Good day, ladies and gentlemen and welcome to Asure Software Corporate 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 Tamra and I’ll 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, Tamra, and welcome everyone to Asure Software’s conference call. 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. 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. It will be made available for replay via links available in the investor relation sections of the company’s website at www.asuresoftware.com. After we’ve 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 welcome everyone. We’d like to thank everyone for participating in our first quarter 2016 earnings call. And the first quarter was an eventful quarter led by the headline news that we acquired Mangrove Software. And what the Mangrove acquisition does for us we’ll feel for years to come. It puts us in the covenant human capital management space and we’re excited about this multibillion-dollar market opportunity and being in the Space. What it does within Asure is it gives us the opportunity to grow our current employee spend. Today we have markets and the scheduling of people and the scheduling of Space and now really we have the opportunity to schedule and produce and provide services through the entire lifecycle of an employee, whether its hire to retire or womb the two if you will, we’re able to provide services for the employee and the company all throughout the process. What this does is per employee spend on some of our customers today are about $120 per employee per year. This takes us to the $500 per employee per year, so we have a huge cross sell component, an opportunity we go overnight to 7,500 client and we have opportunities to provide our services and software to delight our clients. On the revenue side, the cost synergy of the Mangrove acquisition, we have a real chance at $4 million annualized savings. As we look into next year, we have a good opportunity to get about $3 million across synergies this year. So as the public company that’s looking to grow and grow size, this immediately puts us into the next level of size. As long-term investors that have followed us, they’ve encouraged us to grow, we’ve stated that we're going to do an acquisition in the…

Thank you, Pat and good morning everyone. I’ll take a few minutes to go over the first quarter of financial highlights and then we’ll be happy to address any questions during the Q&A period. But first, I’d like to spend a couple of minutes talking about our recent acquisition of the capital stock of Mangrove Software in late March. Mangrove is a leading cloud SaaS provider of human capital management or HCM applications. Mangrove also engaged in the payroll processing business. The company’s solutions are uniquely designed to help companies recruit, manage, pay and analyze our workforces more effectively. The aggregate consideration for the Mangrove shares, we acquired consisted of $12 million in cash, a portion of which was used to pay certainly obligations of Mangrove and a $6 million secured subordinated promissory note, which is subject to adjusted as provided in our stock purchase agreement. We funded the cash payment with proceeds from our credit agreement with Wells Fargo. And we believe prior to our acquisition of Mangrove Software’s capital stock, we acquired all the assets of Mangrove COBRAsource, a Benefit Administration service business, which was at the time a wholly-owned subsidiary of Mangrove. The aggregate consideration for these assets was roughly $1 million which Mangrove COBRAsource applied to payout certain loan balances before transferring those assets to us. Turning to our financial results for the quarter ended March 31, 2016. As Pat mentioned cloud bookings in the quarter increased by 69% from the first quarter of 2015, driven by migration wins from Boy Scouts of America, First National Bank, Detroit Medical Center and Bentley University. Revenue for the first quarter was up 6% to $6.7 million from $6.3 million in the first quarter of last year- in the same quarter last year. The increase in revenue was driven…

Thanks, Brad. So on the Mangrove acquisition and we’ve largely began the process of integrating the two companies. We were thoughtful about our acquisition in due diligence, we set the stage of moves that we want to make and between this quarter – the first quarter and the second quarter we’ going to largely integrate the acquisition of Mangrove. We’ve have some one-time cost but as we move past that we’re going to better leverage the cost structures we scale our business. Some items that we’re working through right now, we’re going to have our first ever client conference that will be next week in Tampa, we’re excited about that opportunity to present the new Asure to some of our key and selective client bases as a result of the Mangrove acquisition. From a product perspective we have any integrated product with the Mangrove acquisition coming out here, July 1st. We’re going to present that at the user conference to get their final feedback and in July 1st in the third quarter we’ll have a product launch of the new product. And finally partnership opportunities have been huge and people have looked to partner with us as a result of the acquisition and we’re working through some really nice opportunities as a result of the acquisition. As far as synergies I mentioned the $3 million in synergies largely we have planned those synergies and we’ll execute on them throughout the year the second quarter will mostly be done on the cost side and then we’ll have some clean up through the rest of the year. As far as the revenue pipeline coming out with the new product we’re starting to have conversations. Conversations are very, very encouraging and I think we’ll see those to the second half of the year…

[Operator Instructions] And our first question comes from the line of Jeff Houston with Northland Securities. Your line is now open.

Hey, Brad, thanks for taking my question.

Yes.

The first question here is looking at the backlog it sort of makes my percentage was right, though, as we go through 2016, should we expect it to decline sequentially like it did in the first quarter or will – do you expect new bookings to slow that or just about the backlog as we go through the year?

No, I think on the backlog we see – we’ve had the large install, we think the backlog will go up because a lot of our seasonal components to backlog is - will be January especially with the ACM backlog. But inspires us making progress, I think we’re making some really good progress in the backlog and our large sale. Sales opportunities especially the international sales, we had Morgan Stanley, as well as some other sales in ‘15 and we’re really work our way through them. PSSI obviously has our large sale. So we will win more business and that will be at the backlog. I think as we win business though it will be watch, the eye towards implementation is already in the cycle. And because we’ve now proven that we can install these big deals, the next stage of the process will go much easier. So I anticipate, backlog trending up, but not at the rate that it has been.

Got it. And looking at the strong cloud bookings in the quarter how do you break that up between the three different product areas. Just looking at the revenue, it looks like revenue in Force was the strongest in the quarter. Does that kind of mimic what was going on with the mix in the cloud bookings?

The bookings were probably slightly, I don't have that number for you Jeff, but the bookings were slightly probably driven a little bit more in the Space side. What I would say the poor side under revenue was very strong because of the implementation of PSSI project. But maybe slightly more bookings in the Space side than revenue but I was happy with the revenue in Force and really happy with the conversations that are taking place especially since the Mangrove acquisition.

Got it. That’s helpful. And this sounds like you’re also making some great progress in converting your on-premise clients over to the cloud versions. Can you update us on how you’re encouraging them to make the move? Or is it just something naturally that's happening as the overall trend will be in SaaS?

Yeah, no, it’s part of the overall term we’re going to go faster and faster in converting our base, their clients are ready for it. Two or three years ago, they weren’t quite ready for it or they heard about the cloud, but it wasn’t for them. Now they’re coming and saying, hey we welcome those kind of conversations. So you know I’d see over the next couple of years that we’ll continue to drive those conversations. I think for us we've organized it in such a way where the clients expect to have those conversations, want to have those conversations and they’re almost scheduling it out as opposed to hearing “sales pitch”. So we feel really good about where we are and the progress we made and we think internally we’re executing pretty well, we’ll continue to execute on cloud migrations.

Great. And last question for me is looking at Mangrove, could you provide some color on who they compete with most often and the payroll Space and Benefit Administration and some of their other products?

Yeah, today, they’re in the midmarket and they will compete against an ADP obviously. On the low-end of the ultimate – although ultimate is a little bit higher end at today's marketplace. They will also compete with the Paycoms or the Paylocity. They really have a fully functional product which was the reason for the acquisition. We’re excited about the human capital management side of this. We think we can bring some technology to this marketplace around the facial recognition in the sensors that we have. And we think we can really bring that mobile and to worker, we think we can bring some technology to that company to help track productivity, keep the employees longer and really have an integrated version here in this midmarket. We also have some entry points that we feel like in the larger marketplace that we can take advantage in talking with our joint customers. Over the next couple of quarters, I think you will see us come out with some solutions that will be laser focused in those areas on the large end of the enterprise space. But you know I’m very, very pleased with how the integration is going and you know we bought a company that we really believe has very, very strong potential and we’re going to come out with some products here very quickly to take advantage of that. And the client conference next week will give us another feedback loop and talking to clients. We’re very encouraged that they want what we have and down so now this kind of our solution set is we believe one-of-a-kind. So we’ll compete with the traditional payroll providers, we’ll compete with the wage works and the and benefit providers. But we think we have a unique solution and then process solution and we think we have a value proposition that will be targeted to very specific customer. And if we do our job right, some of that competition goes away.

Got it. That’s helpful. Thank you.

[Operator Instructions] And our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is now open.

Yeah, Pat, I realize you didn’t provide guidance for the first quarter. I’m curious how the quarter performed on revenue and profitability versus your internal plan?

Yeah, I think you know really what I would say on the internal plan we feel really good about, it's really on the – right on the internal plan for us. I do think the one-time costs were a little bit higher in the first quarter and that’s a result of the acquisition taking a little more cost than we had planned. That being said we pulled some of the synergies up, so we feel that we’re in track on the second quarter and especially the third quarter for having an integrated acquisition. I think one of the nice things about the Mangrove acquisition is we were able to get in working with Rich and Paul and early in the process, so we’re able to combine the companies that are far faster pace than we initially planned. That added some one-time cost by the same token throughout the year, I think we’re right on target. And level of conversation is around the product and what we’re trying to do in the cross-sell opportunities, you know I think is why we’re reaffirming our guidance and feel strong about that prospect at least today in May and feeling the opportunities are there. That being said whenever you acquire a company that is big relatively speaking to our financials. We have to plan out through the quarter, the second quarter and make sure that what we think we have we have and we see no reason, why we don't. So we’re very, very positive so far.

The sales pipeline both increased - increased for both Force and Space in the quarter?

Yeah, pipelines are pretty strong and are up in the quarter. I think the interest level is high since the acquisition and the cross-sell opportunities you know, I mentioned the $20 per employee per year to over $500 per employee per year, we’re going to get organized and come out with the products around that integrated focus in the third quarter. So you will see the pipeline swell and I do think we have to execute and the 69% was a great execution point in the first quarter. I think the second quarter you'll see good execution, the third and fourth quarter I think will be particularly strong as we launch the enterprise product.

And Brad, one for you, I missed, I had a tough connection, how did Space perform in the quarter and what were the drivers?

Space was slightly down to $3.7 million from $3.8 million, but on the cloud we increased 196,000 or 11% and hardware revenue increased 90,000 or 37% over the same quarter last year.

Okay. Thanks guys. I’ll go back in the queue.

[Operator Instructions] And I’m showing a question from the line of Michael Chadwick [ph]. Your line is now open.

Thank you. Hey, I just had a question regarding the projections around the cost synergies. I jumped in the call maybe five minutes after the start, so I may have missed something and I apologize. But can you talk a little about the $3 million you're looking to sort of tweak out of this in terms of – versus the run rate, that’s a very high percentage. And then you’re I think forecasting on the $4 million perhaps next year. Sounds very positive, but I’d just like to get a little more color on this if possible. Thinks.

Yeah, I mean, I think what the synergy we’re talking about are really cost savings and they’re coming from Asure and Mangrove. We also though plan to ramp up our growth, so really something its redeployment. So we’re going to take out all that expense, but then we plan on hiring more sales people and really focusing on growth. So not all that will flow through to the bottom line but we’re sort of repositioning the company toward more growth. I think at least on demand growth side by having a much more robust sales force and a lot more cross sell opportunities. But Pat, you’d like to chime in.

Yeah and then Mike just we’re following kind of the same play book we did on our other acquisitions where we’re going to take G&A hosting, we’re going to combine our hosting facilities, our IT facilities. We feel that that’s a target rich environment for us. What we’ll also do is just the G&A in general will be able to and have already in most cases taking some cost out. And then as far as repositioning the growth, we do see this as a cross-sell market opportunity. The HCM market as you know is broad and big and we feel that we have opportunities to really go after the marketplace and our growth opportunities in that fashion. We also see that there were some other vendor costs take out, where services that we had or Mangrove had that now we have those products. We can eliminate some partnership costs that were in the P&L. So I think broad strokes you'll see the $4 million number. You’ll use IT savings of 25%, G&A you’ll see almost 40%. And then you’ll see some partnership and other cost redundancies for the remaining piece. And then as Brad said we’ll take those cost out at the same point in time we’re investing in some product resources and some sales resources to capture the opportunity. And from where I sit today, our pro forma was 8.9 in the first quarter, we’re forecasting 37.5 and 38.5 and we feel really good about making those numbers and then positioning ’17 to really be an organic growth company with tuck-in acquisitions. One of the other things that we feel is is we do have some licensing agreements that we feel could be right for either some cost reduction or some acquisition. And we think we have some opportunities in those areas as well. But some of that is you know early days, we’re in the – we’re 50 days or so into an acquisition. So we’re busy plugging away on some of these cost synergies and really repositioning the product.

All right. That’s very helpful. Thanks.

Thank you. And I’m showing no further questions at this time. I would like to turn the conference back over to Mr. Pat Goepel for closing remarks.

Well, we appreciate everybody joining the call today. We’re very, very excited about the Mangrove acquisition. We’re very excited about direction of the company. Feel like we have some momentum first quarter. The revenue, we have revenue growth, maybe not as much as we would like, but certainly a good solid start. We feel that the acquisition integration is well on its way and look forward to progress we’re going to make and this repositioning of the company, we feel really, really good about in the second half of the year as well as ‘17 and we think that there is opportunity for some really nice growth within Asure. We appreciate your involvement and your ownership. I would like to remind you the board and the managements are heavily invested. We invested right along the side of you, I own close to 10% of the company and the board and management together, we probably are between 25% and 30%. So we’re invested in this and feel really good about the acquisition and the progress. We like to thank our partners, Wells Fargo was tremendous lending partner and this acquisition and have been a great partner with us overall. And Mark, our new auditor has been very helpful as well. So with that, we’ll see you next time and appreciate your involvement. Take care.

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