Good afternoon, and welcome to Asure's Fourth Quarter and Full Year 2023 Earnings Conference Call. Joining us for today's call are Chairman and CEO, Pat Goepel; Chief Financial Officer, John Pence; and VP of Investor Relations, Patrick McKillop. Following the prepared remarks, there will be a question-and-answer session for the analysts and investors. I'll now turn the call over to Patrick McKillop for introductory remarks. Please go ahead, Patrick.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Asure's fourth quarter and full year 2023 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.asuresoftware.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 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 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 March 17 through the 19, we will attend the 36th Annual ROTH Conference in Dana Point, California. We also plan to do a few non-deal road shows later this spring as well. Investor outreach is very important to Asure, and I'd like to thank all of 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 turn over the call to Pat Goepel, Chairman and CEO. Pat?

Thank you, Patrick, and welcome, everyone, to Asure Software's fourth quarter and full year 2023 earnings results call. I am joined on this call by our CFO, John Pence, and we'll provide a business update for our fourth quarter and full year 2023 results as well as our outlook for 2024. Following our remarks, we'll be available to answer your questions. As you can see from our reported results, our strong momentum continued during 2023, with strength coming from solid execution across the business. Our total revenue growth in 2023 was 24% up versus the prior year. Excluding ERTC, our revenues were up 19%. Our recurring revenues grew 16% versus the prior year. Excluding ERTC, our recurring revenues were up 19%. Our net loss was $9.2 million, a $5.3 million improvement versus the prior year, and adjusted EBITDA was up 97% versus the prior-year period. Lastly, our cash from operations for 2023 was $18.9 million versus $13.7 million in 2022. We have multiple growth drivers in our business with HR Compliance, Asure Marketplace and our Payroll Tax Management solution showing very strong growth in 2023. We believe that over time, these business lines can become much larger contributors to our overall revenues. As our Payroll Tax Management offering continues to grow, it can contribute to our float balances growing as well. We continue to build on our momentum by advancing our technology through leading partnerships and launching strategic sales initiatives, such as the bundling of our 401(k) products with payroll to drive new client additions. This particular initiative was launched a short time ago and the reception we have received thus far has been very positive. Many small businesses traditionally have not had the resources to offer 401(k) retirement solutions, but around 20 or more states in the U.S. have mandated these plans, and many more have introduced legislation mandating 401(k) plans for small businesses. The U.S. government's SECURE Act 2.0 aims to increase employee participation in retirement plans by providing tax credits to support the setup of employer-based retirement plans, and Asure has the solution they need to set up those plans. We continue to advance our technology with partnerships as evidenced by the recent invitation to join the SAP PartnerEdge Open Ecosystem. The partnership with SAP will allow Asure to enhance its payroll tax engine by integrating with the SAP systems and streamline payroll tax processes for its existing SAP clients. Also, in today's press release, we mentioned we received Workday Global Payroll certification for integration into Workday HCM and Asure Payroll Tax Management. This solution helps large enterprises streamline processes, enhance compliance accuracy and stay ahead of regulatory changes. The certification accelerates Asure's payroll tax business into the Workday Human Capital Management ecosystem. Our sales efforts during 2023 resulted in a 56% increase in new bookings versus the prior year, and we're pleased with the productivity per rep we're experiencing. We've expanded our sales force during the year to approximately 110 reps with plans to go about 130, and have been very pleased with the quality of new hires that we made. We're supporting our sales efforts with digital marketing, which will drive higher levels of sales leads and productivity in 2024. Based on our current business trends, we're reiterating our full year 2024 revenue guidance of $125 million to $129 million, with EBITDA margins of between 20% and 21%. As a reminder, this '24 guidance excludes any potential contributions from ERTC filing, but does include our plan to resume acquisitions in earnest. We have signed agreements to purchase approximately $7 million of annual recurring revenue, and the pipeline is very strong. As we look at the business excluding ERTC from 2023, our guidance for 2024 implies a 25%-plus growth rate, which is very positive. Additionally, reviewing our growth, excluding ERTC for the past few years, we're witnessing solid double-digit growth in the implied 25% growth rate in our guidance of 2024 would be an acceleration of the rates we saw in previous years. Now, I would like to hand it off to John Pence to discuss our financial results in more detail as well as our quarter one guidance. 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. The reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at investor.asuresoftware.com. Now on to the fourth quarter and 2023 results. Fourth quarter total revenues were $26.3 million, decreasing by 10% relative to prior year. Excluding ERTC, total revenues were up 15% from the prior year. Full year 2023 total revenues grew by 24% to $119.1 million. Excluding ERTC, total revenues were up 19% from the prior year. Recurring revenues for the fourth quarter grew 4% versus the prior year to $25 million. Excluding ERTC, revenues were up 15% from the prior year. Full year recurring revenues grew by 16% to $99.7 million year-over-year, and excluding ERTC, revenues were up 19% from the prior year. Full year and fourth quarter recurring revenues grew on the strength of HR Compliance solutions, Asure Marketplace and increased interest revenues with average client balances exceeding $200 million during the year. Net loss for the fourth quarter was $3.6 million versus $1.1 million during the prior year. Net loss for the full year 2023 was $9.2 million, an improvement of $5.3 million versus the prior year loss of $14.5 million. Gross margins for the fourth quarter decreased to 68% from 72% in the prior year. Full year gross margins increased to 72% from 65% in the prior year. Non-GAAP gross margins for the fourth quarter decreased to 72% from 76% in the prior year. Non-GAAP gross margins for the full year increased to 76% from 70% in the prior year. The decline in margins during the fourth quarter was driven by lower revenues versus the prior year as a result of lower ERTC revenue. Margin expansion for the full year was driven by growing high-margin revenue streams, continued progress with our efficiency initiatives and scale benefits from our growth. We continue to believe there is substantial margin upside over the longer term as the business scales. EBITDA for the fourth quarter was $1.1 million, down from $5 million in the prior year. EBITDA of $14.3 million for the full year was up 63% versus the prior year. Adjusted EBITDA for the fourth quarter decreased to $2.8 million from $6 million in the prior year, and adjusted EBITDA margin was 11% in the quarter compared with 21% in the prior year. Adjusted EBITDA of $23.3 million for the full year was up 97% versus the prior year. Adjusted EBITDA margin for the full year was 20% versus 12% in the prior year. Our cash from operations for 2023 was $18.9 million versus $13.7 million in 2022. We ended the year with cash and cash equivalents of $30.3 million, and we had debt of $4.3 million. Now in terms of guidance for the first quarter of 2024, we are guiding the first quarter revenues to be in the range of $30 million to $32 million. Adjusted EBITDA for the first quarter is anticipated to be between $6 million and $7 million. We are reiterating our 2024 revenue guidance to be in the range of $125 million to $129 million, with adjusted EBITDA margins of between 20% to 21% at these revenue levels. As Pat mentioned in his comments earlier, these guidance figures exclude any contribution from ERTC revenues, but assume a resumption of acquisitions. We are excluding ERTC given the uncertainty about the future of the program. The growth from our HR Compliance, Asure Marketplace are expected to continue to be strong contributors going forward. Also during 2023, we saw very good growth from our standalone Payroll Tax Management product offering as well. Our Payroll Tax Management product has multiple short term goals with the platform being offered as a service to large enterprises as well as HCM vendors. While the above-mentioned are strong contributors to our growth, we also expect to drive growth through inorganic methods. We have signed agreements to purchase approximately $7 million of annual recurring revenue so far and the pipeline is strong. In conclusion, we are pleased with our performance in 2023 and the momentum we have built on the strength of private development, technology and sales. This gives us confidence in our forward-looking guidance. As we look at the business excluding ERTC revenues in '23, we are generating approximately $100 million in revenues and the guidance we have given through 2024 implies 25%-plus growth for this year, which is a very healthy rate. If we look back, the core business grew 16% in 2021 to 2022 and 19% from 2022 to 2023. And then we look to guidance for this year, and you can see the growth rate accelerating assuming we achieve our goals. We are excited about 2024 and look forward to it being a breakout year for Asure, and driving profitable growth and leveraging the initiatives we have implemented across the business to generate sustainable growth and create shareholder value. With that, I will turn the call back to Pat for closing remarks.

Thank you, John. We are pleased to deliver continued growth in 2023, achieving 24% total revenue growth. We remain committed to creating products and technologies that make a difference for our customers. The continued improvement of our solutions over the last few years is being reflected by our continued growth, and we're elated to see positive impressions from our client base as we create valuable solutions which enable them to focus on their core business operations. Our business has multiple growth drivers in HR Compliance, Asure Marketplace, Payroll Tax Management, and our new 401(k) offering, while business owners face an increasingly complex world to operate in, and we're offering multiple solutions to these business owners to ease the demands on their time so that they can focus on the things that are most important. Our recent sales initiative in bundling 401(k) with payroll has gotten a positive reception thus far. The SECURE 2.0 Act gives small businesses the funding they need to implement 401(k) plans, which many states are mandating now, and we expect more to pass mandates in the future. We also anticipate demand for our HR Compliance solution 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 conducting their day-to-day operations. Asure Marketplace has been a strong contributor as well via our partnerships with Equifax, H&R Block, and ZayZoon. Our Payroll Tax Management solution has great potential with this solution being offered to large enterprise clients and human capital management vendors. Our recent partnership announcement with Workday and SAP are great accomplishments for our payroll tax management business, and as John mentioned, we saw good growth for that product offering during 2023. We remain excited about what lies ahead for this business. Our guidance for 2024 reflects our expectations for continued growth, which will be delivered with a combination of organic and inorganic growth. We signed agreements to purchase approximately $7 million of annual recurring revenue so far, and the pipeline is strong. Our margins and cash flow have continued to improve as the businesses scale, and we have focused on improving efficiency across the business, which helps improve the cost structure. As John mentioned earlier, when we view the business excluding ERTC, the core revenues continue to grow at a healthy double-digit rate, and our guidance for 2024 implies a 25%-plus potential growth rate. While we're pleased to have been able to generate revenues from the ERTC program, we want to remind you that our core business continues to perform very well, and we hope that our discussion today helps illustrate our plans for the future as we move on from ERTC. During 2023, we have expanded the sales force as well as invested in marketing initiatives, and we now feel the business is rightsized for future success as we enter the remainder of 2024. We will continue to provide innovative human capital management solutions that help small businesses thrive, human capital management providers grow their base and large enterprises streamline tax compliance. Thank you for listening to our prepared remarks. And so, with that, I'll send the call back to the operator for the question-and-answer session.

Thank you. Our first question today is from Joshua Reilly from Needham & Company. Your line is now live.

All right. Thanks for taking my questions here, and nice job on wrapping up the year, team. Maybe just starting off on ERTC. I know we're moving on from that, but just to wrap up a couple of items. There's some proposed legislation to make the end date retroactive to January 31. I've been getting some questions. Have you guys still been submitting applications for ERTC, even while the program is technically paused? And has there been any cost associated with submitting these applications before you've actually generated any revenue there? Just maybe an update on a couple of those more technical items.

Yeah, Josh, thanks for the question. From ERTC, we're a processor on behalf of our clients. So, the IRS has paused. There has been some legislation whether they let the product or let the program run out in 2020 on April 15th, like scheduled, and then in 2021 on April 15th to the following year is scheduled or will they retro it to January 31. That remains a question for Congress and the IRS. What we've done is we'll make sure that if somebody wants to file an ERTC claim, we'll process that on their behalf. And there are some, what I'll call, minor costs that are involved in that process. But really, we've kept out the revenue in our guidance going forward. And when the bill or potentially the legislation environment changes, we'll inform our customers as well as our investors alike, but we have taken it out of the guidance. And there'll be small run rate dollars. But at this point in time, the volume of activity with ERTC has gone down quite a bit. We want to make sure that if somebody does deserve a refund, we'll process on their behalf, but that's kind of where we are in the program.

Got it. And then just two follow-up items on the March quarter guidance. First item being what are you assuming for W2 and forms revenue on a year-over-year basis? Are you assuming it's going to be flat or maybe even slightly down year-over-year? And how much is job switching impacting that revenue? That's the first item. And then just one other quick item on the March guidance.

Yeah. Josh, same-store sales are roughly flat year-over-year. There sometimes are effects of turnover, etc., on the W2 and year-end revenue. And when we have W2 revenue, we have W2s, we also have ACA, and then we have kind of tax filing forms versus payroll forms. But the revenue is, I think, slightly up year-over-year. But if you kind of ballpark that in the high 4s, that's kind of where we are from a revenue perspective.

Got it. And then, what are you assuming also in the March quarter guidance for the H&R Block revenue? And can you just remind us if there was any H&R Block revenue last year in the March quarter? And then, any seasonality around how that might abruptly end when on April 15 or when the tax filing date ends? Thank you.

Yeah. The W2 revenue, whether it's Intuit or it's H&R Block, the seasonality is more in the first quarter as opposed to all year round, and that's just because personal tax returns have a heavy emphasis on the first quarter and with a little bit sliding into the second quarter. The use of the W2 follows that kind of process. We're probably talking about minor six figures, so a little over $100,000 of revenue in that kind of area, and that's up from last year. But all in all, that's not a huge contributor of our Marketplace revenue. We've announced some recent programs in the marketplace, and H&R Block as well as Intuit will be a nice kind of program for convenience of our employees getting their taxes done. But it's not a huge revenue stream for us.

Got it. Thanks, guys.

Thanks, Josh.

Thank you. Your next question is coming from Bryan Bergin from TD Cowen. Your line is now live.

It's actually Jared Levine on for Bryan tonight. In terms of 4Q and into 1Q so far, have you noticed any change in the demand environment or even the competitive environment relative to prior quarters?

In the first quarter, compared to the fourth quarter, I haven't observed a significant change in demand. I would say that demand remains quite strong. We are introducing several new programs, including 401(k) and the marketplace. We also have enhanced capabilities in the area of benefits related to commissions. There are various factors contributing to our performance, but the demand environment has remained strong. I did come from our sales kickoff here in the last month or three weeks, I should say, and I think people are pretty fired up, and I'm pretty confident that they can make their plans. So, I think we had a bit of a pivot on September 14 when the ERTC paused, but we have no shortage of opportunities with new product introduction, new technology as well as our bundling, and people are quite frankly, pretty fired up. So, for us, it's been pretty positive.

Okay. And then, that competitive environment as well?

No. On the smaller end, we might encounter some challenges with a private company. We see ADP and Paychex as the main vendors. Similar to regional banking, the government is increasingly focusing on compliance and money transmission licenses, both at the state and federal levels. There's a trend where smaller payroll providers, who previously offered their services to CPA clients, are now feeling the pressure to become licensed. This situation is leading to a greater interest in companies like ours, which are licensed and have expertise in money movement and tax filing. Overall, while this has been positive for us, we haven't noticed any significant changes in the marketplace; we still see the same players we observed last year.

Okay. Great. And then for my follow-up, what was the float revenue in FY '23? And then, what are you assuming in that FY '24 guide in terms of float revenue?

Yeah, we were a little under $9 million this year when it's all said and done, and that compares roughly to about 2.5% or so the year before. We've got a growth kind of a combination of two or three things that we're thinking about in terms of the forecast. Overall, we've modeled a 0.5 point decline midyear in our core business, but we see some growth in float as a result of a couple of different factors, right? We discussed acquisitions. When we acquire businesses, we will take on their client fund balances. One of our main growth areas is in tax service provision, which also brings in significant client fund dollars. In our pricing strategy, we may forgo some fee revenue to acquire those client balances. This is an essential aspect of our business model. So, I would say, in general, I think it's pretty consistent with the overall growth trend. So, if you think about, we've guided to 25% growth directionally from the core business. I would say that we expect kind of, between the acquisition, and between those initiatives, we think that we're probably in that kind of same growth rate for float dollars next year.

Great. Thank you.

Thanks for the question.

Thank you. Next question is coming from Eric Martinuzzi from Lake Street Capital. Your line is now live.

Yeah. I wanted to focus on the acquisitions. Just for Q4, how much revenue was from acquisitions?

Yeah, roughly $0.5 million.

All right. And then you talked about the $7 million of ARR under contract. When are you expecting those deals to close? And how much are you paying?

Please proceed.

I was going to say that we will likely receive about 75% of the $7 million this year. Some of it will come in at the beginning of March, and some at the beginning of April. So, from that $7 million, I anticipate that around $5 million to $5.5 million will come in this year. Regarding our spending on it, we believe we have been quite careful, and I'll let Pat provide a blended rate for that $7 million purchase.

Yeah. I would estimate it to be around 2 times revenue. We recently completed an acquisition of just over $5 million in revenue a couple of days ago. The pipeline is very active with several starts planned for March and April. Additionally, we have about $200 million in potential acquisition targets within the reseller community, with approximately $20 million to $25 million currently actionable. The pipeline remains strong, and we are confidently executing our plan, expecting to generate revenue from it.

And again, I think we've been pretty transparent on this. This is definitely part of the model. We were happy to do the equity raise in the third quarter to pay down debt also give us this dry powder to start really prosecuting that part of the model. I mean it's really important to us, as you see, the adjusted EBITDA margin, and it's really important to get the scale. So, if we have to replace, let's say, $18 million for ERTC in 2024, that's an important part of that strategy. And I think that, again, if we can get it executed, we'll deliver the same margins.

Yes, the only thing I would add to John's $0.5 million is that when we acquire resellers and other payroll assets, we also integrate the marketplace and include tax filing revenues. The money movement is not part of that $0.5 million. We've established that as part of our model. Traditionally, we've discussed acquisition economics mainly in terms of cost reduction, but we are pleased to see that we are also benefiting from increased revenue.

I just want to clarify the organic growth. You mentioned acquiring a company two days ago that will contribute $5 million in revenue in 2024, and that over $400,000 of your revenue in Q1 comes from acquisitions. I want to confirm that I understand the math correctly.

If you're looking at it from an organic perspective, we didn't have many acquisitions before the fourth quarter. So, that number reflects our true performance, and you can base your conclusions on that.

Got it. Thanks for taking my questions.

Thanks, Eric.

Thank you. Our next question is coming from Richard Baldry from ROTH Capital Partners. Your line is now live.

Thanks. Your OpEx from 3Q to 4Q was pretty flattish. And to get to the sort of the profitability we see or that you're guiding for next year, it looks like it'll be, call it, well-controlled on the OpEx side. Are you at all concerned that given the organic growth you're seeing underlying the business that maybe you should be accelerating your hiring or spending on internal a little more than what seems to be implied in the results? Thanks.

I'll give you my perspective and I'll let Pat kind of go. I think as we talked about fourth quarter even as we were giving the guidance, it was a pretty sharp pivot as we were planning ahead for the end of the year. We were trying to invest heavily in terms of our sales and operations to get ready for the next year. I would say that ERTC going away put pressure on the fourth quarter, but we don't see a lot of incremental costs going into 2024 from the fourth quarter from my perspective. So I think we have to deliver the revenue, but I think that the cost structure is pretty stable.

I believe you raised a good point, Rich, and it's something we discuss frequently at both the management and Board levels. In our investor presentation, we highlighted more details about our model. In 2021, our adjusted EBITDA as a percentage of revenue was approximately 10%. However, this past year in 2023, we were fortunate to increase that to 20% at the $119 million mark. For illustrative purposes, at a $200 million level, we anticipate it could be 30%. This really underscores the scalable nature of our business, which is where our focus lies. What ERTC allowed us to do is invest in technology and payroll, and we're running at increased levels for that. Now, with ERTC, it was one-time revenue and you're kind of one-and-done. Here, it's allowing us to invest in a repetitive business model. So while this year, roughly $18 million or so was ERTC one-time revenue, next year, as we model with guidance, most of that revenue is repetitive revenue. So, you're going to see us really build a platform of growth that's repetitive revenue, and it's only accelerated in the last couple of years. From a cost perspective, what we've done is we've been able to really right-size the scalability model. Primarily, we invested in our infrastructure with common service tools, Salesforce, NetSuite, and AWS. We're starting to invest in AI, and we think we have some pretty good winners in that area. And then just the simplification of the business around bank accounts, money movement and the marketplace allows us to move where we can invest in our important asset around people, but also invest in efficiency and the scale outcome. So, we think we're well on our way, and really pleased with the outlook here. So, I appreciate the question, but that's how we're looking at it today.

And in terms of revenue seasonality, from Q1 to Q2 is usually a dip because of the W2 type upswing in Q1. Do you think that at all different in terms of magnitude this year given sort of the mix changing in the business?

Yeah. I don't think it will be as dramatic also just because of some of the acquisitions too, right? So, you're going to have some of that muted by the fact that some of these acquisitions and the revenues are going to start coming on. So, I'd say probably not as dramatic, is a simple answer.

Okay. My last question is about the M&A pipeline. Considering the current macro environment, it seems like the recent acquisitions align well with your targets. Do you believe that the targets you are pursuing, in terms of valuation and cash flow capability, are manageable within the pipeline you are examining? Has there been any change in that regard lately? How do you feel about it? Thanks.

Again, my perspective on it, I think they are goldilocks. I think everything is going according to the model. And as Pat mentioned, there's this unique time for these small providers. I mean, the cost of doing business with the regulations that the various states are putting in place for the banking system, it's really having an effect on some of these smaller providers, whether they want to continue to stay in business and take the risk or do they think this is a better time to exit.

Great. Thanks.

Thanks, Rich.

Thank you. Next question is coming from Jeff Van Rhee from Craig-Hallum. Your line is now live.

Great. Hey, guys, thanks for taking the questions. A few for me. On sales, what are you seeing in terms of the timeline for the reps to ramp to productivity? How has that changed in the last, call it, six months, 12 months?

Jeff, I think if anything, it's probably gone up a bit productivity and the quality of hire has gone up for us. So, we've been really pleased with that. I think some of it is the pace of change is quick. So, in other words, if you think about kind of where we're at, we've had a lot of really good success in the marketplace and in tax filing as well as ERTC. We now are introducing 401(k). We have a medical benefits kind of product. And so, now you have new reps and new products. And in those times, the sale of a concept and then delivering that to a newer person sometimes takes a while to get to that area. I want to emphasize that we are very pleased with the quality of our sales representatives. However, when it comes to tax filing for larger clients like SAP and Workday, the sales process, including implementation, tends to take longer. This is primarily because these customers typically have higher revenue figures, which results in a longer implementation timeline. Despite this, we achieved another exceptionally strong year, with our bookings increasing by 40% excluding ERTC. This success gives us the confidence to expand our team to 130 representatives. So, we think we have really good onboarding training. We have a lot of the right mix to get productivity up. I would just say we're throwing more at the reps from a product perspective. Part of our charm is that we give a lot of the products in the bag that some of the other companies don't where they isolate or go to a one-product sale. We give our business people and our salespeople the opportunity to sell all the products in the bag. Sometimes that does take a little bit longer than if you were only selling one product, but we think it makes a more consultative and more value added in the future. And I'll tell you what, I couldn't be more pleased with our sales folks.

Good to hear. Regarding Payroll Tax Management, you mentioned earlier that these deals are larger and may take longer. When can we expect those deals to start impacting revenue? Should we anticipate low to mid seven-figure run rates by the end of the year? Please help us understand when these deals will begin to make a difference.

Yeah. I mean, I'll give you one example. I have a company with 22,000 employees, and they'll start between March 1 and April 1. And that process has been going on about six months or so. We went live with a 100,000-employee company last year, and that process took us almost a year from start to finish, but went live over six months. We have some potential two-combo deals in the pipeline, and we believe they will start to come together in the second half of the year, although we are currently in sales processes. Therefore, we expect to see a consolidated increase. Additionally, we have introduced what we call banking in a box and our Treasury Management solution, which may be partnered with some of these deals, ultimately expanding the total addressable market and increasing deal sizes. We feel well-positioned, and you can expect to see progress throughout the year.

Yeah. It's great to hear on the Marketplace product as well. I think you referenced, obviously, Equifax off to a strong start, a little bit of contribution from HRB and ZayZoon. How do you think about a goal for Marketplace by the end of the year? And outside of Equifax, which had maybe some different contracting structure, how are the timelines of the other deals ramping relative to expectations? So, timeline of ramp relative to expectations, and then just goals for the year for that segment?

Yeah. I think just from our perspective, we look at the business three ways. We have our core business and growth that we're going to get momentum coming off that business. We have some enhanced initiatives that's a second vehicle and whether that's the Treasury Management, the 401(k), some of those newer products that we're working. And then, we have acquisitions which we layer some of our product offerings to. From a goal perspective, the $125 million to $129 million implies a 25% growth. In that initiative, probably 10%-ish or so is momentum that we've had over the past year. The growth rate of acquisitions we've kind of published somewhere in that 10% to 12%. We have enhanced initiatives such as the 401(k), which we separated from the Marketplace to create its own product. While this may have slightly reduced some Marketplace activity, we expect the Marketplace to grow significantly, well into the double digits. From our standpoint, it's a bit early to establish a specific target number due to multiple ongoing initiatives, including our recent healthcare initiative and an acquisition that has broadened our capabilities in receiving commissions. So, we're kind of in the middle of the movie, Jeff. I think I'll give you a little bit more color here at the end of the first quarter. And we did one acquisition two days ago. So, I don't want to put targets that would limit us right now. I would say at the end of the first quarter, we'll come out with a clearer number.

Got it. Fair enough. Thank you.

Thank you. Next question is coming from Vincent Colicchio from Barrington Research. Your line is now live.

Yeah. Pat, do you have a booking growth number for Q4, if we exclude ERTC?

If we exclude ERTC, the growth for the year is 40%. Specifically for the fourth quarter, without ERTC, we're looking at closer to 50%, which was 56% in that quarter. This indicates strong bookings and a lot is happening in the business. You can expect to see more bundling, as the bundling initiative is beginning to yield results.

And as far as client companies, do they grow their employee base in the quarter? And what are your expectations for that in '24?

On client, we modeled roughly flat. We didn't get into it because if you think about the backdrop, you had the macro environment with either interest rates and people were modeling some people, depending on what your belief was, it was either going to be a recession or growth, etc. We just modeled the flat area and then a 0.5 basis point cut in the second half on float. So, we don't get too worked up on quarters or what I'll call same-store sales growth. And if we do get some of those hiring initiatives growing, that's kind of a benefit to the model.

And then do you have your bookings breakdown in the quarter between new and existing clients?

One of the things that we're working hard and we just had our sales kickoff is we do about 65% to 70% new logos. What we want to do is even that out over time. We believe that we have an opportunity to continue to drive our base business. And we're having a lot of success with bundling. We want to make sure that we have that same bundling success. And one of the things that we're doing is making it easier to do business across the bundles with us. Some of the things that we're doing from a technology rollout strategy, we'll augment that and we'll get into more product-driven sales and kind of check the box sales. We're excited about those initiatives, but we're still in early days. So, when I look at bookings and Eyal, who's our Chief Revenue Officer and President, he's done a fantastic job, one of the initiatives that we're trying to do is, we think that there's base sales growth that while we've achieved a lot of success in the model, we think we can even do better, and that's where we're going to work those percentages.

Thanks, Pat.

Thanks, Vince.

Thank you. Our next question is coming from Greg Gibas from Northland Capital. Your line is now live.

Hey, thanks, Pat and John. Thanks for taking the questions. Just to clarify, I think you were saying growth from acquisitions was 10% to 12% organically – inorganically. Is that right?

I believe we mentioned during our previous quarter when discussing the full-year guidance that we anticipated about 25% growth or more, with a fairly even distribution between organic and inorganic growth. I don't think that outlook has changed.

Great. I just wanted to check if there have been any updates on that. I appreciate it. Also, regarding the headcount and ERC count trends, are you noticing any changes? I believe you mentioned that 2024 guidance was modeled on a roughly flat basis. Has there been any change in customer headcount or seat count, whether growth or decline?

No, we haven't observed a significant change one way or the other in the last year or so regarding the number of employees per account.

Got it. And I guess, lastly, just as I think about quarterly trends or seasonal, without ERTC I know that was kind of big on Q2, how would you advise us in terms of what 2024 would look like cadence-wise versus 2023?

So I think again, our guidance is $125 million to $129 million for the full year. That has no ERTC component in it. And that, if you think about '23, $119 million we just delivered, has approximately $18 million for ERTC in it, right? So, we're growing a base of $101 million to approximately $125 million to $129 million. So, that's kind of the way we're looking at ERTC vis-a-vis '24.

Yeah. And the only thing I'd say that $101 million last year or 2023 with $18 million of ERTC, ERTC was mainly one-time revenue, right? Because you had the 941-X and you had that process and it was one-time revenue. When you think about the bookings and sales of a repetitive revenue business, they build on each other. So, the $125 million to $129 million, what we're pretty excited is to grow that base. And then, when you think about the fourth quarter, you start to grow that base, and we think we could exit in close to 30% growth. And when you have that kind of growth from a repetitive revenue perspective, now that leads into a multiyear growth strategy. And then, I'd just remind you, we're in a scale business. And in 2021, we had 10% adjusted EBITDA margins. 2023, we finished the year here, we had 20%. Pick the number at close to $200 million, you'll see 30%. So, we think we're really set up well for long-term growth and create shareholder value. And so, I feel really good about the momentum that we currently have.

Yes. I want to reiterate that the growth from 2022 to 2023, excluding the ERTC, was 19%. It's important to keep this in mind. The ERTC adds considerable complexity to the numbers and comparisons, but when we exclude it, the core business is performing quite well. We believe it will continue to perform strong this year.

Great. Thank you.

Thank you, Greg.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

No, I'd tell you, really excited about 2024, came off some really good events around our sales kickoff and we had a group of high performers together. They see the momentum. They see the future of the business. We're very pleased with how we're positioned for 2024. And stay with us. Patrick mentioned, we're at the ROTH Conference here in March. We're going to do some non-deal road shows. So, we're going to get out to the community. We have a bunch coming up in May. So, we hope to see you soon, and I really appreciate your interest as an investor. Have a great day, and thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.