Asure Software Inc Q1 FY2026 Earnings Call

Good afternoon, and welcome to Asure Software's First Quarter 2026 Earnings Conference Call. Joining us on today's call are Chairman and CEO, Pat Goepel; 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 Asure 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.asuresoftware.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 13, we are attending the 21st Annual Needham TMT Conference in New York. And on May 14, the ONE Houlihan Lokey Conference also in New York. On May 28, we will attend the Craig-Hallum Conference in Minneapolis. On June 23, 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 Asure, and I would 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 like to now turn the call over to Pat Goepel, Chairman and CEO. Pat?

Thank you, Patrick, and welcome, everyone, to Asure 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, sales force and AI capabilities over the past year. Our organic growth rate for quarter 1 2026 was 7% compared with 3% in quarter 1 2025, and 3.5% in quarter 1 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 base 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 Asure 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 are increasingly well positioned to accelerate cross-sell and attach rates throughout the remainder of 2026. Our multiproduct attach rates continue to improve. The number of clients purchasing multiple products in our payroll business grew by 15% in quarter 1 compared to quarter 1 of 2025. We continue to work toward our internal goal of moving clients from an average of 2 products to 4 or more products per relationship. Earlier this year, at our sales kickoff, we introduced AsureWorks, which is our administrative services outsourcing or ASO model, which allows clients to delegate key payroll and HR compliance processes to Asure. We are scaling AsureWorks 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 and 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 AsureWorks 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 2x to 3x the revenue of a payroll-only client. Importantly, AsureWorks is 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 AsureWorks 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, under our President and Chief Revenue Officer, Eyal Goldstein, is driving focus on both new logo acquisition and multiproduct 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 in our core human capital management payroll continued at a strong pace in quarter 1, 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. Our client base, primarily small and midsized businesses in payroll-intensive, compliance-driven industries remains resilient. We have not observed meaningful changes in sales cycle dynamics or competitive behavior in quarter 1. 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. To do so, we hold money transmitter licenses in every state and require 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 Asure 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—plumbers, hotel workers, tradespeople—whose 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 to date without any active marketing or onboarding from Asure. In quarter 1, 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 base 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. On our last call, we told you that Luna could perform over 50 actions live, audible and permission controlled. Since then, we've proven 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 modern system. Our continuous coverage 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 makes AsureWorks possible. We can now take on the work itself, not just deliver software, because the AI layer gives us the efficiency and the auditability to do it at scale without scaling headcount linearly. Through Asure Central, every payroll specialist works from a unified action surface. Discrepancies, missing data and pending filings requiring approvals are 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, close the 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 the margin profile over time. The result is higher accuracy, greater efficiency and a structurally 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 1 financial results in more detail and provide an update on our 2026 guidance. John?

Thanks, Pat. As Patrick noted, several figures discussed today are on a non-GAAP or adjusted basis. Reconciliations are available in our earnings release and our investor presentation at investor.asuresoftware.com. First quarter total revenues were $42.8 million compared to $34.9 million in Q1 2025, representing growth of 23% year-over-year. Recurring revenue for Q1 2026 was $37.8 million compared to $33.2 million in Q1 2025, an increase of over 14% year-over-year. Recurring revenue represented approximately 88% of total revenue in the quarter. We believe that in 2026 recurring revenue as a percentage of total revenue will be in the low 90% range, and we anticipate that will continue to trend upwards in 2027. Professional services and hardware revenue was $5 million in Q1 2026 compared to $1.7 million in Q1 2025. The increase in nonrecurring revenue was primarily due to hardware sales from our Lathem acquisition, and professional services tied to enterprise tax. Float revenue was relatively flat in Q1 2026 compared to Q1 2025. We have modeled two additional rate cuts in 2026, which we anticipate will be partially offset by continued growth in client fund balances. Gross profit for Q1 2026 was $30.5 million compared to $24.6 million in Q1 of 2025. GAAP gross margin for Q1 2026 was 71%, in line with Q1 of 2025. Non-GAAP gross margin for Q1 2026 was 76% compared to 75% in Q1 of 2025. Net income for Q1 2026 was $0.6 million compared to a net loss of $2.4 million in Q1 of 2025. EBITDA for Q1 2026 was $9.4 million compared to $4.1 million in Q1 of 2025. Adjusted EBITDA for Q1 2026 was $12.3 million compared to $7.3 million in Q1 of 2025, an increase of 69% year-over-year. Adjusted EBITDA margin for Q1 2026 was 29% compared to 21% in Q1 of 2025, an increase of approximately 800 basis points. For the full year, we continue to expect to generate positive unlevered free cash flow in the mid- to high-teens range, which we calculate by taking adjusted EBITDA at the midpoint of our guidance range, less software capitalization of approximately $15 million to $16 million, and approximately $6 million in cash interest cost. We ended the first quarter with cash and cash equivalents of $19.2 million and debt of $68.8 million as of March 31, 2026. Based on continued positive momentum in our business, we are updating our full year 2026 guidance and also providing Q2 guidance. It's important to keep in mind that the first quarters are seasonally strong as recurring year-end W-2/ACA revenue is recognized in this period. Full year 2026 guidance: revenue of $159 million to $163 million, and adjusted EBITDA margin of 23% to 25%. Q2 2026 guidance: revenue of $36 million to $38 million, and adjusted EBITDA of $6 million to $8 million. Our cost structure, including CapEx and capitalized R&D, is expected to remain relatively stable on a dollar basis. With that, I'll turn the call back to Pat for closing remarks.

Thanks, John. Quarter 1 2026 marks continued progress towards the inflection point we've been building towards. With Asure Central now substantially adopted across our direct client base, our Luna AI delivering measurable efficiency gains, AsureWorks gaining early traction, and our sales force growing towards 150 reps, we're executing on the plan we've been sharing with investors. We believe we are at an important inflection point in the business where growth and profitability are advancing together. This combination—top-line momentum and bottom-line discipline at the same time—is what we've been working towards. And we're very pleased to be delivering on it. We remain on track toward our medium-term target of $180 million to $200 million in revenues with adjusted EBITDA margins of 30% or better, a level we came within close range of during this quarter and in Quarter 4 2025. And our longer-term vision, which we have discussed with investors, reflects the potential for margins to expand well beyond 30% as we achieve scale. AI continues to reduce our cost to serve while simultaneously expanding our market and revenue opportunities. We're excited about 2026, and remain committed to delivering value to our shareholders, our clients and our stakeholders. Thank you for joining us today. And now I'll send the call back to the operator for the question-and-answer session.

If you would like to ask a question, please press star then one on your telephone and wait for your name to be announced. Our first question comes from Jeff Van Rhee with Craig-Hallum Capital Group.

Just a couple of quick ones for you. On Asure Central, I'm curious, now that you're getting a little further into it, what are you observing with respect to the path of adoption as people get single sign-on capabilities and are getting exposed to more products? Just kind of curious what the paths of adoption are looking like so far?

Yes, really, really pleased. Attach rates were up about 15% year-over-year. People are really getting into the flow of it. And I think more important than that, it's one of the reasons why we also introduced AsureWorks. The bigger story for us with small and medium-sized businesses is we can go to a small business and say, 'Hey, we'll give you the tools to manage compliance end-to-end across all products in human capital management or we can do the work for you.' And because we have the proof point of Asure Central where all the products are under a single pane of glass, the light bulbs are starting to go on. So I think we're early innings yet. But boy, we're really, really pleased. And then our acquisition of Lathem, which we acquired in July, they're undergoing Asure Central and they'll be largely done in the second quarter here. So really, really pleased with our sales motion, our customer service motion. And the other thing that's coming out which is interesting is the prompts or the trigger events. So if you get to 20 employees and now by law you have to offer COBRA, it's almost a no-brainer to say, 'Hey, do you want Asure to manage that for you as opposed to try to introduce that somewhere else?' Or if you're in a state where 401(k) is a regulatory requirement, 'Hey, we noticed you don't have any 401(k) deductions, would you like us to help you with that plan?' It's a real easy conversation. So we're just getting started, but those are some of the things that are popping out quickly.

Yes. That's helpful. And in the deck, you talk about the expanding PEPM. I mean, I can see you're taking it from $15 in 2020 to $100 in 2026. But where by your math are you at this point in terms of PEPM, and any thoughts on '27, '28 trend to just get a sense? I know what the potential is, but where are you and where do you think you can be?

Yes. What I would say right now is we have kind of an internal goal that we're shooting for—2 products to 4 products—because we have a direct model and an indirect model, et cetera. In the investor deck, we have 64% of our business in the small/medium business, and it's a focus area for more and more products. From an intentionality perspective, we were kind of in the area of $12 to $15 per employee per month. I think what you're going to see is a double here over the next three years or so. And you're going to see— I would say we're pretty optimistic right now. But it is the first quarter. I think we'll have a better answer here when we get Lathem in probably on the second earnings call. But I would be disappointed if we don't do a double over the next two to three years here.

Yes. I mean you've certainly added an incredible amount of breadth to the product set over the last several years. So it makes sense. One last maybe for me on tax season impact. Just what was the seasonal uplift in Q1 from tax season?

Are you talking W-2s or are you talking float?

No, W-2s, sorry.

We were probably up in the area of 300,000 or so on W-2s and ACA. Some of our employee counts are in a PEPM environment where we don't bill separately for W-2s. But for the ones we bill separately, it's about a 6% increase. And I would say anecdotally float balances ended the quarter at a double-digit increase in float balances.

Our next question comes from Joshua Reilly with Needham & Co.

I just wanted to start off on the last piece you were talking about there with the forms growth. The 7% organic growth is pretty impressive versus what, 3.5% the last couple of years in the first quarter. How much of a headwind or a tailwind, I guess, was the forms growth in this March quarter versus the last couple of years? Because I know it's been a headwind the last couple of years and I know you just threw out the 6% number. What was that referencing exactly? Was that the forms growth for the quarter?

That was the forms growth. So really, Josh, there was no headwind in forms growth. Maybe it's one percent.

Got it. And in the prior two years, there was somewhat of a more of a headwind. Is that the right way to think about it in this year?

Yes. If you think that you had the Great Resignation and then you had the Great Stay, during a couple of those periods turnover was really heavy which would add more to W-2s and then when you stay, it's a little bit less. So there was a headwind, a couple of percentage points in that area.

Got it. And then on the Lathem transition—the business model transition—how is that going? Because the hardware revenue was a little bit above my estimates here for the March quarter. And just curious, is that still on track with your expectations entering the year?

Yes, I think so. I'm not sure that the hardware was that much up. I think we also had some pretty healthy professional services, Josh, with regard to some of the larger tax implementations. So I think from my perspective, the hardware was kind of in line with last year and nothing too crazy. In terms of the integration and the plan, I would say we're going to be in earnest in the back half of this year and into next converting to that HaaS model. So early stages and we haven't started to see that transition, which will, again, obviously be really good for the mix of revenue, right—turn it into recurring, but it will put some pressure on the nonrecurring side, right? So on the compares, we're going to be adding a lot more recurring revenue in a couple of quarters, and you're going to see a decrease in nonrecurring. Again, good for the health of the business, but it will be a little bit of a transition in terms of the mix. And that's what we expect to happen kind of over the next, I would say, 18 months to two years.

Yes. And Josh, I would say really, really pleased with the Lathem acquisition overall. It was absolutely the right acquisition for us. Our customers love it. And anecdotally, the install times and the coordination around multiproduct implementations has gone really, really well.

Last point for me is on the enterprise payroll tax deals, can you just give us— we've seen some kind of mixed feedback in the market about ERP migrations. How important is the cloud ERP migration for you or just any type of key migration for you to win business there? And can you still win some deals even if ERP migrations are in a period that's a little bit slower?

Yes. First of all, Josh, and I hope you appreciate this. In addition to analysts and investors, we have people from Team Red on the call, who is our primary competitor. So I can't go too much into detail like I used to be able to because they've noticed us. But anyway, what I'd like to talk about here is, first of all, the market for tax is really compelling. We think we're miles ahead of the competition. I think we have a really good offering there, and we're going to continue to grow in that area. As far as ERP migrations or implementations, first of all, many times we are the tail not the dog in the sense that when somebody goes to an Oracle or UKG or an SAP or Workday, what happens is we are—the timing of some of those deals is when they do implement with ERP. So sometimes that can lengthen an implementation cycle, but it absolutely—actually, the market right now for compliance and tax services, especially with how we go about it with AI, is very strong. Eyal Goldstein is here—real quick, Josh, Eyal Goldstein is here. We're lucky to have him today. Eyal, I don't know if you want to comment on that, please.

Yes, Josh. So we also have a really big opportunity not only on the greenfield, new ERP deployments, but also the current installed base. We're doing quite a bit of work within the current base, and we've got such a long runway there as well. So we're not seeing any impact from what might be happening with the broader group around ERP in general.

Our next question comes from Bryan Bergin with TD Cowen.

It's actually Jared Levine for Bryan tonight. To start, can you talk about your managed service offerings, the recent announcements there? What do you see in terms of the revenue opportunity, including the PEPM uplift specifically from those managed service offerings?

Yes. I mean, first of all AsureWorks—we're really excited about it. The fact that we could do it all for them or a customer doesn't necessarily have to hire a full-time payroll or HR professional and they can use us to help them—that's compelling. For some metrics, we see an opportunity of about $50 or so per employee per month where we're doing the work for them. Now some of that can change based on the size and scale of the customer and the breadth of what we're doing. But that's the kind of opportunity we see with AsureWorks. We had this in motion for quite some time. We had one of our resellers pilot the program and we since acquired that reseller. And then we're rolling that model all across the country. I would say it's more of a '27, '28 initiative, but I do think you'll see somewhere around $3 million to $5 million in opportunity in this year's revenue. But over time, it's going to continue to grow. And that's what's exciting for us. And not only that, but when you can go to a customer, they don't need to go to a PEO or employee leasing to get all their compliance and offerings done—we can do it for them or the same software they can use internally. We think that's a real compelling message. And even if we don't get the entire business, we're going to get a good majority of the business. So many times, we'll pitch that and they'd say, 'Well, maybe we'll start with HR compliance, and we'll start with benefits or we'll start with payroll tax in time.' So we think we're just getting started. We had six people offering. We're selling it today. But clearly, we've exposed the sales organization and we have a set of learning and development training going on to roll this out. So we're pretty bullish on this.

Great. And then a follow-up here in terms of the guidance. So it looks like you didn't pass through all of the quarterly revenue and adjusted EBITDA beat. Anything to call out there? And just also want to confirm there was no kind of incremental M&A since the last earnings here.

Yes. No M&A since the last earnings. And again, we tried to kind of get you where we think we need to be for the rest of the year.

Our next question comes from Eric Martinuzzi with Lake Street.

Yes. I wanted to ask about when the Lathem folks come onto Asure Central, will that entire base be viewed as kind of a multiproduct adoption customer base? In other words, should we see a spike in the percentage of customers when we have this same conversation?

Eric, what I would say is it depends. In our business, we have some stand-alone channels. We'll do a stand-alone tax channel, for example, where we partner with other payroll companies. We won't cross-sell without their permission into those companies that we have relationships with. And then with Lathem, we have some other payroll companies that use Lathem and are partnered with them, and we'll respect that the same way. But a large majority of the Lathem customers will be in Asure Central. We're still going through that flow, and those will all be available to cross-sell, et cetera. It hasn't really slowed us down because we prioritize Asure Central and the upgrades with the customers that have already been sold with the cross-sell of Lathem products. So those customers are already on Asure Central. We'll just continue to adopt them through the second quarter. It will, by no question, add velocity to our cross-sell approach and our attachment of those customers.

Got it. And then you talked about you're still on target for the 150 sales reps by the end of the year. You finished out at 118, I believe, at the end of 2025. Are we talking about kind of a linear progression on our way to 2026? Or in other words, what's the sales headcount now?

Yes. We're about 10 under where I really would like to be, and Eyal is with me, and he can comment, but for us, we've been really choosing quality. If you think about where we're going with Asure Central and where we're going with AsureWorks, we're looking for people that really have a consultative sell versus, let's say, a transactional product sale. Eyal, maybe you could talk a little bit about some of the candidates and the flow there.

Yes. Historically, we've looked at more small business, transactional sales professionals, and that worked well for us where we had point solutions and we were selling more payroll and tax deals than anything else. Now that we're selling more of the broader product, the complete product and especially with AsureWorks, it's a much more consultative sale. It's much more solution oriented and more disciplined around the sales process, needs analysis and demoing the product, which we're really proud of these days. That just requires a different caliber and profile of a sales professional. The good news is the folks we're bringing in check all those boxes and they're actually ramping a lot quicker than historically what reps were ramping at. But we're being more disciplined about who we're bringing in, and we feel confident we'll get to that 150 by the end of the year.

Our next question comes from Richard Baldry with ROTH Capital Partners.

When you talk about accelerating to double-digit organic growth, can you talk maybe about the pieces that get you there? Presumably some of it's the headcount, but how much of it's ARPU and maybe how much visibility do you have into that acceleration, whether it's in pipeline, retention rate changes, win rate changes, et cetera?

Rich, thank you. Definitely, the attach rate numbers are really positive and we have pretty good retention on that. Candidly, in the fourth quarter and first quarter, we did a lot of professional services work. And I would say that one-time work is the only noise in the numbers sometimes because we have been a little one-time heavy. Now that ultimately will be a very strong indicator for us. But short term, sometimes you have to grow over bigger compares on a one-time. What I would tell you is the ARPU, the attach rate, the number of reps, the rollout of Asure Central, the rollout of AsureWorks and AsurePay— we're early days, but I would tell you there's really good pipeline development, a good underpinning of the pipeline, and real focus on attach rates. I can see from our deal alerts we've had a really exciting first quarter and I can see momentum into the second quarter based on our hiring profile and our learning and development as people get up to speed. So we have pretty good visibility, but we also want to be conservative in an environment that has a lot of global uncertainty. So we've tried to be conservative in our forecast. Hopefully we can upside and produce outsized results in the second half.

And for a follow-up. Can you talk about the internal use deployment of newer AI efficiency tools? How much do you feel that that can help you either hold the line on costs in some areas, maybe cut costs to bolster your EBITDA growth in excess of what organic growth might otherwise imply?

Rich, we're seeing AI used all throughout the organization. There's really not an area that's not started to investigate and start to deploy it. We're using it in the financial organization for basic tasks like doing variance analysis and helping on forecasting. The operations team is using it to interact with customers and make those interactions more efficient in processing payrolls. The sales team is doing a lot of work with the front end analyzing customers and getting much more effective throughput. I think we're seeing it throughout the organization and it's really early days, but it's pretty interesting. You're exactly right—it's going to help. I don't think we're going to necessarily want to exit a bunch of people. But what we're going to do is change the profile of what they're doing. If somebody was more on the data entry side or interaction with the customer, that will be much diminished. They're going to be much more involved with making that customer happy and trying to solve their problems. That goes back to the AsureWorks concept. We're really going to be a lot closer and tighter with the people we've got servicing the customers and less on the data manipulation side of the business. So I think we can do that and not really change the cost structure while adding to the top line. Ultimately, you're right, it will fall through to the bottom line on EBITDA.

Eyal, maybe if you could talk about sales and marketing with AI.

Yes, Rich. On the front end we're using AI quite a bit. We're doing a lot on the marketing side around content creation and being able to put out much more thought leadership much quicker. That's helped quite a bit for us. On the sales side, we've implemented AI tools around needs analysis and discovery. As we do more of these larger deals in the 20 to 100 employee space, we're able to do much quicker research and get output faster around company specifics, peers and competitive context, which helps drive the front end of the sales process. We're also taking the data from discovery or needs analysis and generating quick deliverables that tie our services to ROI and value. All of that is now done through different AI tools. It has helped speed up quite a bit of the process for us on the front end. We're also leaning into technology around the outbound motion for demand generation. We actually think that will have a big impact on how many people we're able to reach and having really good bespoke conversations with thousands more companies than we would normally have, leveraging more human motion around business development.

And finally, Rich, operationally we quoted last quarter about 80,000 transactions that Luna assisted with and over 100,000 this quarter. That obviously helps us with scale and the customer experience—where customers are changing their W-4 withholding, for example, Luna can assist. So I think you're going to see more velocity in the model and our financials. In our long-term model we had 40% and we believe over time we can achieve 50%, and that's all AI-assisted.

Our next question comes from Greg Gibas with Northland Securities.

Could you discuss the pace of organic growth implied by your guidance through the balance of the year? And maybe what your updated expectations are for professional services and hardware on a go-forward basis?

At the midpoint of the guide, I think it puts us roughly around 15% full year, year-over-year growth. I think it will be split, with a second-half bias between organic and inorganic based on the guide. We don't have any acquisitions planned, so the upside to the numbers would be organic at this point as we're sitting today.

Just professional services and hardware considering it was a little higher than expected, but I know some of that is seasonal.

I think it will normalize back down—we're going to be in the high nineties percent recurring for the full year. I do think this quarter was a little heavier than the rest of the quarters.

Got it. And you maybe beat me through this one a little bit, but just on the outlook for reseller acquisitions, and you mentioned nothing since the last earnings. Could you remind us what's been done year-to-date? And curious to hear your stance on incremental strategic platform acquisitions? Or is the focus right now just more integration, expanding the sales force and cross-sell opportunities and the Lathem model transition?

Just really quick, I feel pretty good about the components of our solution. We've strengthened the products around payroll and done a good job there. With the integration of Asure Central, the development of AsurePay and the AsureWorks introduction, we think our product set is in a good place. Now it's about attachment rates, ARPU and revenue per unit—cross-sell, et cetera. Eyal has done a wonderful job leading the sales organization. Historically, we were close to 70% new logo; now we're closer to 50-50 and we're not reducing new logos. That speaks to broadening revenue. That being said, we do have a reseller network and we'll continue to add to that. You'll see some small acquisitions from us; I don't think you'll see anything major. Our focus right now is on integration, sales expansion and cross-sell opportunities.

And to answer your question, yes, the only acquisition we talked about on the last earnings call was completed in the January time frame.

Our next question comes from Vincent Colicchio with Barrington Research.

Pat, could you talk to the health of your client base? Is it expanding? And are clients hiring in this environment?

It's a great question, Vince. I would say generally people are cautiously optimistic. In some cases, depending on the industry—energy or others—they may have seen some variability, but many businesses see strong opportunity. Some have stable employment workforces; others are trying to separate good cash register activity from macro noise. I don't see employment growth growing a ton right now; some of it is demographic with aging populations and retirements. But overall, I see a lot of opportunities. Eyal, who is on the front line, would agree. For me, it's a very stable, thriving small business marketplace.

I'd say the organic growth this quarter was broadly distributed across our core categories. Most of the growth this quarter was probably on the HCM platform side of the business as opposed to enterprise tax. That's how I would think about it.

Through the year I think attach rates and RPU growth in small business will carry us. We've had some really good milestones getting customers live and we see good prospects in the tax business and continued growth. Professional services and hardware will continue as we implement, but you'll see the mix move from one-time to recurring over time. We have some nonstrategic businesses that will be less of a focus, but we'll continue to support them. AsureWorks, Asure Central and AsurePay are where we'll lean in. We'll also continue to grow our money movement and compliance offerings up and down the HR stack.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Pat Goepel for closing comments.

Yes. I appreciate each and every one of you from an investor perspective and an analyst perspective. We have a great analyst community and they do a good job representing Asure Software. If you've been an investor with us a while, we continue to make progress. We have the investor deck on the investor website. We have done some non-deal roadshows. With Patrick coming on board, we're going to have some conferences throughout the year. I'm coming to New York soon for some investor conferences. We look forward to meeting you and seeing you soon. We're very thankful for your support—please keep following our progress because we're pretty confident in our growth. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.