Cheryl Trbula - Investor Relations Pat Goepel - Chief Executive Officer Brad Wolfe - Chief Financial Officer

Jeff Houston - Barrington Research

Good day, ladies and gentlemen and welcome to Asure Software Corporate Conference Call. My name is Kaley and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of today’s presentation. I would now like to turn the call over to Cheryl Trbula of Asure Software. Please proceed.

Thank you, Kaley, and welcome everyone to Asure Software’s conference call. Before we start, I would like to mention that some of the statements made by management during this call might include projections, estimates and other forward-looking information. This will include any discussion of the company’s business outlook. These particular forward-looking statements and all of the statements that may be made on this call that are not historical are subject to a number of risks and uncertainties that could affect their outcome. You are urged to consider the risk factors relating to the company’s business contained in our latest periodic reports on file with the Securities and Exchange Commission. These risk factors are important and they could cause actual results to differ materially. This call is also being recorded on behalf of Asure Software and is copyrighted material. It cannot be recorded or rebroadcast without the company’s expressed permission and your participation implies consent to the call’s recording. After we completed our review of the quarter, we will open up the call for questions from the financial analyst community. I would now like to turn the call over to Pat Goepel, CEO of Asure Software. Pat?

Thank you, Cheryl. And I would like to welcome stockholders, interested investors, clients, analysts, employees to the first quarter call. I will be commenting on the first quarter, I will turn it over to Brad for results, and then I will provide a look forward and take questions. The first quarter, we restructured the sales force for the year of 2015 with a sales kick off, and we are going up market into enterprise and global sales area with a subset of our sales force. That group is about 10 in total. Our actual sales force stays constant, around 34 sales employees. We are focused on our cloud and mobile products with a big push into the office hoteling space. We feel that area, after our product development and our acquisitions of Roomtag and FotoPunch, will provide a tremendous area of growth for us, in addition to our cloud and mobile products. Our sales force has been very active and our pipeline is about 3.5 times what it was in first quarter last year on March 31. The sales results in the first quarter were somewhat disappointing and Brad will go over those details. However, the pipeline is strong, the amount of big deals we are in is very strong, and we have some certainty about the potential second quarter results, and we are encouraged by our sales force progress. The amount of $100,000 deals are also up quite dramatically. We believe this will pay off in the second, third and fourth quarters of the year 2015. On the operating side, we closed the Warwick and Framingham offices and created a Northeast office in Dedham, Massachusetts. This will save us about $120,000 a year and it will also provide a showcase for a sales office and demonstrations in the Northeast. We also at the same time closed the Staines, England office and opened a downtown London office, which we believe will have a similar effect with a sales showcase in London for Europe. We changed our hardware manufacturing business line and we will save about 25% cost going forward. We also pick up a 30-day cash benefit to doing that. That change unfortunately required a 60-day retouring of our hardware and that caused about a $250,000 top line delay in fulfillment of orders in the first quarter. We believe this will normalize in the second quarter and, more importantly, we believe as we get to a steady state will be very competitive at our hardware and we will also sell more going forward with this new manufacturing line. From a product view, we focused on our latest panels to market in our SmartView, which as a product what we will do is measure utilization of office buildings. This will allow us as a pre-cursor to allow our clients to save money on real estate and allow us to sell more solutions. Recently, we’ve had some success in this space and we have some big deals that are pending that we believe smart view is a great opportunity to drive value. Opportunities we sold this quarter all stay [ph] insurance, St David's Medical Center, Blue Cross Blue Shield of Massachusetts. Upgrades, we upgraded Royal Bank of Canada, and the U.S. Army. We are going to start to introduce the metric that we call backlog, which will measure clients that were sold in one year value of non-repetitive revenue, as well as repetitive revenue. This will better capture our progress and provide visibility for our investors. So, they will have not only the sales bookings, but also what’s in backlog and then they will be able to see what’s coming into the revenue line. We introduced this concept on this call in the first quarter. We will start reporting on it in the second quarter. Finally, we are progressing nicely on a project internally called straight-through processing. Brad’s team has been focused on this. What this does is allow us to ultimately get leads from the website and enquiries that people are interested in doing business with the churn, ultimately get that data in the hands of salesforce.com, which is our automation of our sales force CRM or customer relationship management software, and then ultimately take that all the way through billing taxation etcetera. So, we have less people touching the client and more people, more automation of the transaction. That will allow us to have more strategic focus to get closer to our clients. So, those are some of the initiatives that drove the first quarter. We are – we will talk a little bit about the year, but before we do that I like to turn over to Brad to go through the actual results. Brad.

Thanks Pat. Good morning, everyone. I’ll take a few minutes to go over the first quarter financial highlights and then we will be happy to answer any questions during the Q&A period at the end of the morning’s call. In the first quarter, revenue was at $6.3 million, a 3% decrease from the $6.5 million reported for the same quarter last year. In line with seasonal patterns, typically associated with this quarter, first quarter revenue was down $769,000 million or 11% from the $7.1 million reported in the previous quarter. As we continue to emphasis our integrated cloud-based solutions, cloud revenue increased $66,000 or 2% over the same quarter last year. AsureSpace revenue was $3.8 million for the first quarter, a decrease of $98,000, or 2.5%, from the $3.9 million recorded for the first quarter of 2014. The decrease was split along the product lines, except cloud revenue which increased $146,000 or 8.7% over the three months ended March 31, 2014. The large decrease was in hardware revenue, which decreased $93,000 or 27%. AsureForce revenue for the first quarter was $2.5 million a decrease of $97,000 or 3.7% from the $2.6 million reported in the first quarter of 2014. Recurring revenue as a percentage of overall revenue for the quarter was 79%, compared to 73% last quarter or 76% in the first quarter of 2014. Gross margin for the quarter was $4.7 million or 74%, down by $289,000 or 6% from the $5 million or 76% year-over-year and down $633,000 or 12% from the previous quarter gross margin of $5.3 million or 75%. EBITDA for the quarter was $970,000, excluding one-time items compared to the $1.3 million reported in the previous quarter and the $1.14 million in the first quarter of 2014. We incurred $283,000 in one-time items this quarter, which included $110,000 loss on the early termination of our Warwick, Rhode Island lease. Net loss, excluding one-time items for the first quarter was $0.03 per share, GAAP net loss per share amounted to $0.08 per share. The per share difference of $0.05 is due to the one-time items discussed above. Cash flow from operations for the quarter was $546,000. Capital expenditures were $658,000 for the quarter. We are maintaining our 2015 guidance and expect year-to-date revenue to be $30 million with EBITDA excluding one-time items of $5.6 million and net income per share excluding one-time items of $0.25. At this time, I would like to turn the discussion back to a Pat Goepel, our CEO, for closing comments and then we will open it up for questions. Thank you.

Thank you, Brad. And as we look forward, sales is encouraging. We feel like our pipeline is stronger. We feel that we have more people participating in sales. We have more visibility to bigger deals. This quarter, as we speak, we sold to Saint-Gobain, which is the largest industrial building manufacturer, as well as Fiserv, which is a data processing company and those were sales that have happened here in the second quarter. Visibility is strong. We feel that our sales model, particularly the hoteling and SmartView visibility is strong in a number of different contracts that we believe we will win. As far as backlog, our backlog is up. We will come up with a metric and really methodology next quarter. We feel that the large deals that we won last year, PSSI, which I was on-site last Monday, we believe is going well. They are a good partner and we see that they are going to implement more locations going forward. We will have revenue from those locations. And I think the backlog metric will be a good indicator, so you have good visibility to that revenue increase. As far as the client conference, we had our first ever global client conference in New York and London. That went very well. We’ve had people visit our top 20 clients in executive meetings and felt very good about those conversations and the opportunities going forward. We should see progress quickly in the second quarter. On the acquisition front, some of you have asked about acquisitions, we have nothing immanent. We are continuing to look opportunistically at acquisitions. We believe there are several companies in the space that will be attractive to us as we look forward. Couple of housekeeping items, on June 8, we will have our annual meeting. And then there was a 8-K, some of you have asked about insider buying. I have authorization to go from 5% to 10%. I’ve been blocked out mostly that time. Next week that opens up and I do plan on buying more and that’s all subject to market conditions and stock availability, et cetera. But no change in that plan, and I plan on being active. On a short, I do feel with Asure we are progressing nicely. I want us to show those results a little quicker and then I’m anxiously awaiting the growth rates that have to come from sales. I think we are retooled, we’ve a product focus, I’m excited about the direction, and now we got to grow. And I think that’s the moment the investors have been waiting for and I think we start growing here the second quarter and I feel good about the year upcoming. With that, I will turn it over to questions from the group.

Thank you. [Operator Instructions] Our first question comes from the line of Jeff Houston with Barrington Research. Your line is now open.

Hi, Pat and Brad. Thanks for taking my questions.

Hi, Jeff. Thank you.

Yeah, sure. So, first question is regarding the national sales executive team. It sounds like – are the 10 reps in this group new employees to Asure? And then also, it sounds like – you just [ph] correct it, they are going to be focusing on office hoteling for enterprise global type deals?

So, Jeff, first of all, thanks for the question. What we are going to do here with our enterprise sales group is we’ve carved up some of our group within our sales group of 34 and what we are doing is we have 10 people or 10 positions. Some were internally promoted and some – those were performers that have done well in the past. Some were recruited new and really their focus is on the share products whether it is time and labor conference room scheduling, and hoteling. What I would say though is there is particular emphasis on hoteling in all our products and particular emphasis now on the larger marketplace. We think that first quarter has gone really well in building pipeline, you know we are a little disappointed with the results, but we do have some visibility and to some successes in the second quarter and we think the program is taking off pretty well.

Great and shifting gears a bit, it seems like cash flow was very strong in the quarter, and it was mostly driven by changes in working capital, is that right and then can you just provide some color on that, should we expect that trend to continue for the rest of 2015?

I think cash will continue to be strong in the year. I think we are beneficiaries. We sold quite a bit at year-end and so accounts receivable. We are working through some of that and then on our inventory issue, we have changed kind of our supply chain and we think over time that it will pick us about 30 days. Brad, if you’d like to comment?

Yeah. I think traditionally our first quarter is our weakest quarter from cash and so we are very happy with this quarter. As I mentioned, we had spent $658,000 on CapEx that’s relatively large for us, but a lot of that goes to the straight-through processing, our transformation projects. We talked about as well as the combination of the offices in Boston. So, I feel good about the cash position and I think it will get better as the year goes on.

Great and then, certainly Pat you mentioned there were two, sounds like two big deals already assigned in the second quarter is Fiserv and I think I missed the second one…

Saint-Gobain.

Saint-Gobain.

And I can send you their information.

Great. And where those space deals or force deals or a combination.

Both of those were space deals and hoteling deals.

Okay great. And then last question for me is you mentioned the $250,000 impact for retooling, caused by hardware, can you provide some more color on that or what that entailed?

No, basically we changed our manufacturer process and ultimately we think we have better quality and we save money and we have better cash terms. In going through that supply chain there was about a 60 day difference in some of the delivery of hardware. We have sold some hardware in a quarter that normally we could deliver. We consciously when we made that change, you know we knew about the 60 days, but there was about $250,000 of unbilled revenue that was due to this supply chain. Long term, it’s a great move for us because it saves money, it’s better quality, better cash, better terms, but short term there was $250,000 in the quarter that will push into the second quarter.

Okay great, thank you.

Thank you. [Operator Instructions] And I am showing no further questions, I would like to turn the call back over to Pat Goepel for closing remarks.

First of all, I would like thank everybody for joining the call and your support of Asure. I think the first quarter was a quarter where we did a lot of work, but you know the results were so, so. That being said, I think a lot of the work will pay off and will pay off nicely in future quarters and I am a big improvement guy here and champion improvement in the company. I do believe that you will see better results, and then from an investor perspective, I will put my money where my mouth is and you should see some insider buying in the second quarter. Appreciate all your support and have a great day.

Ladies and gentlemen thank you for your participation in today’s conference. This concludes the presentation. Thank you and have a great day.