We continue to believe there is substantial margin upside over the longer term as the business scales. EBITDA for the Q1 was $4,400,000 down from $6,800,000 in the prior year. Adjusted EBITDA for the Q1 decreased to $6,800,000 from $8,200,000 in the prior year and our adjusted EBITDA margin was 22% in the quarter compared with 25% in the prior year. We ended the 1st quarter with cash equivalents of $23,200,000 and we have debt of $5,300,000 Now in terms of guidance for the Q2 of 2024, we are guiding 2nd quarter revenues to be in the range of $28,000,000 to 29,000,000 dollars Adjusted EBITDA for the 2nd quarter is anticipated to be between $4,000,000 $5,000,000 We are reiterating our 2024 revenue guidance to be in the range of $125,000,000 to $129,000,000 with adjusted EBITDA margins of between 20% to 21%. As Pat mentioned in his comments earlier, these guidance figures exclude any contribution from ERTC revenues, but assume a combination of organic and inorganic growth.

Speaker 3

Our pipeline of potential acquisitions remain strong and we feel confident about reaching our objectives. We also remain excited about the outlook for our core products such as our payroll tax offering, which brings additional client fund balances and the resulting for numerous new initiatives we have recently launched such as the 401 solution. In conclusion, we are excited about the remainder of 2024 and look forward to 2024 as being a great year for sure in driving profitable growth and leveraging the initiatives we've implemented across the business to drive sustainable growth and create shareholder value. With that, I will turn

Speaker 2

the call back to Pat for closing remarks. Thanks, John. We're pleased to have delivered solid results in the Q1 of 2024. We remain committed to creating products and technologies that make a difference for our clients. The continuous improvement of our solutions over the last few years is being reflected by the growth of our business and we're happy to see positive impressions from our client base.

Speaker 2

The improvement of our solutions is ongoing and a few recent examples include launching a best in class employee self-service and role based identity access software, embedding a new AI agent into our enterprise payroll tax management platform, which will assist in complex multi state tax compliance inquiries is another example of our efforts. Our business has multiple growth drivers in our core payroll business, Assure Marketplace, payroll tax management and our 401 offering in addition to tuck in acquisitions. Small business owners in the U. S. Are tasked with an enormous challenge trying to navigate all the regulations that have been put in place over the years and we're offering multiple solutions to these business owners to ease the demand of their time and resources.

Speaker 2

We anticipate demand for our HR compliance solutions will continue to be healthy as businesses increasingly seek to supplement their internal capabilities with external experts who can help them navigate the increasing complexity of doing business day to day. We've added benefit in insurance capabilities in the Assure marketplace and we expect to grow going forward. Our payroll tax management solution has also great potential, as evidenced by the recent news of our first Workday client, a major league baseball team going live and we remain excited about what lies ahead for this business. Our sales initiative in bundling 401 with payroll has gotten positive reception. And the Secure 2.0 Act will allow us to implement many more 401 plans, which the states are mandating now and we expect more to pass mandates in the future.

Speaker 2

Our guidance for 2024 reflects our expectations for continued growth and we expect to be delivered with a combination of organic and inorganic growth. When we view the business, excluding ERTC, core revenues continue to grow at a very strong rate and our guidance for 2024 implies 25% plus potential growth. We hope that our discussion today helps illustrate our plans as we move on from ERTC. We now feel the business is right sized for future success as we enter the remainder of 2024. In summary, we're pleased to have delivered another solid performance in Q1 against the backdrop of some unfavorable year over year comparisons, which we will be up against for the next few quarters.

Speaker 2

The unfavorable year over year comparisons will start to lift away in Q4, especially and assuming we achieve our goals, the growth rates will be much healthier as we exit Q4 and enter into 2020 5. We will continue to provide innovative human capital management solutions that help small businesses drive, human capital management providers to grow their base and large enterprise streamlined tax compliance. Thank you for listening to our prepared remarks. So with that, I'll send the call back to the operator for the Q and A session. Operator?

Operator

Thank you. Please proceed with your question.

Speaker 4

All right. Thanks for taking my questions and nice job on the quarter here. Can we give you an update on how many acquisitions you've made now year to date? How valuations are trending? And where are you relative to the inorganic revenue assumptions that you laid out in the guide initially for the year?

Speaker 2

Yes, Josh. Thank you. And just by the way, we're fortunate enough to have Al Goldstein, our President and Chief Revenue Officer with us as well to help answer questions. But as far as acquisitions, we made really good progress in the Q1 and anticipate to make a very similar process in the second quarter. We have probably done about a handful of acquisitions here.

Speaker 2

I don't know if we want to get too much into the noise of what's closed and what's not. What I would suffice to say is, I think we are absolutely on track, if not maybe slightly ahead of on track around acquiring. Now some of them have to implement and some implement very, very quickly and some it takes a month or so, but we're right on track in doing that. What I would say on the purchase price, we're probably slightly under 2 times. We're thrilled with that kind of purchase price amount so far.

Speaker 2

And it's been a combination of either equity where we've done some small equity deals as well as cash and loans. So suffice to say, we're really bullish about our plan, not only for the year, but the first half of the year and the integration of those have gone very, very well.

Speaker 4

Got it. That's helpful. And then could we give some more details, what was interest income in the quarter and maybe compared to last year in the same quarter? And is the yield on the float balances up year over year? Or is it consistent what it was last year?

Speaker 4

Just some more details there would be helpful. Thank you.

Speaker 3

Hey, Josh, this is John. So last year, rough numbers about 3.5% is what we earned on the client funds balances. This year roughly 4.5%. The balances have picked up a little bit, but that gives you rough order of magnitude as to kind of how that's progressed.

Speaker 4

Got it. That's helpful. And then maybe just last follow-up on that. Do you expect it to be 4.5% for the rest of the year? Or is there more upside potential for the yield to increase?

Speaker 4

Thank you guys.

Speaker 3

Yes. So what we factored in our numbers, Josh was a 0.5. Decrease mid year. Obviously, we don't know if that's going to happen or not. But when we kind of came up with our forecast for the year, we were assuming a 0.5 point.

Speaker 3

So there might be a little upside into our model depending on what happens on the balance.

Speaker 4

Thank you, guys.

Speaker 2

Thanks, Josh.

Operator

Our next question comes from Bryan Bergin with TD Cowen. Please proceed with your question.

Speaker 5

Hey, guys. Good afternoon. Thank you. So obviously a big emphasis on your tax solutions in the prepared comments and good to hear about that first Workday client going live. Can you give us a sense on how you're thinking about the growth potential of the Tacx business and the potential scale as a mix of the overall company over the medium term?

Speaker 5

Yes.

Speaker 2

I think from our perspective, first of all, these are enterprise deals both SAP as well as Workday. And then just we have opportunities in the reseller mix as well. But as enterprise deals, if I thought about it, John and I were talking the other day and when we acquired PTM, we our kind of payroll business was roughly 40% or so of our float. So our standalone business, if you will, is 60%. Float and tax, it's all part of our value proposition.

Speaker 2

Now since then, we've spent some calories and time and tears and smiles really growing tax where we're thrilled as we have some of these enterprise partners In addition to PEO partner and Prism, and certainly we're going to grow that business. What I would say implicit in our guide around repetitive revenue, last year we were about with ERTC about 84% or so repetitive revenue. This year, we'll finish in the high 90s. Tax is a big part of that. It's profitable, it's sticky and the book to bill in some of these enterprise clients are a little bit longer than our small business.

Speaker 2

But suffice to say over a multi year plan, we think we can grow tax quite a bit. It'll be a mixture of here of fees and flow and that's all part of the value proposition. But as I was reflecting even on our guidance, we started out repetitive revenue this quarter growing 10%. If you think about our guidance, we're going to finish the year much stronger than that just based on the numbers. Tax filing is going to lead and be part of that value proposition.

Speaker 2

So we think there's huge opportunity and this will be multi year, but it will also be growth this year as well.

Speaker 3

And I'll just put a little bit finer point on what Pat said, to make sure it was clear. When we think about those client fund balances, probably about 60% are specific to this tax business. So it's a key part of the strategy. So it's part of how we price it, it's part of the recurring revenue because of that, right. So that's a really important thing that I think is a little bit nuanced relative to some other payroll companies that don't have that as part of their product in go to market strategy.

Speaker 5

Right. That makes sense. Good detail. My follow-up here, so I guess versus 3 months ago, how would you characterize the overall HCM demand environment as well as kind of the competitive and pricing environment dynamics in the market? Yes.

Speaker 2

And I'll let Gale, if you want to jump in. But just in general, what I would say is, we specifically pivoted from ERTC. We've leaned into getting good people to work. And getting good people to work as well as to be compliant. And I think that value proposition we pivoted a bit away from ERTC, but that was always part of our value proposition anyway.

Speaker 2

And we've leaned into some new products and services. What we're really thrilled is this Q1 payroll sales were up 68% over last year. And it's evidence that if you get the right value proposition, the right bundles, you can grow. Now, I made it sound easy for Yale to execute. There's a whole lot of sweat that goes into that.

Speaker 2

But Yale, maybe just your comments on market.

Speaker 6

Yes. Thanks, Pat. So, Brian, so specifically, we're not seeing any pricing pressures or any issues around pricing for new deals and for up sells within our customer base. We are seeing great growth. Listen, we're a lot of our competitors, and they've said it, they've decided to continue to go more and more upmarket.

Speaker 6

So we continue to see an underserved market under that 200 employee range and that's helpful for us just in terms of deal cycle time and the ability to win more deals. But we're not seeing any pressure specifically on pricing there.

Speaker 5

Okay, good. Thank you.

Speaker 2

Thanks, Brian.

Operator

Our next question is from Richard Baldry with ROTH MKM. Please proceed with your question.

Speaker 7

Thanks. Maybe looking deeper at that 68% increase in payroll sales year over year, can you talk about how comfortable you are with your sales capacity now, hiring plans or goals throughout the year? How is the sales tenure trending? And maybe do you feel like that was geographically or vertically pretty broad? Or is there any concentration inside of that?

Speaker 7

Thanks.

Speaker 2

Yes, I think just from my level, I'm very pleased with the sales execution. I think the pivot is probably took us about a quarter or so. And then I think in some areas we referenced standalone tax or the new 401 ks. The book to bill is probably elongated about a quarter. What I would say is the ability to hire, the ability to grow, the ability to sell, I think Ale's team has done very well.

Speaker 2

But Ale, maybe as you see throughout the year, I think from a hiring, we anticipate around 130. We're probably we're very judicious about who we hire and how many people. We're under that a little bit today, but maybe Ale, if you want to talk about that.

Speaker 6

Yes. And Drorich, the goal would be to get to about 130 quota carriers by the end of the year. I'm really happy with the pivot with some of the numbers Pat mentioned with 68% growth in those payroll sales and just from a new payroll unit, it's almost 100% growth in that area. So those are great healthy ARR bookings that come with tax. They come with marketplace add ons, they come with some of the additional 401 the 401 offering that we have and then the ability to cross sell more to these customers once they go live, right.

Speaker 6

So a much healthier mix and our ability to pivot that quickly and to grow that core business year over year is great and it's only going to accelerate. So the reps that we had doing really, really well high productivity with leading with ERTC are basically on par this year from a productivity perspective, but doing it without ERTC with really good core payroll HCM ARR sales and that's fantastic. That's just going to grow for us as we get more people comfortable with 401, get more people comfortable with some of the tax credit solutions that we announced earlier this week, where we could just continue to capitalize on it.

Speaker 7

Maybe switch back to the tax side on the Workday SAP area. Can you maybe look at now like with early wins, obviously, would build some referenceability. How big can that space be with just those 2 sort of end market players? I don't know if there's a way to think about the ARPU from your side to think about what a deal size would look like and what's your go to market ability to move the dial on those types of deals is or is it really sort of once they build some referenceable basis then their sellers will push the growth in that? Thanks.

Speaker 2

Yes, I think sometimes Ale has a phrase 2 comma deals. In small business, where your average sale is somewhere a little over $3,000 you don't hear 2 comma deals. We're in some 2 comma pursuits, which really is exciting for us. Over time, could be a $100,000,000 business. And that doesn't mean you should spreadsheet down 25.

Speaker 2

But I will tell you, we have an opportunity here both in treasury management and as well as tax filing. And it's not just the 2 enterprise partners that are world class companies. There is the PEO Group, there is software group. We have interest level is really, really high. And then some of the development that we're doing, we really feel good about our bundling of treasury management of tax filing, etcetera.

Speaker 2

So this is a $100,000,000 business by itself over time and we're just getting started. Yale, I don't know if you'd want to highlight anything.

Speaker 6

We the pipeline, Rich, is multiple times year over year. I would our sales team is we're fully staffed on that side from an individual contributor perspective. And we've got folks that I am very confident in that have sold this type of sale specifically before. We understand the competitive landscape extremely well. We're very, very excited about the modernization of the solution.

Speaker 6

And frankly, we're getting pulled into a lot of opportunities rather than pushing our ways in. And that's always refreshing to see. And then on the deal like Pat mentioned, on the higher end to cause, you have 6 figure deals and then on the lower end, probably 4 or 5 times what a normal payroll direct deal is today.

Speaker 2

And then lastly, we brought in an operational leader and staff. I worked with Bill Voelkow in the past. He's run a $100,000,000 plus business in tax and we've really beefed up from personnel, the operational staff. So we have the right technology people, the right operations, the right sales people and then the right market at the right time. So this is going to be a foundational growth item.

Speaker 2

It will take a while because of book to bill and because there are enterprise sales and growth, but we're really bullish on this opportunity.

Speaker 7

Because we don't know the internal sort of base numbers, so I'm curious without a lot of commitment to this. But if the payroll sales were kept up at a clip like the 68% year over year, would that imply a longer term sustainability to keep up the 25 percent organic growth rate? Or is that number sort of faces tough comparisons and by definition have to come down a little bit over time?

Speaker 3

I'll give you my perspective, Rich. I don't think we've ever claimed that this is going to be a 25% organic business. We know that it's going to be a combination of that roll up strategy and the organic is what's going to get us to scale. So I would say we've been pretty consistent at least since I've been here that We think we're going to be a double digit organic grower. I'm not sure we'll be at the 25% level.

Speaker 3

But I think when you combine with the inorganic side of the house, I do think that's achievable.

Speaker 2

Yes. And then the only thing I'd say implicit in the guide is acquisitions and organic growth, but it's clearly going to accelerate through the year. And then we'll be in a really nice position where we're high 90s repetitive growth that as we launched in the 2025, we're coming in with a lot of momentum. So that's what we're playing for and that's how

Speaker 7

we're sticking up the company. Great. Thanks.

Operator

Our next question comes from Jeff Van Rhee with Craig Hallum Capital Corp. Please proceed with your question.

Speaker 7

Great. Thanks for taking my questions. Several, just want to clarify on the 68% payroll sales increase, are you is that a comparable number to what you would typically quote as your total bookings year over year for the quarter?

Speaker 2

Yes. No, Jeff, we had some noise in with the ERTC and some of that. Rather than kind of parse everything out. We just said this year where especially the first three quarters we have all these compares with the ERTC. We have some bundles, whatever.

Speaker 2

This was just obviously, we're a payroll business and it's a good majority of our revenue. We wanted to highlight that because that's something that I think people can feel really good about. And it's clearly an emphasis with our bundles, whether it's 401 or some of the new products that we have.

Speaker 7

Okay. And then on the prior acquired revenue target was 10 to 15, I was unclear. It sounded like you said you're running a little bit ahead of where you thought you'd be. Are you still expecting to be in that $10,000,000 to $15,000,000 of annual acquired revenue?

Speaker 2

Absolutely. I would say we've had a very strong first quarter, first half. Those just the starts, if we didn't inquire anybody after that, we'd be very close to the low end of the range. So we'll continue to acquire into this, but yes, we're on pace.

Speaker 3

Yes, I'll just I'll make a quick comment on this and Pat and Neal can add to it. I think we've talked about it on some of these calls previously. There's a unique situation kind of going on in the industry, right? It's kind of opportunistic for us. But with the changing regulatory landscape, a lot of the states are now saying that payroll processing businesses need to be regulated like a bank.

Speaker 3

And so we were I think pretty early on, I think we resisted it because we thought it was pretty aggressive and we move on to half the states. But I would say about 3 years ago, we decided to embrace it. And so we've gone down a path to get license. It's going to be hard for a lot of the smaller players, some of our resellers to afford that compliance. That's why we launched the treasury management solution.

Speaker 3

But again, I

Speaker 2

think a lot of people are

Speaker 3

trying to decide, is it something they want to continue on with and that we're the natural supplier. So I think we're going to have a lot of opportunities over the coming months to kind of take people into our arms. So that's just another kind of backdrop as regards to acquisitions.

Speaker 7

Yes, definitely helpful, John. I was going to go down that path. I know obviously the 401 secondurities act has been an area of focus in treasury also. Just on those two avenues, any other quantification you can give to give us a sense of the ramp in deal counts, bookings, pipeline, just any quantification in those two areas?

Speaker 3

I'll speak to treasury and then I'll let Pat speak to 401 ks. We launched this with partnership with JPMorgan. We have people that want to buy from us right now. We're just kind of holding them off as we

Speaker 4

get it up and running. We want to

Speaker 3

make sure it's bomber solid before we put them on. So I think we're holding that up a little bit just with our getting it launched. But so I think there's good demand, almost unsolicited demand for that product. And then I'll let Pat kind of talk on 401.

Speaker 2

Yes. And just on 401, I think first of all, we pivoted and launched on a almost a week or 2, right. We had this plan, but we moved into sales motion and marketing motion very, very quickly. I would say right now, we're probably a couple of months behind where I'd like to be on the marketing sales perspective, but we're cleaning we're really starting to pick up the pace. On the book to bill, I would say just based on it's a new On the book to bill, I would say just based on it's a new business for us, we're probably about 3, 4 months behind.

Speaker 2

Well, over time, what we want to be able to do is sell and start a 401 probably I'd like to bring that number in about 60 days. It's somewhere around 120 right now. So we'll go through that just as we grow and learn and get the muscle memory, but that's where exactly where we are in the process.

Speaker 7

That's helpful. I appreciate it. Thanks, Chad.

Operator

Our next question comes from Vincent Coluccio with Barrington Research. Please proceed with your question. Yes. Pat, curious, can you characterize your employee base? Are they hiring currently?

Operator

What does that look like?

Speaker 2

Our employee base or the employee base, obviously our clients. I would say we're looking at that number. We're probably flattish in some areas. They're hiring in some areas. Basically, they're holding.

Speaker 2

I would say access to capital in the small business is still the biggest issue. Some of the regional banks aren't lending and interest rates are a little bit high. So but on the same token, getting quality people is still a concern. So from my perspective, it's been flattish. I'd love to say it's I do think as we connect more people to the small businesses, it's got a shot to go up 1% or 2% because there still is hiring demand.

Speaker 2

I would say they've been unable to execute or unable to get the capital they need to grow, but that's exactly where we are today.

Operator

And how does your bookings break down between new and existing clients?

Speaker 2

We're Dale, I'll let you answer that, but I believe we were well, go ahead.

Speaker 6

Yes, we're still right around 70

Speaker 2

but the majority is still new business.

Speaker 6

And where but the majority is still new business.

Speaker 2

And where I'd like to go with that is and we did want to highlight in our release around some of our technology initiatives. This common user interface with identity access management is going to be really good for us as far as the adoption around the marketplace that's from cross sell. It allows us to get into event driven marketing in a big way. So we anticipate a lot of growth from that over time. Now we're rolling this out and there'll be some learnings here over this quarter and next.

Speaker 2

But as we get really solid with that, what I'd like to do is take that 70%, 30% or so new sales more to ultimately maybe reverse it. Now that's not going to happen overnight, but I think that's the opportunity we have. And this technology foundation that we introduced this quarter and some of the subsequent events, that's exactly where we're going. So feel good about where we are. And then the new logos has been very strong while we get to that point.

Operator

Thanks, Pat. Nice quarter.

Speaker 2

Thank you.

Operator

Our next question is from Eric Martinuzzi with Lake Street. Please proceed with your question.

Speaker 8

Curious on the decline in the cash balance from Q4 quarter end to Q1 quarter end, we're down $7,100,000 Can you help me bridge that?

Speaker 3

Yes, I think a couple of things happened. As you know, the Q1 is always seasonally impacted by W-two revenues. We collect those funds at usually in December, we defer that revenue and we recognize that revenue in Q1. And also we pay we have a lot of annual events that happened in the Q1, whether it be bonuses or we have a sales kickoff. And so there's some abnormal spending that always happens in the Q1 and then the Q4 is a little bit inflated usually because of that W2 cash coming in.

Speaker 3

And then obviously we spent some money on some acquisitions as well.

Speaker 8

How much did you spend on the acquisitions in Q1?

Speaker 3

I don't have that right in front of me. I think it was a couple of $1,000,000 going from order of magnitude from my memory.

Speaker 2

No, it was more than that all in, but because as we had the people strategy deal, there was an equity component in that. So that was that piece of it. And then the other thing is the vendors spend, we do have some annual renewals that come due in the Q1. And then this quarter specifically, we had 2 events where normally we have 1. So that we're pleased with the cash this quarter, but we do drain a little bit of cash first quarter and then typically we're better as we go through the year.

Speaker 8

Last year, your cash was up $4,000,000 between Q4 and Q1 and this year being down $7,000,000 I'm just not

Speaker 2

Yes, happy to take it offline, Eric.

Speaker 3

I think there was a receivable yet. I think as our ERT receivable might have come in from the government last year if I'm going from memory. So I think that might have been the dynamic. It was an unusual quarter last year for the Q1.

Speaker 2

And John, if I remember correctly, that was close to $7,000,000 or

Speaker 3

so. Right.

Speaker 2

Yes. So Eric, that's a lot of it right there.

Speaker 8

And have we closed any acquisitions in Q2?

Speaker 3

Yes. I think there's one disclosed in the subsequent events that we got closed yesterday.

Speaker 8

Thanks for taking my questions.

Speaker 2

Yes. Thank you,

Operator

We have reached the end of the question and answer session. I would now like to turn the call back over to Pat Gebel for closing comments.

Speaker 2

Yes. I appreciate everybody's time today. A lot going on at Assurant. It's a great time to be here. We appreciate all of you.

Speaker 2

Patrick mentioned, we have a lot of investor outreach here over the next quarter and we hope to see you soon. So thank you.

Operator

This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.

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Earnings Conference Call
Asure Software Q1 2024
00:00 / 00:00