Asure Software Inc (ASUR) Q3 2026 Earnings Call Transcript

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 in understanding our business and exclude the impact of certain items. A description and timing of these items, along with a reconciliation of non-GAAP measures to the most comparable GAAP measures, can be found in our earnings release. Today's call will also contain forward-looking statements that refer to future events and, as such, involve some risks. We use words such as expects, believes, and may to indicate forward-looking statements, and we encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations. I'll hand the call over to Pat in a moment, but I wanted to take a moment to remind people of some upcoming investor relations activities. On November 17th, we will participate in the Craig Hallam Alpha Select Conference in New York. On November 18th, we will attend the Stevens Annual Investment Conference in Nashville, Tennessee, as well as the Roth Conference in New York. On November 19th, we will participate in the 7th Annual Needham Virtual Tech Conference. And finally, on December 16th, we will attend the Northland Capital Markets Virtual Growth Conference. Investor outreach is very important to assure, and I would like to thank all of those that assist us in our efforts to connect with investors. Finally, I would like to remind everyone that this call is being recorded, and it will be made available for replay via a link available on the Investor Relations section of our website. With that, I would now like to turn the call over to Pat Geppel, Chairman and CEO. Pat?

Thank you, Patrick, and welcome, everyone, to Assure's third quarter 2026 earnings result call. I'm joined on this call by our CFO, John Pence, and we'll provide a business update for third quarter 2026 results, as well as our updated outlook for the remainder of the year. Our third quarter revenues came in at $40 million, representing a growth of 10% compared to the third quarter of 2025. Growth was strong and broad-based with payroll benefits and HR compliance among the key contributors, and we're reaping the benefits of the investments we have made in the business over the last few years. Our organic growth rate for third quarter 2026 was 9%, compared with 4% in the third quarter 2025, an increase of 500 basis points, and up 5% in second quarter 2026. Organic reoccurring revenue growth for the third quarter was 14%, which is a continued acceleration driven by the launch of Assure Central a year ago and continued payroll tax management momentum. The positive feedback for our products continues to grow, and this is supported by our recent G2 Awards announced this fall, where we were rated a high performer in several categories, as well as a momentum leader and a leader in the small business segment. Building on the 9% organic growth and the 14% reoccurring organic growth we delivered this quarter, we continue to intensely focus on driving double-digit organic growth in the future and increase cross-sell activities while continuing to grow the embedded tax business. During the third quarter, we meaningfully expanded the distribution of our payroll tax management solution, which already represents nearly 20% of Assure's revenue. In August, we announced a co-selling arrangement for our payroll tax management solution on the AWS marketplace, and we began to actively co-sell into its 330,000 customers in September. AWS customers can procure, sure, through the existing purchasing processes, including unused AWS spend, and our sales team co-sells alongside AWS sales teams against our ideal customer profile. Streamlining contracting and private offers can shorten the typically long enterprise sales cycle in September. We also made payroll tax management available on Oracle Marketplace integrated with Oracle Fusion Cloud Human Capital Management. Organizations running Oracle can add multi-jurisdiction payroll tax filing, funding, and money movement without migrating their payroll system of record. They can then use the payroll system of record as we file across federal, state, and local jurisdictions on their behalf. Together, the AWS and Oracle marketplaces open up new opportunities for payroll tax management. Indeed, in the payroll tax management business, we have already won approximately 30 major enterprise accounts for payroll tax management, and these partnerships will continue to help grow that segment of the business. In September, at our annual reselling training event, we launched Assure Central to our reseller network and took our first resellers live on the platform, which we believe will unlock significant cross-sell for our human capital management suite, as we have done in the direct business. Assure Central brings single sign-on, user provisioning, role-based access together with payroll, tax, HR, recruiting, time and attendance, 401k, benefits, and Luna all in one environment, and resellers can white-label the experience with their own logo. The number of clients purchasing multiple products has increased by 7% versus the third quarter 2025. With the increase in attach rates, we're also experiencing an uptick in our retention rates versus the second quarter, and we will share updated retention metrics in our one-year, year-end, 2026 release. We remain focused on moving clients from an average of a little more than two products per client relationship towards four or more products per client over time. Now, a brief update on AssureWorks, our administrative services outsourcing offering, which lets clients delegate key payroll and HR compliance processes to Assure. The momentum we saw at launch continued into the third quarter. Our pipeline and new clients continue to grow and set new records. The reception across the target buyers includes small hotel chains, restaurants, HVAC companies. As an example, it remains very, very strong. These are Main Street businesses that need payroll and HR compliance support but lack the internal resources to manage it themselves. We are continuing to train more reps for SureWorks every day and build out that effort. Clients who adopt SureWorks typically represent up to five times the revenue and payroll-only clients, And because it is not a PEO model, there is no co-employment risk, which makes it a compelling and flexible alternative for clients constrained by the cost and rigidity of a traditional PEO. On the sales front, we made significant progress in hiring reps. We're confident in hitting our target of 150 by year end. The efforts of our recruiters and our sales managers really have paid off, and we're excited to have these new reps on board. These are full solution sellers who can sit down with a business owner and present our entire product suite, and that consultative, needs-based approach is central to driving both new logo acquisition and multi-product cross-sell within our existing base. The new type of rep we hire typically ramps faster than when we have experience with prior reps. Our existing to new customer logo split in the third quarter was approximately 47% to 53%, an improvement versus a year ago of 36% to 64%, but similar to the second quarter of this year where we continue to drive towards our 35% new logo, 65% base expansion mix over time. Our contracted backlog is now $86.6 million, and we expect to convert approximately 46% of that backlog over the next 12 months. We continue to operate in a positive selling environment as small and mid-sized businesses need the products and solutions Assure offers to help them navigate the complex world of payroll and compliance. In our forecast, we conservatively model flat headcount growth for our clients. We haven't seen any dramatic shifts in the sales cycle process. On the M&A front, after quarter end in October, we acquired a human capital management payroll processing company based in the southeastern United States for an aggregate purchase price of $26.5 million. The company serves mid-market organizations with cloud-based HR, payroll, and talent tools, expanding our exposure to the small and mid-market segment and adding and develop technology that will be used to update some of our product offerings. We have an active pipeline of potential reseller acquisitions and will continue to pursue those opportunities. Also, in October, we closed a new credit facility, which gives us some more flexibility to pursue our strategy, and John will share more details in a moment. On AI, our view hasn't changed. Payroll and HR compliance isn't software a generic AI can replace. We hold money transmitter licenses, interface directly with the IRS, state and local agencies, and manage compliance where the margin of error is effectively zero. That makes assure a system of record and our expertise a real mole. At the same time, AI is a meaningful accelerator for us. Luna Conversations grew about 25% in the quarter to more than 26,000, and in her first year, Luna has completed more than 15,000 AI actions for our customers. At the start of fourth quarter, we released the time import agents, bringing Luna directly into the payroll run with humans in control at every decision point. I also want to take a moment to recognize and congratulate our Chief Technology Officer, Yasmin Rodriguez Joaquin, a pioneer in payroll tax technology and the compliance infrastructure behind it, who has been named two women we admire, top women Chief Technology Officers of 2026. Yasmin, congratulations, and thank you for everything you do for Assure and our clients. So with that, I'd like to turn the call over to John to discuss our third quarter financial results in more detail and provide an update on our 2026 guidance along with our outlook for 2027. 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.assuresoftware.com. Third quarter total revenues were $40 million compared to $36.3 million in Q3 of 2025, representing growth of 10% year-over-year. Recurring revenue for Q3 of 2026 was $36.9 million compared to $31.8 million in Q3 of 2025, an increase of 16% year-over-year. Recurring revenue represented approximately 92% of total revenue in the quarter versus 88% a year ago. Professional services hardware and other revenue was $3.1 million in Q3 of 2026 compared to $4.4 million in Q3 of 2025. The decline versus prior year was primarily due to reduced professional services provided as part of large tax deals in the prior year. Gross profit for Q3 2026 was $27.8 million compared to $23.5 million in Q3 2025. Gap gross margin for Q3 2026 was 70% compared to 65% in Q3 2025. Non-gap gross margin for Q3 2026 was 75% compared to 70% in Q3 2025. Net loss for Q3 2026 was $0.6 million compared to net loss of $5.4 million in Q3 2025. EBITDA for Q3 2026 was $7.9 million compared to $3.9 million in Q3 2025. Adjusted EBITDA for Q3-2026 was $10.5 million compared to $8.1 million in Q3-2025, an increase of 29% year-over-year. Adjusted EBITDA margin for Q3-2026 was 26% compared to 22% in Q3-2025, an increase of approximately 400 basis points. We ended the third quarter with cash and cash equivalents of $16.8 million and total debt of $64.7 million as of September 30, 2026. Subsequent to quarter end, on October 15, we closed a new senior credit facility of up to $115 million with a syndicate of five banks led by MUFG Bank Limited. The facility has an $85 million term loan, all of which was drawn at closing, a $10 million five-year revolving credit facility, and a $20 million delayed draw term loan facility. The term loan currently carries a rate of SOFR plus 3%. This adjusts periodically based on our consolidated net leverage ratio and could be as little as SOFR plus 2.75% and will not exceed SOFR plus 3.5%. We used $62.6 million of the gross proceeds to repay in full our existing credit agreement with MidCap Financial Trust. Turning to the Southeastern U.S.-based payroll acquisition Pat mentioned, the aggregate purchase price was $26.5 million, paid as follows, $13.5 million in cash at closing, a promissory note in the amount of $3 million to secure the indemnity applications and other adjustments, and the issuance of shares valued at $10 million. The purchase price is subject to customary working capital adjustments. Based on the current positive momentum in our business, we are updating our Q4 2026 and full year 2027 guidance. Please note that the guidance incorporates the recent acquisition we completed in October 2026. We anticipate revenue of $42 million to $44 million and adjusted EBITDA of $10 million to $12 million for Q4 2026. This implies full-year 2020-06 guidance of $162 million to $164 million in revenue and adjusted EBITDA of $40 to $42 million. Next year, our preliminary guidance for 2027, we anticipate revenue to be in the range of $183 million to $187 million and adjusted EBITDA margin to be in the range of 26% to 28%. We expect our cost structure, including capital expenditures and capitalized software development costs, to remain relatively stable on a dollar basis. With that, I will turn the call back to Pat for closing remarks.

Thanks, John. Stepping back, I think the third quarter tells a clear story. We grew revenue 10% to $40 million, and adjusted EBITDA grew 29% to $10.5 million, with adjusted EBITDA margin expanding approximately 400 basis points to 26%. Reoccurring revenue organic growth continues to accelerate, reaching 14%, and we forecast it to be in the double digits again in the fourth quarter. We're really starting to hit our stride, but we're not slowing down. Our sales team is larger and more productive. Our clients are buying more of our core payroll and human capital management products. Our unified technology platform enables us to cross-sell, which drives improved retention, and we can scale organically. We have a very active pipeline of opportunities for payroll tax management, and the new distribution capabilities of Oracle and AWS will help build further opportunities. It sure works, is gaining traction, and our recent G2 awards reflect the positive feedback our clients have about our products. Just a few years ago, we laid out a goal of $180 million to $200 million in revenue, and with today's forecast for 2027 of $183 million to $187 million, we are close to crossing the goal line. We've worked hard and executed, and all of our metrics are trending up. Margin expansion and improving profitability are two important characteristics of our model, and AI is helping us lower our costs to serve while improving the client experience. We're proud of the progress this quarter and even more excited about what's ahead. Thank you for your continued support and for joining us today. Before we open the call for questions, I want to take a moment to acknowledge the recent loss of Dick Strong, a longtime supporter of Assure and a good friend. Dick was a very smart, talented, kind person, and he'll be greatly missed. On behalf of everyone at Assure, we offer our heartfelt condolences to his family and Donna. Thank you for your continued support and for joining us today. I will now turn the call back to the operator for questions and answers. Operator?

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star 2 if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star 1 at this time. One moment while we pull for the first question. The first question comes from Jeff Van Rie with Craig Hallam. Please proceed.

Great, thanks. Thanks for taking the questions, and congrats on a nice posting here, guys. A couple for me first. Pat, maybe on the employee per month, where are you now? What is a full suite purchase right now tallied to, and where do you think that can evolve to over time?

You know, we publish The Art of the Possible, which is $100 plus. Per employee per month, a specific number, you know, we'll start to get a little bit more color in 2027. But, you know, if you add brokerage and you add all those kind of products and services as much as 180, we're continuing to sell more products and services, and we're training for that. And then, you know, we have Assure software through Assure Central, or we'll do it for you with Assure Work. So we're still in the middle of the movie, and there's different sample sizes with different training. We'll lay out probably a metric around that in 2027. But right now, suffice to say, it keeps going up. This past quarter, you know, revenue per unit, you know, in the payroll business was somewhere up 57%, you know, which was really, you know, a nice progression of what we're trying to do. You know, I think in 2027, as we get, you know, more mature, I think we can establish that metric and publish that.

Okay, got it. And then the Southeastern reseller, a bit larger than your typical reseller purchase, I heard in the script. There's maybe some incremental capabilities there as well that might stand out. Maybe just a second more on what you're getting there with that purchase.

Yeah, first of all, the technology is obviously like a reseller acquisition, so very simple in integration, et cetera. They had some kind of unique front ends that we think will help us advance the whole business on some verticals, so we're excited about that. We think that there's some growth in selling. We also think from an integration perspective, you know, this is what we do. So we think we could add scale, add capability, add the growth. And, you know, frankly, we thought it was, you know, a pretty attractive acquisition for us to do. Mm-hmm.

And then maybe, John, just a couple quick numbers questions then. As I look at Q4 and the 27 outlook, what organic growth is embedded in those two numbers? And then this reseller, can you give us a little, dial it in a bit closer in terms of what the reseller itself brings in terms of Q4 revenue and next year's revenue?

Yeah, I'd say when we bought the business, it was probably at about a $10 million run rate. So I would expect a couple million in this quarter to be realized. We think, obviously, there's some upside to what they were doing historically when you put our sales team behind it and when you start to maximize some of the technologies they've built out. So, in terms of next year, I think the guide kind of in the midpoint implies kind of 13%, 14%. I would say right now that majority of that's going to be organic, just in terms of the guide for next year.

Okay. And if I could sneak one last in there, just on free cash flow, appreciate the 27 outlook. Is there just a real quick bridge? You know, I keep a close eye on it. Just curious what that guide implies in terms of free cash flow for 27. Kevin.

Well, again, we have a little bit of this, and we can talk about it off. But the way we think about it, Jeff, is always thinking about the adjusted E, but less the cost of finance. So I think with this new loan, we're expecting probably around $8 million of interest cost for the year, roughly $2 million a quarter, I think. Okay. So if you factor that off, and then, again, if you want to take software cap off the table, that's going to be really consistent. So I think we'll probably be in about the $14 million range next year on that. So I think midpoint of what we guided towards is in the 40s, mid-40s. So back off the software cap, back off the – and I think we're in the low 20s when it's all said and done from our perspective.

Got it. Great. Congrats on the quarter, guys. Thanks. Thank you. Thank you, Jeff.

The next question comes from Richard Baldry with Roth Capital. Please proceed.

Thanks. If I look year over year and I add your cost of goods sold and your OPEX, the numbers are very flat while revenues were up decent. Can you talk about the pieces of that sort of cost saving? Is it integration, AI, or just scale leverage efficiencies? And sort of a breakdown, seeing a lot of companies across my space noting that AI can drive material cost savings, sort of wondering how far along that spectrum you feel like you are.

I'll give you my perspective first, Rich, and then Pat will obviously have his. I think we're just in the early innings. You know, we've always said really consistently, as long as I've been here, that this is a scaled business and you're now starting to see the benefits of it. So, that was pre-AI. So, I think what you're seeing right now is the pre-AI scale part of the business. We are implementing AI throughout the business. We've got it in ops with our call centers. We're using it in the finance area. Our sales guys are going into it as well with Gong and some of the other tools that they're using. So, I think early, early stages of us getting AI benefits, I think what you're seeing right now is just the pure scale part of the business. So that's my perspective, and I think there's a lot of opportunities in the future to take more cost out.

Yeah, I would echo with John, you know, exactly that. I think the next wave here is, you know, a lot of – I always say that the, you know, end-to-end process starts with the customer, goes to our office, and then comes back to the customer. I think in the area of workflow, we still have a lot of AI opportunity to take cost out and improve all the way around. I think there's some other things around marketing where, you know, marketing and sales and customer acquisition, again, with workflow, you know, the work that we're doing internally, you know, I think we're just getting a productivity factor here every quarter. So, we'll continue to work in those areas in 2027, and, you know, I would say a lot of it's come with scale, but, you know, definitely AI is top of mind in how we do business and how we become a better company.

Yeah, and I didn't even touch on, you know, Luna, just in terms of, you know, the customer experience, right, so, and their ease of use of the software. So, I think there's, again, lots of opportunities still.

Okay. Then if I look at the fourth quarter specifically, the adjusted EBIT guide of 10 to 12 million, at the low end of it, it'd be actually down a little bit sequentially. Obviously, the upper end would step up pretty good. You talk about the variables to do that, you know, the acquisition and organic growth would tend to drive some sequential top line growth. So how do we look at that range and where we'd expect to end up?

I think, you know, from my perspective, Rich, we've talked about it throughout the year. We've been running behind in terms of where we want to be in the sales headcount. I think we're finally starting to catch up. So that's one of the headwinds. Headwind's good, bad, in terms of we're finally getting fully staffed on that team. I do think that there's going to be a little bit of integration work, too, with the acquisition. So I'm expecting really good fall through from that acquisition in terms of EBITDA contribution, but not necessarily in the front end. So I do think there's going to be some work, you know, rationalizing that business. So I think I feel good about the guide. And I do think that there's a little bit of headwind just with some of the things I mentioned in the fourth quarter. Oh, I'm sorry, John. Go ahead.

Yeah, if I look at it around fourth quarter, first of all, there's a jumping off point on continued spend in the sales and marketing area. You know, we feel like we've done a lot of work with technology and the operations. And, you know, from a sales marketing perspective, you know, we're close to the 150 target of salespeople. You know, we're going to go up again next year in salespeople. So fourth quarter implicit in that is some ramp costs in sales for 27. Then the other thing is, you know, if you look at the mix and the guide, reoccurring revenue is growing over non-reoccurring revenue to the tune of a little over $2 million in the fourth quarter. So, you know, the quality of your revenue is super high. And then the integration that John spoke of operationally, you know, we're continuing to sell more and more products per customer. And we're spending some calories on integration between departments and workflows and customer products that we think will benefit in 27 and beyond. But, you know, in the immediate quarter, we want to make sure we get those processes right so we're spending some money.

Yeah, and just to put a finer point on it, I mean, I think midpoint of the guide is about a 10 percent, a little under year-on-year growth for next quarter. It's going to be, I think, a similar story as to this quarter in terms of the mix of recurring and non-recurring. We're adding a lot more recurring. We had a lot of pro services last year as it relates to some of the big tax deals. So we're not expecting that same less volume of non-recurring. But we're really excited about the mix in terms of the organic growth that's outpacing the non-recurring that's falling off.

Got it. A good quarter.

Thank you.

Thanks, Rich.

The next question comes from Jared Levine with TD Cowan. Please proceed.

Thank you to start. I was hoping to get an update in terms of the SMB HCM demand environment more broadly here. You know, what are you seeing? Has there been any macro impacts or changes, you know, as you kind of look over the course of this year in terms of demand progression, in terms of what you're seeing on pipeline volumes or even sales cycles?

Yeah, Pipeline's really good.

Pipeline's gone up, and, you know, we anticipate, you know, really good fourth quarter, first quarter sales.

Pipeline is strong. I would say the multi-product continues to be a focus, whether, you know, it's the managed service or software. You know, a small business wants fewer vendors, a little bit more simplicity. They want a partner that they can, you know, hang their hat on with multiple products and services. So, you know, those trends, I think, will continue. As far as, you know, staff, you know, clearly, you know, they want access to capital. They want access to people. They want the easy button so they can focus on growth and a vendor that can provide more and more of those services. And then also they want the vendor to have a point of view. So in the area of compliance, you know, we're seeing that broader pipeline of HR, payroll, compliance, all the way through the stack. And then, you know, where there's more pressure with the Secure 2.0 Act around 401k, especially in the states that have legislated that, we see that as a big demand focus as well.

Great. And then for my follow-up here, I wanted to touch on float revenue. You know, just given the recent 25 basis point increase, can you remind us kind of a framework in terms of how to think about that? I know you do take some duration in terms of a laddering strategy, but just how to think about that benefit from that recent 25 basis point increase as we kind of look over the next four quarters or so.

Yeah, I think from my perspective, it's worth for us roughly a half a million dollars a year, every quarter point right now with our current balances. That's a simple way to think about it at a high level. Got it. Thank you. So again, we talked to Goldman at least once a quarter, but we had our quarterly update with them last week, and their current view is that there's another quarter point coming in December meeting as well as another quarter point in March. So, you know, going into next year, we probably will see another half point, at least on their current view of rates. So, hopefully, that's, you know, a million dollars of, you know, upside to this current year in terms of flow. And then, Jared, you're only assuming – Go ahead, Jared.

I'm sorry.

I was going to say, in terms of your guidance for next year, you're just assuming the one hike that has been announced to date?

Yeah, I mean, we have not overestimated the flow. But, yeah, so that's in the current guide. It's just what's in the current rates right now.

Great. Then, Jared, in the queue is our laddering strategy as well.

Awesome. Great to hear. Thank you.

Thank you.

Thank you. The next question comes from Eric Martinuzzi with Lake Street. Please proceed.

You had a nice uptick in the gross margins in Q3. I was curious, obviously, you've given us a view to revenue and EBITDA margins for 2027, but what's implied as far as gross margin? Was that Q3 just kind of an outlier, or is there a change in the longer-term gross margin expectation?

So I think on a gap basis, you know, I think we're probably in the 70% range for the year. And I think we'll probably get two points or so next year on a gap basis. There's usually about five-point spread between the gap and the non-gap. So if you think 70 this year, it's probably 75-ish non-gap. And I would say, you know, next year, I think we're shooting for about 72% gap and about, you know, 76, 77 non-gap.

Yeah, and what is behind that? Is that just the efficiencies in the workforce? Is that, you know, I'll let you answer the question.

Yeah, I mean, I think it's a little bit of what I was talking about with Rich. You know, it's not anything extraordinary except that we expect our people to, you know, continue to be able to ramp with the tools we're giving them with more and more, you know. So it's just kind of implied in the model. And if you think about it, we've had this slide in the hour deck for, I don't know, for years where we kind of talked about the breakpoints of the model at different scale levels. I think it's been out there for quite a while. At 200 million, we're expecting to be at 3% adjusted EBITDA, and it scales from there. So there was some modeling behind that. It wasn't just aspirational. And so the models is kind of playing out the way we were hoping it to.

And then, Eric, just, you know, with the average customer revenue per unit going up and the adoption of more products and the attach rate going up, that's allowing us to have, you know, a better gross margin pick up over time.

Yeah, congrats on the numbers and the outlook.

Thank you.

The next question comes from Brett Huff with Stevens. Please receive the question.

Hey, this is Colby Sanford on for Brett Huff. Appreciate you taking the question in. Nice to finally be covering you all. So last quarter, you described the enterprise payroll tax pipeline is really strong. Since then, you've been at Workday, HR Tech Conference, Oracle, and you've added payroll tax management to the Oracle Marketplace and now AWS as well. So what are you hearing from your enterprise buyers and your ERP partners at these events? And kind of how should we think about these marketplace announcements and how they will generate new leads for y'all?

I think, you know, first of all, you know, our team has been in Las Vegas three weeks in a row at a busy time. And I was joking with our president and chief revenue officer, Al Goldstein, if he was taking residence up in Nevada. But we've got a lot of really good feedback. You know, our product teams work really hard. You know, the strategy of the foundation level for us around, you know, embedded payroll, tax filing, treasury, et cetera, is a great foundation for us to be because it allows us to play up and down to, you know, the enterprise clients to the, you know, medium and small clients, but frankly, also other, you know, payroll companies because they use some of our foundation tools. So, you know, the feedback's been really positive. You know, I was on calls even this morning and this afternoon right before earnings with, you know, a number of different clients and opportunities and partners that, you know, really like our modernization strategy in this area and that those tools perhaps were underserved by other players in the past and, you know, we have that capability. So, I think our time is right now, and our time is, you know, sometimes luck is preparation meeting opportunity. We're prepared for this moment, and, you know, I think you're going to see a lot of growth here in that area. Well, you've already seen it, but in 27, 28, you know, I think you're going to see strong growth in that area.

Awesome. That's super helpful, and I appreciate it. If I could just sneak one more in there. So a larger competitor of y'all has been leaning a little bit more into PEO, moving some of their clients out of management solutions and into that PEO business and having their sales team refer some deals into it. So just curious if, you know, you're feeling any of that new logo deals in your client base and just any change in the competitive landscape recently with some of your competitors and just the AI natives?

Yeah, I think from our perspective, you know, I used to run a PEO, and I was the CEO of a PEO, and that's, you know, an environment that can get complicated quickly. I personally think we have all the capabilities of the model. If we choose to do that, you know, we would have the capability to build into that base. As far as I look, we have the capability and, you know, kind of what we're doing where you don't have to have things like group insurance and all that, where, you know, you can unbundle that. And we have kind of best-in-class tools and managed services without the PEO. I happen to like that position. As far as the competitive environment, you know, I think all in all, it's going to be a changing environment. And, you know, we're a better company with AI and software, not one or the other. And I think other competitors feel that there's opportunities too. And for us, it's an exciting time to be part of a human capital management space. And we think there's market share opportunity to go after. And we're pleased to report a really good quarter because of that. So, I think the trend towards multiple products, multiple solutions, having tools not only around breadth of products, but also workflow within products, you know, is where a good solution looks like. And then Enchanted AI with the workflows gives more power to the user in a quicker basis and makes good decisions. And, you know, we're leading into that strategy as well.

Awesome. Thank you.

Once again, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. The next question comes from Greg Gibbous with Northland Securities. Please proceed.

Hey, good afternoon, guys. Congrats on the quarter. You know, wanted to ask regarding, you know, those strengthened positions, one within the Oracle ecosystem, but also, you know, payroll tax management available there and the relationship with AWS. Could you maybe speak to the response you're seeing so far at this point as it relates to the opportunities with those networks or potential customer bases?

You know, Craig, it's so early days, what I would say, and I was at two of the trade shows. I didn't have a chance to go to Oracle just with timing of earnings, but our team was there. You know, I'll give you an idea. Last year, we were at the Workday Conference. I think our lead volume was probably triple last year, and it's just a progression of us having a lot of success stories and taking market share, and there's been a good buzz there. So the lead flow was really good. HR Tech, very similar. You know, from the feedback I'm getting, you know, at Oracle, really good opportunities, some good, serious buyers. And, you know, there's an opportunity with the modernization of the work we've done. You know, people, you know, really want to engage with us, and that's right where we want to be. So the early returns are real positive, but a lot of these announcements are over the last 45 days or so, and a lot of this activity has been in the last 30 or so. We'll continue to progress here, but it's probably just a little bit early, but initially a lot of excitement.

Okay, that's fair. And with respect to the payroll processor you acquired, I think you mentioned, you know, some verticals or capabilities that, you know, add an incremental opportunity to where Assure sits today. And I wonder if you maybe expand on those. And then should we think about the purchase price being pretty close to your two times revenue target?

Yeah, I think purchase price was about 2.6 times revenue. We disclosed that, and how I look at it is we've got a nice size, nice capability. The staff is really strong. They know our products and services. We know their products and services really well, so the learning curve is not a long putt. It's a real easy putt for us. And then when I look at some of the vertical markets they've done and some of the capability, you know, I think some of the scheduling capability and, you know, kind of time opportunity there, in addition to some of the reporting, you know, we think was a nice add to some of our product family and service family. And so that we're going to leverage that going forward.

Got it. Thanks very much.

Thank you. At this time, I would like to turn the call back over to management for closing comments.

So anyway, I just seen if the team had anything. Hey, third quarter was an outstanding quarter for us. Good momentum, reoccurring revenue going up. We're excited about it. We think that'll pay dividends as we finish the year of 2026 in a strong way. And in 27, it sets us up for really good growth. And John mentioned that in the IR deck, I think it was three years ago, we kind of pointed to 180 to 200 million. We're in that sweet spot. It's been very predictable for us that scale wins. The AI, good fortune. We're embedding that in a lot of things we do, which is helping our software. Change is afoot in human capital management. Our people are at the tip of the spear leading change. We've got a lot of pipeline of opportunities, and I think we're a story to watch here, and I've been here a long time, really, really excited. And from an investor perspective, hey, we lost a good one at Dick Strong, and I want to, again, wish, you know, my sentiment to the family. But, you know, right now I think it's a real good time to look at Assure again because we got a lot of stuff going on. So I really appreciate your time, and have a good day.

Thank you. This does conclude today's teleconference. You may disconnect your lines this time. Thank you for your participation, and have a great day.