Pat Goepel - President and CEO Brad Wolfe - CFO Cheryl Trbula - Head, IR

Richard Baldry - ROTH Capital Partners Eric Martinuzzi - Lake Street Capital Markets Vincent Colicchio - Barrington Research Ryan MacDonald - Wunderlich Securities Nick Altmann - Northland Capital Markets

Good morning. Welcome to Asure Software's Fourth Quarter 2016 Earnings Conference Call. Joining us for today's call is Asure's CEO, Pat Goepel; CFO, Brad Wolfe; and Director of Human Resources, Cheryl Trbula. My name is Leanne 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 to provide the necessary cautions regarding the forward-looking statements made by management during today's call. Cheryl?

Thank you, Leanne. Good morning, everyone. Before we start, I'd 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 or guidance. 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 outcomes. You're 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. It will be made available for replay via a link available in the Investor Relation sections of the company's Web site at www.asuresoftware.com. After we've completed our review of the quarter, we'll 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. I'd like to welcome everyone to our fourth quarter and final year conference call. I want to thank you for all joining our call and appreciate your support whether you’re an employee, client, investor or a valued third-party resource. Before we start to get into the call, I did want you all to be made aware. We did send an earnings release out before the bell and we round to 1 decimal point with everything but net income per diluted share. For whatever reason, the first press release went out with one digit. So our final year results of $0.24 and $0.26 rounded to $0.20 and $0.30. There has since been a corrected earnings release. We’ve been working with NASDAQ and MarketWatch and if it hasn’t hit the wire, it will hit very, very quickly. But it says corrected on the press release and it was an unfortunate formula error but we want to make sure to draw your attention to that one. So it is a corrected release with a two-digit net income per diluted share. And in the absence of a doubt, I want to cover right away our net income for the quarter was $0.09 in both actual and pro forma. For the year, it was $0.24 in actual and $0.26 on pro forma. Now that we have that away, I want to talk about the fourth quarter, high level financial highlights. Q4 was a strong quarter for us highlighted by double-digit year-over-year growth in key financial metrics; total sales, revenue, gross profit, EBITDA and net income. We were very, very pleased. It felt like we had a very strong year. Fourth quarter and year guidance; revenue was just a little light at just out of the range by about $50,000. We did some year-end cleanup of AR in the Mangrove business and some of the mix of business we would have liked to seen a little stronger in the hardware sales. Suffice it to say though the EBITDA at $8 million which was right in the middle of the range and the $0.26 pro forma we felt were pretty strong. So all-in-all, a great year for us. I want to talk a little bit about Mangrove. We had the acquisition of Mangrove and this was a big acquisition for us. It got us in the Human Capital Management space. It allowed us to really create a new product category that uniquely links us right in the middle of an innovate, cutting-edge technology like facial recognition and motion sensors to help companies built their future, Human Capital Management and space needs. And that value proposition really will propel us forward for the next decade. So very, very pleased when we look back at 2016 that we were able to accomplish that. On top of this, we enhanced and uniformed our software platform, we expanded our sales resources. We now have 40 sales resources. We bolstered our balance sheet with the raise that we completed in December. Altogether, the important measures that we produced are much stronger, more capable and a more dynamic organization where we’re now really well positioned to capitalize on the $13 billion Human Capital marketplace as well as the Human Capital space marketplace. In less than a year when I think back at what the staff did and the employees, we’re able to realize cost synergies from the acquisition and we position ourselves to really not only utilize or realize cross-selling synergies but that will carry forward to '17 in a big way. This was reflected in our results in our '16 which were up across the board and met guidance, but also our consistent growth we’ve experienced in total bookings and cloud bookings. In fact, since the acquisition of Mangrove, we achieved two consecutive quarters now of 50% growth in Human Capital Management bookings. They are coming off small compares but what I’m excited about is you’ll see that growth continue in '17. Clearly, we’re encouraged by how quickly we not only got to integrated solutions after the acquisition with our introduction of Version 8 but were also quickly been able to capitalize and leverage some of the benefits of this important acquisition. Our client activity Q4 and 2016 was definitely a busy period for Asure. We were very fortunate to win some major wins including MetLife, Procter and Gamble which is going with us worldwide and I’m including – when I say worldwide, we’re including locations in Poland, Switzerland, China, so excited about opening up a worldwide organization such as Procter and Gamble and that will have benefits for other big clients. Allstate and Rogers Communications to name a few. In addition to finalizing the transition of some of our on-premise clients to the cloud, our sales team led by Eyal Goldstein who was appointed Chief Revenue Officer in December continues to rapidly expand our cross-selling opportunities and pipeline for new business. I’m very, very happy with Eyal and the team. And if we’re to quantify the growth in cross-selling opportunities over Q3, we’d see another 46% increase. In addition, our sales pipeline remains strong, continues to grow. Looking at the growth over the final quarter here of 2016, our pipeline increased by more than 32% which reaffirms the progress we made at selling our entire platform of solutions. As I look forward to '17, our 40 sales people will be selling the whole solution not just individual products which will position the company to bigger and bigger sales. Before I go into further detail about our operational progress and our outlook for '17, I’d like to turn the call over to our CFO, Brad Wolfe, who will walk us through the financial details of the quarter and the full year. Brad?

Thank you, Pat, and good morning, everyone. Turning to our financial results for the quarter and fiscal year ended December 31, 2016, revenue for the fourth quarter of 2016 was up 44% to $9.7 million from $6.8 million in the same quarter last year. The improvement in revenue was driven by increases in cloud, space, on-premises software and professional services revenue. For the full year, our revenue increased 32% or $8.6 million to 35.5 million from 26.9 million reported in 2015. Of this increase, Mangrove Software which was acquired in March of 2016 contributed 6.9 million. For 2016, cloud revenue increased $7 million or 51% over 2015; space revenue increased 585,000 or 133%; on-premises software license revenue increased 1,362,000 or 159% and professional services revenue increased 1,289,000 or 42%. This is offset by decreases in maintenance support revenue of 1,488,000 or 25% as compared to 2015. As I talked about in our last call, we continue to deemphasize maintenance support revenue as we move toward more cloud revenue. On a pro forma basis, including the results of Mangrove as if the acquisition was completed on January 1, 2015, our total revenue for Q4 increased 10% to 9.7 million from 8.8 million in the same year-ago quarter and increased 7% for the full year to 37.7 million from 35.1 million in 2015. Our recurring revenue as a percentage of total revenue was 73% compared to 74% in the prior quarter and 76% in Q4 of last year. The fiscal 2016 recurring revenue as a percent of total revenue was 74% as compared to 75% in 2015. Looking at our revenue by source, revenue for our workspace management solution Asure space in the fourth quarter totaled 4.6 million which was up 17% from the 3.9 million reported in the same quarter last year. Our on-premises software revenue increased to 516,000 or 1,481%. Cloud revenue increased 176,000 or 10%. And our professional services revenue increased 192,000 or 37% over Q4 of last year. Our hardware revenue stayed about the same in the quarter while maintenance support decreased 235,000 or 23%. For fiscal 2016, Asure space revenue was 17.2 million, an increase of 1.2 million or 7.6% from the 16 million last year. Cloud, on-premises software license revenue and professional services revenue were also up over 2015, offset by decreases in hardware and maintenance support revenue. Our cloud revenue increased 829,000 or 11%; professional services revenue increased 878,000 or 37% and on-premises software license revenue increased 484,000 or 241% over 2015. These increases were offset by a 4% decrease in hardware as well as a 22% decrease in maintenance support revenues, primarily caused by the movement of customers from our on-premises to on-demand and cloud-based solutions. In Q4, revenue for AsureForce, our workforce management solution, increased 2.3 million or 80% to $5.2 million from $2.9 million in the same quarter last year. This increase was primarily due to our acquisition of Mangrove which added 2.1 million of revenue in the period. Cloud, hardware and on-premises software license revenues all increased during the quarter, driven by 135% or 2.1 million increase in cloud revenue, a 136% or $223,000 increase in on-premises software license revenue and 104% or $306,000 increase in hardware revenue. These increases were partially offset by $136,000 or 40% decline in professional services revenue and 222,000 or 46% decrease in maintenance support revenue as compared to Q4 of last year. For fiscal 2016, AsureForce revenue was 18.3 million which was up 7.4 million or 68% from the 10.9 million reported in 2015. This increase was primarily due to our acquisition of Mangrove which contributed 6.9 million of the revenue in 2016. Cloud, on-premises software license, hardware and professional services revenue increased with the largest increase coming from cloud revenue of 6.1 million or 98% over 2015. On-premises software license revenue increased 879,000 or 134%, hardware revenue increased 582,000 or 44% and professional services revenue increased 410,000 or 60% over 2015. These increases were offset by a decrease in maintenance support revenue of 606,000 or 31% as compared to 2015, mainly due to the timing and size of contracts and renewals as well as our continued emphases on transitioning clients from on-premises to on-demand, cloud-based solutions. Our gross margin for the quarter of 2016 was 7.5 million or 77.5% of total revenue. This remains fairly consistent with the 7.4 million or 78.5% of total revenue reported in the prior quarter, but was up 60% from 4.7 million or 70% of total revenue compared to Q4 of last year. For the full year, our gross margin was 27.4 million or 77.2%, an improvement from the 19.6 million or 77.7% in 2015. Our EBITDA for the fourth quarter totaled 2.2 million compared to 2.3 million in the prior quarter and 599,000 in fourth quarter of 2015. We incurred 502,000 of one-time cost this quarter primarily in conjunction with our integration of Mangrove and the acquisitions we made in early January of this year. For fiscal 2016, our EBITDA totaled 7.5 million which was up 101% as compared to 3.7 million in 2015. Our EBITDA results include a 2.6 million of one-time items comprised mainly of one-time acquisition and integration-related costs. Our GAAP net income for the fourth quarter of 2016 totaled 133,000 or $0.02 per share. This was an improvement from a net loss of 796,000 or $0.13 per share in Q4 of last year. For the full year, our GAAP net loss totaled 972,000 or $0.15 per share which was an improvement from our GAAP net loss of 1.8 million or $0.28 per share in 2015. Excluding one-time items, our net income for the fourth quarter of 2016 totaled 635,000 or $0.09 per share compared to a net loss of 499,000 or negative $0.08 per share in the same year-ago period. For the full year, our net income, excluding one-time items, totaled 1.6 million or $0.24 per share compared to a net loss of 1 million or negative $0.17 per share in the same year-ago period. On a pro forma basis, including the results of Mangrove, our net income per share, excluding one-time charges, for the quarter totaled $0.09 compared to a net loss per share, excluding one-time items, of negative $0.15 per share in the same year-ago period. For fiscal 2016, our pro forma earnings per share, excluding one-time charges, totaled $0.26 as compared to a net loss of $0.39 in 2015. And finally we’re introducing a new metric, non-GAAP net income per share which is defined as GAAP net income excluding stock-based compensation, one-time charges and amortization of indefinite life intangibles arising from acquisitions. We believe this metric more accurately portrays the operations of our business and provides a clear picture of our financial performance. So for the fourth quarter of 2016, our non-GAAP net income totaled $0.20 compared to a non-GAAP net income per share of $0.01 in Q4 of last year. On a pro forma basis, including the results of Mangrove Software, our non-GAAP net income per share totaled $0.20 which was an improvement from the non-GAAP net loss per share of $0.04 in the same year-ago quarter. For fiscal 2016, our non-GAAP net income per share totaled $0.68 compared to non-GAAP net income per share of $0.27 in fiscal 2015. On a pro forma basis, including the results of Mangrove Software as if the acquisition was completed on January 1, 2015, our non-GAAP net income per share totaled $0.73, an improvement from non-GAAP net income per share of $0.17 in fiscal 2015. You’ll note in today’s earnings release which was posted on our Web site further details including a reconciliation of our GAAP net earnings to earnings before interest, taxes, depreciation, amortization and stock-compensation expense, EBITDA and EBITDA excluding one-time items. Cash flow used in operations for the year was 2 million as compared to a 3.4 million of cash flow provided by operations in 2015. Including our cash flow used in operations was 2.6 million in acquisition and integration costs including severance, professional fees and other one-time charges driven by our acquisition and integration of Mangrove and our recent acquisitions which we executed in Q1 of 2017. Turning to backlog, which define as sales bookings that have not yet turned into revenue or deferred revenue including both repetitive and non-repetitive products lines, for repetitive products, one year's value is included in backlog. At quarter-end, our backlog decreased 36% to 2.5 million from 3.9 million at the end of the prior quarter. Somewhere to Q3, we experienced a strong conversion of backlog to revenue from our enterprise clients during the fourth quarter. The movement of enterprise clients through the implementation anticipated to lead the greater reported revenue in future periods. As the cycle time from creation to revenue accelerates, we expect this process into revenue to increase. Today, we also took steps to simplify and clean up our balance sheet and capital structure by paying off $6.2 million seller note from March of 2016 and increasing our term loan with Wells Fargo by 5 million. These actions have consolidated our debt with a single and longstanding partner and at a very attractive interest rate while decreasing our leverage by $1.2 million. In addition, the investment we’re making both in infrastructure and process is increasing both leverage and scalability in our business which enables us to achieve higher throughput and lower operational costs. From this enhanced operational position, we can then ramp up our investments and our product portfolio on sales and marketing initiatives to further accelerate our overall expansion. Based on the results for the quarter and the year as well as with our backlog conversion process today and how our pipeline is shaping up, we reaffirm our guidance for 2017. As a reminder, we expect the revenue for the full year to be between $45 million and $47 million which represents an increase of 26.6% to 32.2% compared to 2016. For EBITDA, excluding one-time charges, we expect this number to range between 9 million and 9.5 million which is a 20.7 to 27.4 increase over the prior year. We also expect our net income per share, excluding one-time items, to be between $0.22 to $0.28. And finally, we’re introducing non-GAAP net income per share guidance with a range of $0.60 to $0.75 which is up from $0.68 in 2016. This concludes my prepared remarks. I’d like to return the call back over to Pat to discuss our operational highlights as well as our outlook for the rest of the year. Pat?

Thanks, Brad. It’s clear I think from Brad’s reading of the results that we’ve done a nice job this year and Asure had a very strong year. If you look at any of the key metrics you can see we made really nice progress this year and very, very happy with the transformative acquisition of Mangrove. Our consistent ability to deliver results and execute on our sales strategy helped us drive a doubling of the stock in 2016 as far as the price goes and we’re thrilled about that. We’re also thrilled to partner with Roth Capital on our $14.4 million equity raise that we just were at the Roth conference, I was there this past week and a lot of the real high quality investor that went and had faith of us in December were at that conference and very, very pleased with the quality of institutions that participated. And on that amount, that 14.4, I just want to remind everyone that 10% came from management and I think that speaks volume of the confidence that we have in the business going forward. David Sandberg, the Chairman, myself, we participated and again have high confidence in the business going forward. Finally, the balance sheet in December was bolstered and we were able to close on three strategic tuck-in acquisitions. Two of these acquisitions; PSNW and CPI which are our two regional service bureaus that resell our human capital management products, very, very successful acquisitions for us. They’ll close and we’ll end up delivering almost and pay them back with a four-year cash flow, maybe even three years. They’ve been integrated seamlessly into our business, very pleased with the results and we will file an 8-KA today that explains the economics of that in more detail, so look for that. PMSI which is the leading human capital management service company that expanded our solution service implementation capabilities as we look forward to grow that business this year and beyond and that will be in the 8-KA as well. These acquisitions allow us to supplement our growth strategy, allow us to sell more software, more strategic cross-selling. They have rich technology and product platform and a sales team growth. They’re indicative I think of a broader financially sound M&A approach and some of you have asked around acquisitions and I think the likelihood to have these tuck-in acquisitions that already use our platform will be very high in 2017. I’m pleased to report that the acquisitions are fully integrated now, they’re performing nicely and they’re going to drive strong EBITDA and cash flow into 2017. Sales strategy, a couple of comments. One, we’ve now gone to 40 sales people. You might have seen some announcements first of all in December around Eyal. We also hired Brad Burrows from ADP. He’s going to be our client success manager and really focused on cross selling some of our products into a solution. And in our 7,500 clients we want to continue to grow our PEPY. And if we sold an individual product, it was about $100 per employee per year. We think with the four products now, it’s almost $500 per employee per year. Some of that’s still aspirational as we put the product together but we do feel that we have a common user interface and expanded sales team, a lot of training coming off the year beginning event and I’m very, very excited to see progress of that team. In addition to the key sales hires we made, we’re also building out our channel strategy. And I think you’ll see us continue to imbed some of our products in large software customers or companies. We think that there is pent-up demand for the human capital space relationships that we think we can leverage other channels to help us grow. We also think that there is synergies between the employee-rich data of human capital management, in the facilities-rich data of workspace management and we’re going to continue to drive relationships. And our global win of Procter & Gamble was a result of our relationship with Jones Lang LaSalle and I think you’ll see more and more of those type of relationships. Some housekeeping items I want to talk about. First of all, we plan on filing an 8-K today seeking approval to increase the number of authorized shares of common stock. We believe this is in line with our corporate readiness plan for future acquisitions because it provides us with the flexibility and wherewithal to take advantage of opportunities as they arise. In addition, increase in number of authorized shares will allow us to continue providing equity incentives to our employees. Another housekeeping item that Brad mentioned, we paid off the 6.2 seller note of Mangrove. We had some charge-backs against the previous owners which allowed us to pay the note off and have a $200,000 discount. We have a solid understanding of the platform and comfort with the business after this year. We also think this cleans up the balance sheet and the debt structure and allows us to consolidate more with Wells Fargo, which we have a great relationship with. And speaking of Wells Fargo, as Brad mentioned, the $5 million additional interest is at the same rate that we have currently outstanding with them and that just consolidates a lot of our debt right into Wells, which at a 5.5% rate is a good rate given this environment. So our balance sheet cap structure is simpler, cleaner and we think that’s very prudent. Finally, as Brad mentioned, I’m confident that we reaffirmed guidance. Our pipeline remains robust. We have signs of continued organic growth. Our refocused sales effort is capitalizing quickly. I’m very happy with the leadership team that we put together and I think we’ve upgraded in that area. Taking all this together, we believe we’re in a good position to achieve the guidance for the full year. And then on the acquisitions, I think our tuck-in acquisition activity is high right now and I think the likelihood of us increasing a couple of tuck-in acquisitions is high in '17. Finally, in closing, we’re encouraged by the progress of the company, expect a strong '17. We’ll continue to invest in our sales and marketing teams as well as our channel partnerships in our key growth markets. And that coupled with the acquisitions will help us scale further. We believe the execution of these initiatives will enable us to achieve our goal of surpassing a $100 million in annual revenue. And with that, we’re open taking any calls on questions. So, operator, if you could provide the instructions, we’ll be happy to answer questions.

Thank you. [Operator Instructions]. Our first question comes from Richard Baldry with ROTH Capital. Your line is open.

Hi. Thanks. And congrats on a big year. Can you maybe talk about the number of heads you had in sales maybe a year ago so we have a comparison to that 40 number? And then maybe sort of the average tenure in that group and their productivity in '16 and what would you expect in '17?

Yes, Rich, I think the average number, I think we shopped for 35. We probably ran about 33, so we’re up a little over 20%, so 33 to 40. Now average productivity is probably about two years or so. We have a lot of new employees but we have I think about 24 that are tenured and are really delivering results. Some of the next wave here will deliver more and more and then the third wave are just hired. So I think our core 24 we feel real strong about. We have another 10 or so that were hired in the past year that are starting to get up the curve and have half productivity or so. And then we have about seven or so new ones that will deliver nicely as '17 evolves. So that’s the sale strategy and kind of where we are. Now one change we did make in January is they’re selling all products, so they sell in platform, which we think is going to increase. Our cross-selling increased the value that they sell. And they’re incented to sell core products as well as all our products.

And will that group also be responsible for cross-selling to existing customers or over time will you build a group that’s focused on cross-selling and lead the hunting for new logos?

All of our sales reps have some cross-sell opportunities but we do have a group under Brad Burrows that is dedicated to cross-selling only and that has about 12 sales reps. So we have 12 sales reps dedicated but even our new hunters, if you will, have a cross-selling component, it’s just smaller because we want them to have some opportunity to understand the client experience and be able to cross-sell in addition to going after new prospects.

And then talk about what you think a good organic growth rate could be for 2017 and then maybe longer term, how many heads do you think you’d add to that 40 on a typical annual basis heading out?

Implicit in our guidance I think with the acquisitions is about a 10% growth. We finished the year right about that amount or so. I’d like to go up 1% or 2% per quarter. So in other words we go from 10 to 11 or 12; 12 to 13 or 14 and keep showing progress. Sometimes that’s a little lumpy around sales with big deals from the year before or year after. But that’s kind of the goal. The trend line should be to go up. And I’d like us to get to the 20% growth. Historically, we’ve been running a little bit over EBITDA with one-time, so a little bit over 20%. What we’re trying to do is guarantee a 20% and reinvest in the sales until we get 20% growth rate. This year was 20% add-on in sales people. We’re going to look to get more productivity increases with the cross-selling but we’re also going to evaluate on how we keep growing, because we think the marketplace is huge and we think that there’s no shortage of opportunities to invest.

Last thing would be, you’re having some success migrating people off of the on-premise on to the cloud, do you internally sort of have a timeframe for how quickly you’d like to get that done and all this cost that you can take out once that’s completed either on a platform side, support side, et cetera? Thanks.

When we look at the on-premise we think we can redeploy people. We think we can take some cost out. But more importantly redeploy some of our engineers support to our growth as well as to some of our development of future products. So we do think that there’s efficiencies to be gained. We are down to about a little over – just a little over $3 million in maintenance revenue and we’ll continue to drive that. I’d like to see that finish up probably in a three-year timeframe. What I don’t want to do is I don’t want to force the migration but I want to partner with our clients to make the migration opportunity in the frame and in the business light. Sometimes it requires a strategic change and we sell to what I’ll call three functional heads of the CIO or the technology executive, the CFO, the financial executive and the VP of HR. And whoever leaves that initiative to the cloud, we will continue to be very active and partner with them to ultimately go to the cloud. So we’d like to see that ramp up within the next three years.

Thanks.

Our next question comes from Eric Martinuzzi with Lake Street. Your line is open.

Thanks. Congrats on the 2016 as well as the new acquisitions. My first question has to do with those acquisitions. Just wondering from a modeling perspective when you guys got into HCM, you kind of took on a new seasonality maybe is the best way to describe it, in other words kind of a Q4 – much larger Q4 than I guess maybe historical trends have been. You talked about an incremental $5.5 million to $7.5 million of revenue from the acquisitions, but how does that layer on to the legacy business?

Well, I think, Eric, we’re going to file some 8-KAs today that I think you’ll have greater insight in the three acquisitions in the numbers. So I think that will provide a lot of color on the acquisition revenue. And then what we have modeled primarily is about a 10% growth factor if you kind of layer both in. We think we have the opportunity to beat that number both organically. I would say our acquisitions are performing strong, so we’re pretty pleased with January and February results in getting out of the gate. You’re right. There is some seasonality depending on W2s and adjustment runs and some other stuff within the business. We’re still learning that as this was our first year with Mangrove. But by all counts, I think we’re very, very pleased with how the business is progressing and our ownership and the client feedback as well as the employee feedback.

Maybe if I can just take it down to Q1 here, you just finished Q4 with 9.7 million. Do you view that number going up sequentially or down sequentially in Q1?

Q1 usually is our softest quarter. We are going to provide – we’ll break out quarterly guidance in the next earnings call. I would say on the Q1 --

With the three acquisitions coming in, revenue will more likely be up. I can give you some more guidance on sort of the seasonality as we get more expertise on that. But we would expect revenue for the first quarter to be up compared to fourth quarter.

Yes, and I think our guidance was 45 to 47. I don’t think you can multiply it by four and give the guidance but we’ll definitely be up from the results that we have here.

Okay. And then you’ve obviously taken on some new employees here. Do you have insight on what the operating expense number looks like for the first quarter?

Well, I want to remind people that the first quarter, we take all of our employer taxes upfront so [indiscernible] et cetera. So the first quarter is a high cost quarter for us. Typically, we run at a loss. I think we feel that our net income per – we’re not going to give specific guidance but I would think that breakeven would be a good starting point. And clearly as those taxes go off when they hit limits, we’ll drive a lot of results from there.

Okay, that’s helpful. And then a couple of housekeeping questions here. For the share count, where did the share count finish up at year-end?

8.6 million is the share count.

Okay. And then the transaction close date for the acquisitions, can you give us a picture of kind of pro forma what the cash and the debt looks like sort of maybe a snapshot as of end of January or into February?

The transactions were all closed on January 3, so as far as the – they’ll show up in the first quarter results. And as Pat said, I think in the 8-KA you’ll get the audited statements. We revealed in the 8-K that we filed right after the acquisitions what the terms were for those.

Okay. Thanks for taking my questions.

Thanks, Eric.

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

Yes, Pat, I’m curious. What organic growth rate would you need to hit to hit the high end of your earnings forecast range for '17?

Yes, I think the midpoint is right around 10%, so we’d be in that 46, 47. If we get higher organic growth, we should be above that.

Okay. And then could you help us in terms of – maybe this is for Brad, what gross margin range would you expect for '17?

Gross margin has been very consistent for this 74% to 78% range. I think probably the 76%, 77% is what we’re expecting. The businesses that we acquired have very strong gross margins, especially on the SPOs [ph] we rolled up. So I don’t see any change in that as time goes on. I also think we continue to invest back in the business. Pat mentioned tuck-in acquisitions and we’re really focused on growth. We’d like to hold our EBITDA at 20% but really not trying to focus on getting EBITDA higher, we’re focused on growth.

Okay. And Pat, could you give us more color in terms of cross-selling where you’re seeing the greatest synergies? Has that changed from the prior quarter?

Payroll and time is clearly – we’re off to a really good start in that area. HR and space is kind of nice. Payroll and benefits is the other area. Those three areas I think we’re seeing – we’re seeing some people buying whole kind of platform solution and the key for us was to have a Version 8 out. And Version 8 now allows us to have the same common user interface, same single sign on, et cetera. So we’re happy with the cross-selling activity and we think that will lead to results.

Okay. Thanks for answering my questions, Pat.

Thanks, Vince.

[Operator Instructions]. Our next question comes from Ryan MacDonald with Wunderlich Securities. Your line is open.

Hi, guys. Can you talk about – it looked like in the quarter you had about additional 12 customers come and adopt Version 8. Can you talk about sort of the mix there between existing customers and new customers? And now obviously being late into Q1 how you started to see demand evolve for Version 8 into start 2017?

Thank you, Ryan. I think we are probably about eight and four, eight new with four cross sell of the 12. I think cross sell is getting introduced quite a bit right now and we’ll continue to grow nicely. And then new employees, typically the first quarter is probably the slowest quarter; second, third and fourth will be higher activity. But suffice it to say we’re very pleased with the pipeline growth. And I think you’ll see us grow pipeline all year. And now we got to close the amount of specific quarters and do well. So that’s been our focus. We’ve trained people. We had an all-sales training event here in January. We have a customer conference in May where we’re going to really introduce to all our customers the cross-sell component and have people in Austin. So pretty excited about what '17 will bring us in cross-sell.

Got it. And when you look at the transition of moving on-prem customers over to the cloud, approximately what percent of the existing base is still on-prem and how aggressive do you expect to be to continue to get those customers over to the cloud this year?

From a revenue perspective, we have about $3 million or so in revenue on maintenance revenue. We’d like to continue to be opportunistic. What we’ll do is we’ll raise prices a little bit more on the maintenance folks. We’ll also offer more and more development to the cloud folks. And the combination of raising prices but also enticing and giving rewards to the people that go to the cloud we think over the next three years we’ll continue to have advantage. What I have found is you don’t want to force them quite as much on a specific date because what you want to do is you want to educate and be there when the client is ready. So over the next three years we want to see the completion of that but we also want to do it in such a way that we’re partnering with them on the right time and the right place to migrate, and that’s been our strategy.

Got it. And then just lastly from me, on the M&A strategy, are you looking for any particular areas of focus in terms of additional technology to expand sort of the breadth of the platform or is it more similar – looking for similar opportunities to the acquisitions you already closed at the beginning of the year?

I think you’ll see – first of all, we have a strong bias right now to first of all anybody that is on our platform and they’re running out a separate business, so they have a technology license. We will continue to support them on that technology license. But if we can get them into the family and be able to buy them, they’re very accretive acquisitions and we want to continue to drive that result. I wouldn’t think we’re going to get too much wider over the next year or two. We feel like we have a very strong solutions set and we got to sell into that set. What I would look at is we will look at some core acquisitions to increase our base and we’ll look for areas to expand the platform acquisitions. And that will be kind of the area that we’re going to focus on because if we can get scale, our thesis is we’re already at 20% EBITDA margins and when we double scale over time that will increase and then the organic growth with the acquisition growth will allow us to really break through from being a micro-cap, small-cap. We’d like to get into mid-cap land eventually. We think there’s plenty of market opportunity to do that and we think we have a core solution set that’s very attractive to the market, so we’ll continue to build on that.

Great. Thank you very much.

Our next question comes from Mike Latimore with Northland Capital Markets. Your line is open.

Hi, guys. This is Nick Altmann on for Mike. Just to clarify, are all 40 sales people currently selling the entire suite or is that by year-end?

No, they’re currently trained and introducing it. They might have help via a system consultant or a systems expert in an area but they’re all selling the entire suite of services.

Okay. And then you guys mentioned the pipeline increased 32% sequentially. What percent of the pipeline is cloud now?

Cloud is really almost all of it. There may be a 2% that’s not cloud but really that’s what we’re selling. Where there’s a legacy on-premise or if they want to have another location or something like that, we might give them the right to do that. But we’re not going out after on-premise software, so it’s really almost 100% engagement at this point.

Okay. Thanks, guys.

Thank you, Nick, and appreciate your support as well. I want to thank everybody for joining today’s call. It was a long one but we had a lot to celebrate over the past year and we had to unpack a lot of information that you’re going to receive today via 8-Ks and 8-KAs. So I especially want to thank the employees, partners, investors for their continued support. Really just thrilled with the interest in Asure at this point in time. I think people see what we’re building and I think frankly people are pretty excited about what we’re building into '17. I think '16 was a transformative year and '17 I think is the year that we really pound the table. And so I’m looking forward to the other earnings calls with '17. I want to thank everybody for their support and I appreciate your time today.

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