Earnings Call Transcript - ASUR Q2 2020

Operator, Operator

Good afternoon and welcome to Asure’s Second Quarter 2020 Earnings Conference Call. Joining us today are Asure’s CEO, Pat Goepel; CFO, Kelyn Brannon; and Vice President of HR, Cheryl Trbula. I would now like to turn the call over to Cheryl for introductory remarks. Please go ahead.

Cheryl Trbula, Vice President of HR

Thank you, operator. Good afternoon, everyone and thank you for joining us for our second quarter 2020 earnings call. After the market close, we released our financial results. The earnings materials are available on the SEC's website and our Investor Relations website at investor.asuresoftware.com, where you will also find the investor presentation. This teleconference is being broadcast over the internet and will be archived and available on our IR website. 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 of these items along with a reconciliation of non-GAAP measures to their most comparable GAAP measure 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 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. Finally, I would like to remind everyone that this call will be recorded and it will be made available for replay via a link in the Investor Relations section of our website. With that, I would now like to turn the call over to our Pat Goepel. Pat?

Pat Goepel, CEO

Thank you, Cheryl, and thank you all for being on the call today. We’d like to welcome everyone to our second quarter 2020 earnings call. I appreciate your interest whether you’re an employee, client, investor, analyst, or interested third party. I'll start today's call with an update on some key metrics and our response to COVID-19 before reviewing our business highlights for the second quarter and recent changes to our Board and senior leadership team. Despite the obvious uncertainty COVID-19 has created for small businesses, we are encouraged by our strong human capital management business bookings in the second quarter. Asure continues to make progress on our strategic initiatives, including our product innovation and go-to-market investments, while accelerating expense reductions after the Workspace business sale. In April, we provided an update on our business as we responded to the impacts of COVID-19. We also talked about the headwinds in our key metrics. Since that time, and especially beginning in late May, our key metrics began to improve and continued improving throughout the quarter as businesses started reopening and employees began returning to work. We experienced a steady increase in paid employees, as well as an increase in sales leads and sales productivity in the quarter. We usually do not provide detailed metrics on a monthly basis, but we think it's important for our investors to understand how they've been trending as the economy recovers. On our April call, we mentioned that we had a little over 1,000 of our 10,000 direct customers delayed because of COVID and 160 had returned. Now a little over 600 have returned. So year-over-year, the number of clients processed is down just 4%. Same-store sales, on the other hand, are down about 14% year-over-year. Translating these metrics into recurring revenue on a monthly basis, April and May were roughly in line with each other, but June and July increased substantially. Though July had a slight dip down from June as some of the states reinstated closures. Still, we're pleased that new sales units exceeded losses in both June and July. Starts in July also exceeded losses. We view this as an encouraging and important milestone on our path to double-digit growth. Looking forward, as COVID customers continue to return and small businesses continue rehiring, combined with our strong new bookings and starts, we expect the tailwinds on recurring revenue to keep improving. That said, we think it's prudent to monitor these trends for a few more months before revisiting a return to providing guidance. We have been a valuable business partner to our small business customers during the pandemic, providing them with information to navigate complicated changes in legislation. Our solutions were invaluable to clients in adapting to the new environment of a remote workforce as they begin to reopen and get back to business. Our COVID-19 resource center and webinars, in particular, have benefited more than 10,000 small business attendees since launch. Our webinars led by Mike Vannoy are at an all-time high. We could not deliver this excellence to our customers without the dedication of our employees who continue to excel in this ever-changing environment. I want to thank them for rising to the challenge and delivering exceptional service to our small business clients. Furthermore, we have an ongoing commitment to our employees to ensure their safety. More than 90% of the workforce continues to work remotely, and that has been going very well. While small businesses have experienced unprecedented economic headwinds due to the COVID-19 pandemic, we will never stop providing our clients with the service, technology, and support they need to survive the crisis and thrive when it’s over. As such, we continue to make progress on our strategic initiatives, including product innovation and go-to-market investments, while also controlling expenses. These go-to-market investments resulted in strong new business bookings in the second quarter. Still, as expected, the heightened unemployment rate and 150 basis point cuts in rates in March adversely impacted Asure's second quarter financial performance. Nonetheless, as an essential small business, Asure remains committed to helping our 50,000 indirect and 10,000 direct small business customers grow in this challenging environment. We remain optimistic about our long-term strategy and expect to be well-positioned once the macro environment and our clients' operations normalize. Turning to the second quarter financial highlights. Revenue was $14.1 million, non-GAAP EPS was $0.03, both exceeded Wall Street expectations. New bookings in the second quarter grew 21% year-over-year, demonstrating success in our initiatives. Our Human Capital Management quota-carrying representatives now stand at 55, up significantly from the 33 we began the year with. In addition to salespeople, we also hired Human Capital Management developers and client service personnel to meet the change in requirements for small businesses. Shifting to the Board of Directors and senior leadership changes that we announced today. We launched our Human Capital Management only strategy in December with the sale of the Workspace business. We completed the transition services in June. We believe these leadership and Board changes optimally position Asure to deliver on our goal of doubling revenue over 5 years while tripling non-GAAP EBITDA. Asure's Chairman David Sandberg, who has elected to step down, plans to remain an Independent Investor. We are thankful for David's dedicated and loyal service for the past 11 years. In addition to CEO, I am truly honored to assume the important role of Chairman of Asure and want to thank my fellow Directors for the trust they have placed in me and our leadership team. Furthermore, the Board of Directors has elected current board member Dan Gill as the Lead Independent Director. We look forward to working together with Dan in his expanded role as he has been a valuable leader and a source of knowledge for Asure for several years now. Eyal Goldstein has been promoted to President and Chief Revenue Officer. Eyal has made some outstanding contributions to Asure's growth and success, while he takes on additional management responsibilities of overseeing certain operations. I will be able to concentrate on some strategic focus with an emphasis on growth and creating greater shareholder value. Jay Powers, who has been appointed as Chief Financial Officer, succeeding Kelyn Brannon, who will consult through the end of the year. Jay has more than 30 years of leadership experience in accounting and finance at publicly traded technology companies and resides in Austin, Texas, where the majority of the finance team works. I'd like to welcome Jay and also want to thank Kelyn who brought global finance experience to our team when our company included the Workspace business. She was instrumental in our efforts to enhance Asure's financial systems with the implementation of NetSuite and the execution and transition of the Workspace business. We will absolutely miss Kelyn and wish her well on her future endeavors. We’ve also added two exceptional Board members. Grace Lee brings over a dozen years of human resources and diversity experience to Asure's Board, and Ben Allen brings a wealth of experience as CEO and President of multiple industry-leading companies. We’d like to welcome Grace and Ben and look forward to their expertise and immense contributions. With that, before we go any further, I'd like Kelyn to talk about the detailed financial results. Kelyn?

Kelyn Brannon, CFO

Thank you, Pat, and good afternoon, everyone. For comparison purposes, we have provided restated 2019 revenue numbers that exclude non-strategic customer contracts and non-core HCM businesses we exited in December of 2019. As usual, all non-revenue financial figures I will discuss today are non-GAAP unless I state them as a GAAP measure. You will find a reconciliation from GAAP to non-GAAP results and restated revenue numbers in today's press release. During the quarter, bookings increased 21%. We increased our sales representatives to 55 at the end of July, up 67% from the 33 we began the year with. They will be impactful in the second half of this year and into 2021 and beyond. We experienced year-over-year declines in revenue, gross profit, and adjusted EBITDA, primarily driven by lower check volumes due to fewer customers processing payrolls, as well as fewer employees paid as a result of COVID-related shutdowns. Still, we remain confident about our financial and competitive position and look forward to a gradual return to more normal operating conditions. Revenue for the second quarter decreased 18.5% to $14.1 million from an adjusted $17.3 million in Q2 of last year. Recurring revenue represented 97% of total revenue in Q2 compared with an adjusted 98% in Q2 of 2019. Next, I'll discuss our profitability metrics. Q2 non-GAAP gross profit was $9.1 million, equating to a non-GAAP gross margin of 64.7%. This compares to $11.1 million or a gross margin of 64.1% in Q2 of 2019. We continue to be laser-focused on gross margin, and we are taking actions to drive improvement. Interest on client funds exceeded $140,000 in the second quarter, down from $350,000 in the second quarter of 2019. We still expect 2020 level of interest on client funds to be between $850,000 and $925,000 for the year. Q2 non-GAAP EBITDA was $1.4 million, down from $3.6 million in the second quarter of 2019. In the second quarter of 2020, our non-GAAP effective tax rate guidance still remains at 0% as we feel this more accurately measures our expectations for actual performance. Net operating loss carry forwards currently stand at $34 million. Shifting gears to our balance sheet, cash and cash equivalents were $29.3 million at quarter-end. At June 30, 2020, we had $33.6 million in gross debt, which are the amounts payable for our term loan and for the seller notes. This is up $8 million from $25.6 million at the end of Q1 2020. Total deferred revenue on the balance sheet as of June 30, 2020, including both short-term and long-term combined, was $4 million, up from $1.5 million in the first quarter of 2020. DSO in Q2 was 35 days, up from 24 days in the year-ago quarter. Overall, headcount remained at 411, unchanged from Q1. During the second quarter, cash generated from operations was a negative $700,000. Now I'll turn the call back over to Pat. Pat?

Pat Goepel, CEO

Thanks, Kelyn. Our large market opportunity and recurring business combined with the value proposition of our solution is strong, and we continue to experience success in our sales efforts. Before turning to Q&A today, I'd like Jay to say a few words. Jay?

Jay Powers, CFO

Thanks, Pat. It's a great privilege for me to accept the CFO role. I look forward to working closely with the rest of Asure's excellent management team, the Board, and our dedicated employees to drive growth, profitability, and value creation for shareholders.

Pat Goepel, CEO

With that, we'll open it to questions. Operator?

Operator, Operator

Our first question is from Ryan McDonald. Your line is open.

Ryan McDonald, Analyst

Yes. Good afternoon, everyone. I guess first off, Kelyn, best of luck in the future and welcome Jay. Thanks for taking my questions. Pat, you talked about that we’re seeing some nice trends here into June and July, albeit July may be slightly lower than June. Can you talk about, if there's a mix there of what maybe saw that fall off slightly in July? Was it more as things closed off again that you saw maybe fewer payrolls, or was it just some new bookings slowing down? Little more commentary there. Thanks.

Pat Goepel, CEO

Yes. No, I appreciate it, Ryan. Yes, what I'm signaling here from a sales perspective, we're getting increasing momentum in sales and starts and fewer losses. So that's a really positive development. What I would say is starting right around Memorial Day through the end of June, we saw clients tick down, albeit on the same-store sales or the people that they pay. What I would say in July, it went down about 1% or 1.5%. I think anecdotally some of the PPP money played a role. But the metrics that we can really drive around bringing companies onto our system and keeping customers on our system were really encouraging. And then I would say from a company perspective, we had just over 1,000, and now a little over 600 have gone back. What I've seen is the companies are staying open. It's really maybe one or two left as PPP money goes away, or there's some uncertainty around hours, etc. That's how I'm interpreting it based on the feedback.

Ryan McDonald, Analyst

Excellent. That's really helpful. And then I guess on the follow-up, I think in about mid-July, you announced an acquisition, a small acquisition. I'm assuming it was of a reseller. Can you talk about how you're thinking about the mix of organic versus inorganic, if that's changed at all since the first quarter? Thanks.

Pat Goepel, CEO

Yes, I think with COVID, our big focus with our employees and our clients, etc., is we will continue to look for strategic acquisitions. And we define them as companies we know really well and in our network. I don't think you'll see us go outside the HCM space or go too far afield and we’ll look at the reseller network. What I would say is we're really focused on getting organic growth, bringing more customers than we lose each month. We are having a great line of success in doing that, and then as COVID and the tailwind start to come back where people start hiring again, that’ll only add to this certainty of organic growth. So that will be a positive development. And then as far as I don't think we'll be too active on the acquisition front, but we will be opportunistic especially in this environment.

Ryan McDonald, Analyst

Excellent. I'll jump back in the queue. Thanks again.

Pat Goepel, CEO

Thank you, Ryan.

Operator, Operator

Thank you. The next question is from Derrick Wood from Cowen. Your line is open, sir.

Derrick Wood, Analyst

Great. Thanks for taking my questions. Nice job on the quarter and Kelyn, it was great to work with you. Good luck in your new endeavors and welcome Jay. Pat, when you look at that 21% growth in new bookings year-on-year, that certainly seems quite good in this environment. I mean, what would you say were key contributors in improving growth? And I'm curious if the COVID-19 response center that you've set up has been kind of a new vehicle for new customer generation.

Pat Goepel, CEO

Yes, our go-to-market team, Mike Vannoy, Lucas from marketing, and Eyal Goldstein, our Chief Revenue Officer, have done an exceptional job of supporting small businesses during critical times. From March 15 to Memorial Day, our focus shifted from payroll and HR to how businesses could survive. We attracted about a thousand participants to a webinar that generated significant interest, and our primary goal was to assist small businesses in obtaining financial support rather than focusing on sales. This approach proved to be beneficial. Moreover, we've recruited some great talent, increasing our sales team from 33 to 55 members. The marketplace is always evolving, and recent acquisitions have allowed us to attract skilled employees. Some clients have faced challenges with their current providers, and we've been able to assist them in staying afloat and securing PPP funds, which in turn led them to choose our services. It’s a combination of focus, strong personnel, and favorable timing. I'm optimistic about our potential for long-term success.

Derrick Wood, Analyst

Thanks for the color. And I guess you're not reinstating guidance, so I was hoping to get a little bit of color on how you're thinking about the rest of the quarter. We've seen certain areas of the country reverse a bit over the last four weeks, and there's some uncertainty about what PPP is going to do from here. So just curious, how do you think dollar retention should trend or what you're thinking about through the rest of the quarter?

Pat Goepel, CEO

Yes. No, I appreciate it. When I drill in, that's why we went into some of what we've seen in June and July. We saw good increases. Let me talk from a sales perspective. I think we're going to keep driving sales, and I think we're going to have some success. I think from a client loss perspective, if you do a good job servicing them, you're going to keep them because they're focused on bigger things with the pandemic. So I think our retention will be strong. Where the issue is, and you mentioned it with the pandemic, I think is in the same-store sales or the hiring. What I think you'll see is some companies will be reluctant to invest in new hires because they don't want to bring somebody on and then have to pause them. What they'll do is they'll work a little bit more with overtime if they need to. There will be a little cost in hiring. Now I got to be a lot smarter as an individual. If I can predict the economy in the second half of the year, whether it's going to be a V or a W, etc. What we've kind of modeled is slight to steady improvement, and that's what we're banking on from here. That same-store sales improvement will be a nice tailwind for us. If we don't get it, it's kind of what we modeled. If it's another closure or what have you, we haven't modeled that. What I would say in our daily call bounds from a pause perspective is we’re really encouraged that over a little over a thousand companies have paused. Just over 600 have started with us. We're not seeing many completely shut off payroll, so that's encouraging. Of that, another 200 or so have given us a restart date. Now it remains to be seen what restart date gets slid back a little based on further pandemic decisions, but that's as much color as I can give you right now.

Derrick Wood, Analyst

Great. I will, I'll get back in the queue too. Thanks.

Pat Goepel, CEO

Thanks, Derrick.

Operator, Operator

The next question is from Eric Martinuzzi from Lake Street. Your line is open. And it seems that we have lost Martin's line. The next question is from Richard Baldry from ROTH Capital. Your line is open.

Richard Baldry, Analyst

Thanks. I broke up for a second, so I'm not sure if you covered this. But can you talk a bit about the pattern of 2Q bookings, how heavily back-end loaded that might have been? 21% seems pretty good. I'm sort of curious if April and May were almost dead stops, so June had to be pretty strong, or somehow were you able to book throughout the quarter?

Pat Goepel, CEO

Yes. Bookings accelerated through the quarter. I would think, really since that Memorial Day timeframe to July 1st was good, and we're seeing continued momentum.

Richard Baldry, Analyst

Okay. And then on the hiring side, can you talk about where do these people come from? It seems to me that a lot of people are reticent to make any moves right now. So where do you sort of, will they be in-house developed salespeople or veteran employees you're actually able to attract from another company?

Pat Goepel, CEO

There were a few acquisitions in the marketplace, one of which I mentioned because we have some board members from CompuPay. BenefitMall decided to exit the payroll business and sold to ADP, acquiring customers without taking the employees. In some cases, we benefited from experienced salespeople who chose to make a change. This was a rewarding experience for us. Other industry veterans saw the chance to expand their territories significantly. Additionally, there have been shifts in the sales process where some individuals competing with the broker of record and the Benefit team found themselves in competition rather than collaboration. They appreciated the model that allowed them to partner with Benefit for payroll sales. The individuals we’re bringing on are experienced and productive, making them a known quantity who can start contributing immediately. We are excited about this opportunity.

Richard Baldry, Analyst

And the last thing to the extent you can think about it while acquisitions may be sort of slower in pace short-term for obvious reasons. Can you talk about what you're seeing in terms of maybe the earlier stage of that pipeline of people? Are they more willing to talk to you because of fears around trying to stay independent or any change to the expectations in terms of valuations mix of consideration for us to think about when that pay starts to pick back up? Thanks.

Pat Goepel, CEO

Yes. Thanks, Rich. And you know what I would say between February 15 and April 30, I think a lot of people were talking; I'm not sure they wanted to execute. They just wanted to understand their options because the pandemic hit them right in the face and they didn't know what this means. I think people are getting their bearings and kind of understanding a little bit what the new normal could look like. Now that being said, there's still kind of a lot of ambiguity. When there's a lot of ambiguity, people search for options and then ultimately do they commit or not? I think valuations where people are not capitalized or facing some kind of burning platform, are going to be lower, which I think ultimately will be good for us. From our perspective, we want to make sure we acquire the right people at the right time with the right degree of certainty going forward. From my perspective, I think certainly we’ll be active, but we're really going to make sure timing is right and the valuations are right. We have our own business to worry about and we're focused on improving it each day. We're really encouraged with some of the companies that we're bringing on, and the losses are less than the companies we're bringing on. So we'll continue to execute that strategy and be opportunistic on the acquisitions. We do think there are going to be value and opportunities there later in the second half. More importantly, I think the beginning of 2021 will also provide opportunities to continue to drive results.

Richard Baldry, Analyst

Thanks.

Operator, Operator

Your next question is from Vincent Colicchio from Barrington Research. Your line is open.

Vincent Colicchio, Analyst

Yes. Pat, I'm curious where are you in the cycle in terms of negotiating better financial terms for certain clients, or is that mostly past us?

Pat Goepel, CEO

Vince, that’s a good question. I really think early on in February or March, call it May, I think people were just really trying to figure it out. I think now that things are certain, people are going to be value-conscious, but by the same token, they want a supportive partner. Their first inkling, I think, is really do they have good financial terms? Do they have a good business model? Have they worked out and do they have the right partners? Pricing concessions or some of that, especially in the payroll area where we can provide a lot of value. We're just not seeing that much, frankly. It's more about can you help them through what they're going through, and can you help them get to certainty in an uncertain world? If we focus on that, I'm confident value will continue.

Vincent Colicchio, Analyst

And in the competitive landscape, is there any particularly aggressive behavior from competitors?

Pat Goepel, CEO

No, I think everybody is trying to provide value to their clients. I think they're trying to understand the business model. I think some of them are focused inward to make sure they understand the post-COVID world a little bit. I do think people want to play offense too, and then there are some folks that maybe have to really look at their business models, so there’ll be opportunities that exist. What we're seeing is people are probably a little more focused on helping their clients, which is a great thing for the clients and then helping to get market share and look at offsets. I think our strategic plan heading into the year was to grow organically, and we were going to hire salespeople, which has provided clarity for our folks. They know what they want to do; they know they need to get organic growth, and they need to bring on new customers and keep customers. We're focused on one business. Kelyn did a great job of transitioning workspace off, so our organization can just focus on growth. I think that's honestly been a good recipe for the beginnings of our success here.

Vincent Colicchio, Analyst

Okay. Nice job in the quarter. Thank you.

Pat Goepel, CEO

Thank you.

Operator, Operator

Your next question is from Jeff Van Rhee from Craig-Hallum Capital. Your line is open.

Jeff Van Rhee, Analyst

Great. Thank you. Pat, a lot of personnel changes here. Just talk to me about the timing. Obviously, Board talent—a lot of moving seats here. What—why now? Why is this the right time? Why did these all happen at this point?

Pat Goepel, CEO

Yes. As we announced earlier, in December and January, we're becoming a Human Capital Management company. We talked about board members leaving; I think we signaled that. We've talked about how to reshape the company into a Human Capital Management company. We're not a global multi-product company. We're a company now focused on HCM for small business. So I think a lot of this is the timing and a plan coming together, and now's the time. From a board member perspective, David has done an outstanding job and been here for 12 years, but he has signaled he was ready to go and ready to leave. You could see the people we recruited, whether it’s Ben Allen or Grace Lee or even prior board members—Carl Drew and Bjorn Reynolds. They have decades of Human Capital Management experience and have been operators or specialists in what they've done. All of it kind of makes sense. And then from a management team perspective, Eyal has done a really nice job of growing the company. He has been with us here for four years, and it was his time to shine and be there. Kelyn also made the right decision to consult, as she has a house in San Francisco, and she’s a very accomplished CFO with a global platform. And then Jay is here in Austin where he fits perfectly with the majority of the finance team. It just felt like the timing was right.

Jeff Van Rhee, Analyst

Okay. That's helpful. What two others than Pat does the—obviously we're adding a lot of sales capacity, does the pipeline at this point, assuming COVID doesn't get better or get worse, we sort of trend at whatever levels we're at now, does the pipeline in the year-over-year comparison suggest the ability to sustain 20% plus bookings growth?

Pat Goepel, CEO

Yes, I think from our perspective, we're not going to give guidance because when we said we won't. But what I would say is the leading indicators are pretty positive, whether it's marketing sales, and then the additional salespeople will continue to be opportunistic in hiring. We want to get to bigger numbers from a sales perspective. We want to achieve organic growth. We had a mission that we'd get to organic growth of double-digits in the first quarter of 2021. It remains to be seen with COVID when that will shake out, but the mission hasn’t changed, and we're going to continue to drive that.

Jeff Van Rhee, Analyst

Thank you. And last then on the expense front, anything about Q2, cost-wise, that makes us not a good baseline to build off of sequentially?

Kelyn Brannon, CFO

No, not really. If you look at our gross margin or our COGS, as revenue came down due to lower check downs and the number of employees being processed, we still needed to keep all of our customer-facing CSR customer service folks. Therefore, despite the dip in revenue, we maintained those costs in place while AWS runs as it does. I would feel very comfortable building off of what you see in Q2; there was nothing unusual from an expense perspective.

Pat Goepel, CEO

Yes. The only thing I'd add to that, perhaps, is we have been making sure that we're making investments in our salespeople, and our developers, and some of the market acquisitions that we talked about are getting us some talent a little bit early. We originally aimed for 55 to 60 sales reps by year-end, and we're fortunate to be at 55 now. We’re bringing in some of those costs a little early where we need them, but then we’re also trying to drive efficiency, and we have some pretty good efficiency programs in place for the second half.

Kelyn Brannon, CFO

If I was thinking about anything that could impact the modeling, remember we started the year with 33 QBSS. We ended Q1 with about 45 QBSS; Q2 of June 30 was 47, and we're now at 55. You will see an uplift. If you're modeling our Q2, kind of all the total compensation and benefits, you'll see a sequential increase as we continue to hire primarily around the QBSS, but also in our development organization.

Jeff Van Rhee, Analyst

Great. Thanks for taking my questions and best wishes there, Kelyn.

Kelyn Brannon, CFO

Thank you.

Pat Goepel, CEO

Thanks, Jeff.

Operator, Operator

Thank you. I do not see any further questions at this time. I will now turn the conference back to CEO Pat Goepel for any closing remarks or additional comments.

Pat Goepel, CEO

Yes. I just want to personally salute Kelyn. She's done an outstanding job in three years, and I am very appreciative of her efforts and how she has moved the business forward as the Chief Financial Officer. I also want to thank David Sandberg, who has served for 12 years; there's no company without him. He's done an outstanding job, and I appreciate his efforts. I would like to welcome all the people playing different roles. Dan Gill has done a nice job since joining the Board and being the Lead Independent Director. I'm thankful. I want to welcome Jay Powers, and I want to salute Eyal Goldstein, who has done a nice job, and welcome Grace and Ben. I believe they're going to contribute significantly to Asure. From an investor perspective, I think COVID has brought some uncertain times. I don't think we can predict whether it's a V, W or what the issue of the day is. All we can rely on is as we do a great job day-to-day, we really understand our business. We get to the level of detail, and we have some success. I'm confident that we're really getting to a point here where we can bring on more clients than we lose each month. If we keep doing that, good things are going to happen. As same-store sales or people start hiring, that'll be a nice wind at our back. There's no question there's heavy lifting to do, but the second quarter and early part of the third, I think signal the trough, and with some luck here, we're going to do really, really well. We appreciate your patience in getting to this point, and we look forward to talking to you soon. Thank you.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day.