Good afternoon, and welcome to Asure Software's Second Quarter two018 Earnings Conference Call. Joining us today for today's call are Asure's CEO, Pat Goepel; CFO, Kelyn Brannon; and Director of HR, Cheryl Trbula. [Operator Instructions]. As a reminder, this call is being recorded. With that, I would like to turn the call over to Cheryl, who will provide the necessary cautions regarding the forward-looking statements made by management during this call. Please proceed.

Thank you, Operator, and good afternoon, everyone. 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 for 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 risk and uncertainties that could affect their outcome. You're urged to consider the risk factors relating to the company's business contained in our reports on file with the Securities and Exchange Commission. These risk factors are important, and they could cause actual results to differ materially from expected results. Finally, I would like to remind everyone that this call will be recorded, and it will be made available for replay via a link available in the Investor Relations section of our website at www.asuresoftware.com. With that, I would like to now turn the call over to Pat Goepel, CEO. Pat?

Thank you, our Cheryl. And I'd like to welcome everyone to Asure Software's Second Quarter two018 Earnings Call. We sure appreciate your interest, whether you're an employee, client, investor, analyst or valued third-party member. The second quarter continued to see momentum, highlighted by our new client additions, expansion within our existing client base, a strategic acquisition of another reseller hub, continued steady financial performance and a superb client conference. Next, let me run down a few financial highlights for the second quarter. First of all, total revenue in the quarter grew 69% over the prior year. Importantly, reoccurring revenue now represents 83% of our revenue mix, allowing for very strong visibility. It also has a healthy impact on our overall margins. Cloud revenue grew 85% from a year ago. Cloud bookings in Q2 were up 75% year-over-year. And our total backlog currently exceeds $40 million. Hardware revenue in Q2 was $1.4 million and that was down from approximately $1.6 million in quarter two of the prior year, as we faced a tough comparison in growing over Procter & Gamble and the acquisition of OccupEye. Specifically, within hardware, our acquisition of OccupEye in the United Kingdom has generated a lot of interest early on. During the quarter, we closed several new deals for OccupEye centers, including AT&T and Barclays in New York. Workspace management software solutions are used to manage and optimize asset management, room scheduling, hoteling and workplace utilization. This building intelligence marketplace, or a subset of the Internet of Things, is an emerging growth area and we're positioned to capture that future growth. By integrating our sensors with our space management and cloud-based analytics, we believe Asure has the most robust product and solution in the marketplace today. Big Market Research, a leading industry analyst firm, has now quantified…

Thank you, Pat, and good afternoon, everyone. As you heard from Pat, we continue to execute during the second quarter with several strategic acquisitions, customer expansion and new logos, along with the upsell and cross-sell to our growing customer base. As usual, all the nonrevenue financial figures I will discuss today are non-GAAP, unless I state them as a GAAP measure. As always, you will find a reconciliation from GAAP to non-GAAP results in today's press release. As a reminder, beginning this year, we adopted the new revenue recognition accounting standard ASC 606, on a modified retrospective basis. This means that results for reporting periods this calendar year are presented under the new revenue recognition standard, while prior period amounts are not adjusted. During Q2, there was no significant impact to our revenue recognition. Under 606, sales commission expense is extended to between 5 to 10 years. Now let me review our financial results for the second quarter ended June 30, 2018. Total revenue for the second quarter increased 69% to $21.8 million from $12.9 million in Q2 of last year. The primary contributor of this increase was recurring cloud revenue, which grew 85% year-over-year. Cloud revenue represented 75% of total revenue in Q2, up from 69% in Q2 of last year. As Pat mentioned, we've been pleased with our ability to steer the business towards a visible recurring-revenue-focused cloud company. In Q2, recurring revenue, which includes the sum of cloud revenue and maintenance and support revenue, represented 83% of total revenue, up from 79% in the second quarter last year. Next, I'll review our P&L in more detail. Q2 cloud revenue of $16.3 million, declined 1% from the prior quarter. As I outlined to you, on our Q1 call, Q1 of 2018 benefited from the typical seasonality, we experienced…

Thanks, Kelyn. I'd like to know shift gears to our strategic tuck-in acquisition strategy. In early July, we acquired USA Payroll, one of the best run in the Evolution reseller family based in Rochester, New York. USA delivers services to our client base located primarily in the Northeastern area, United States, and we look to leverage their presence as a retail hub for Asure in this geography. Importantly, it expands our national reach as a regional hub for Asure and enables us to provide clients with access to greater breadth and depth of solutions with the addition of workforce and workspace solutions. Importantly, USA's Founder and President, Ralph Fornuto, has retained an equity position in Asure, and he strongly believes in the long-term strategy of Asure. We benefit by having an industry veteran leading our Northeast region, as with other similar hub acquisitions, such as California and Nashville, we paid a slight premium versus a typical reseller, given the value of leveraging their footprint in regional relationships for additional growth leverage. We've also seen positive synergies with the acquisition of the Human Capital Management customer portfolio of Wells Fargo business payroll services division. We have successfully transitioned all of Wells Fargo clients, who use Evolution Human Capital Management platform, to our platform. We've also initiated a new pilot program to entice the Wells customer base to our trial -- to try our Human Capital Management offerings, such as workspace management, time and labor management, HR consulting and benefits. I'm pleased to say that initial results have been very strong, with over 30% of our base choosing our human resource product, a terrific example of our ability to upsell successfully. And a lot of them have signed on for multiyear contracts. From a business combination standpoint, the integration effort of all…

[Operator Instructions]. And our first question comes from the line of Scott Berg with Needham & Company.

I have two. I guess the first one, Pat, you kind of called it out in your prepared remarks around OccupEye and moving away from third-party hardware resources. But how should we think about potential gross margin impact with the new hardware going forward versus the legacy providers? Don't know if it's something material or not.

Yes, no, it's specifically, I think, gross margins. We see as the biggest change in the gross margin is the business mix. And I pointed to the high 60s in gross margin. I think on the OccupEye acquisition, specifically, it will help our gross margins going forward. But obviously, the payroll HR business, per se, the margins are a little bit lower. I pointed to some value competitors like Ultimate Software and Paylocity and they're in the lower 60s, as I understand it. So I think you'll see good margins in the HR business, good margins relative to our business mix. OccupEye will help the gross margins going forward, now that we own the software. But it really will be a business mix issue. And then from a revenue perspective, we believe hardware and hardware as a service will continue to grow. I think the first half of the year, we had a tough comparison like I mentioned. And then also in the second quarter, we had a couple of large deals pushed. I think now that they've done our due diligence, I can see them, hardware, increasing in second half of the year, and specifically, hardware as a service as well. But that's a discussion for future conference calls.

Great. My follow-up question would be on valuating what I consider to be kind of your intermediate model in terms of margin targets. You talk about operating margins should gain some additional leverage here in the back half. But can you help us remind us that -- help remind us what you envision kind of the intermediate-term model of the company, maybe 2, 3 years out, whether is that a certain revenue level or otherwise? I'm just trying to understand how we should view the linearity of any, sort of, margin improvements there?

Well, on the margin improvements, first of all, we're targeting 22% to 25%. Typically, if you follow our margins last year, for example, the first half of the year, EBITDA was $4 million. We ended the year at $11.5 million. And so we're under a similar pattern of digesting acquisitions. We also take all our employer taxes in the first quarter or two. So typically, we get about a 4% bump or so in the second half, just by taking those costs, we don't smooth them out at all. So we are a little bit back-end loaded on margins, and that's the rhythm of the business. As far as your questions on intermediate term of the business, we believe we're at the salad bar of an all you eat -- all-you-can-eat buffet, if you will. So we have the ability to do more and more future acquisitions. We're going to -- Kelyn's building a team for high growth and high scalability that takes time, our first measure is to get on NetSuite and get on a common ERP solution. If your question is 3, 4 years out, I think there's no question that we can grow organically. We're going to acquire our own technology and get the benefits of scale. Short term, 22% to 25% of our margins. We believe we could pass that in future years. Those are conversations for future calls.

And your next question comes from the line of David Hynes with Canaccord.

So Pat, I want to ask about cross-sell and upsell activity. I think this is the first year you guys have had your customer success team in the field. So maybe you can take it in 2 parts. HCM into the payroll customers, right, I think a lot of these service for your customers that you're bringing on board are largely payroll only. And then space with HCM payroll. Just curious how that cross-sell effort is contributing to growth?

Yes, thank you for the questions. First of all, on the Human Capital Management and selling to payroll. One of the things that we did in the last quarter is we bought the source code to HRnext, which we believe was critical. It allowed us to control the software development of our advanced HR product and we've now integrated it with Evolution. I think, real strong evidence was the pilot program. We acquired the book of business from Wells Fargo in April, and we recontracted those clients and 30% in the contracting period, that ended approximately July 1 or so, shows advanced HR. So that's real progress. It was a great pilot program for us. And at the same point in time, we moved all those clients that were on a Wells Fargo hosted solution and put them into a central Amazon solution. So I think you'll see us replicate those pilot programs in the '18 and '19. I think the real benefit of the cross-sell revenue will appear in '19 as opposed to '18, given that we're rolling out those solutions to our -- all our small business clients. And then as far as space into Human Capital Management, our C3 conference in May, which we were thankful that you could attend, what we're excited about is, I think, it opened everybody's eyes to why Human Capital Management and where people collaborate and sit on a day-to-day basis really makes sense. We're getting into conversations that 2 years ago, a year ago, we couldn't have in that we go to sell to the VP of HR, and the VP of HR has to come up with a strategy around collaboration, working from home, flexible work schedules to win the war for talent as unemployment is less than 4%. So we're getting a lot of traction, we're getting a lot of orders. But we think the orders are still early days. We think the real revenue will come in -- end of '18 and '19. And I think you'll see us publish some attach rates in '19, as we get our arms around the data and have 1 common ERP solution.

Yes. Perfect. And then I wanted to follow up on the hardware question that Scott asked, just maybe a little bit of a different lens. I want to make sure I understand. So you mentioned delays in hardware decision-making, right as you're cutting that over from the legacy product to OccupEye. Is the risk of attrition on the space side? And what's causing these delays? Is OccupEye or the sensor is more expensive? What's giving you buyer pause?

Yes. No, not at all, and that's a good question. I'm glad you asked me to clarify. If you recall, some -- we've had some really good success in the large account space management. And when you look at -- with OccupEye, we have some real key marquee clients. AT&T and Barclay's being a couple. If you recall our SmartView product, whether it was Anthem or Morgan Stanley or some of the big names that we've mentioned in the past, we had our SmartView product coupled with our cloud-based solutions. We own the solution, and we were using a value-added partner for things like room utilization. Our future sensor capability is pretty exciting in the sense that not only is it scheduling of desks or scheduling of rooms or scheduling of utilization, but it also leads into things like heating, air conditioning, different -- you see, you don't have to have 2, 3, 4 sensors for different products. So the analytics gets multiplied geometrically that we can provide those solutions. When you're talking to clients that are big clients in nature and prospects in nature, clearly, they want to test what we're doing. In some cases, we held off proposing because we knew the deal was imminent. And in another cases, because we have new capability or additional capability, they want to make sure they can test the water. So I view this as not a huge deal but more just a methodical selling process that's going to continue and has continued. I think we bought these sensors for a reason. We believe in the analytics and believe that it's a Trojan Horse to our cloud-based solutions and grow. So we believe it's nothing more than timing of the deal, but that's -- some of the clients that I could give color are clearly Fortune 500 clients that we're pretty deep in contract negotiations with.

And our next question comes from the line of Derrick Wood with Cowen and Company.

Great. I wanted to touch, Pat, on the USA Payroll acquisition. It seems fairly strategic. And when you make an acquisition like this, you're onboarding, I think, about 4,000 new customers that now have a direct relationship with Asure. Have you guys built a playbook or a template to go to that customer, engage with them, build a relationship, introduce them some of the new products? Just trying to get a sense if there's a playbook to try to drive better retention and increased price power, more cross-sell as you get a lot of these new customers as direct?

No, Derrick, I appreciate the question. And that's why I want to highlight and take some time to highlight the Wells Fargo pilot program because it is so important to our success. And first of all, in the acquisition -- we have an acquisition team. The team kind of looks at things upfront. We have data, given that we own the technology that some of these resellers have. So we have a window into their business. In this case, Ralph, the CEO of USA Payroll, is a very strong operator. And then what we do is we have client data. We have client penetration data. And then what we try to do is it starts with HR. So for example, we harmonize benefits, we harmonize things like job titles and people. And then what we do is go out and bring the Asure family of products to those clients, whether it's a welcome letter, we have series of webinars to teach our own newly-acquired folks to products, but then also, the -- our current or our new clients the products that we have in capability. And then we run some programs in the case where we'll give them a test of our HR product for a period of time that they can use and play around in the solution and then adopt the solution and have them to additional products. Our time clock and space management, same kind of program. So the playbook is working for us. We had to build some of the interfaces and the APIs to start out that process. The back-end infrastructure where everybody goes to Amazon is well thought out. And what's exciting about that is it helps us out from a cost structure but also from a client speed, scalability and then all the other testing around SAC1, SAC2, et cetera. They see the benefit quickly in what Asure can bring them and what they can offer. So that's why I highlighted the Wells Fargo. I think it's a program that we're putting in place now and for all the acquisitions we've done, and we expect some pretty interesting results not only in the second half of the year but also in '19 as well.

Got it. And Kelyn, I guess a 2-part question. You disclosed $14.1 million in long-term unbilled deferred revenue. I was surprised to see that so large. Clearly, it insinuated you've got multiyear contracts that helps on visibility. But what parts of the business do you do multiyear contracts? Is it on the payroll or on the workspace? Has that -- has there been a change in trend or focus on securing long-term contracts? And then the other part was just to clarify, Pat had said $3 million in savings next year. Was that just from the AWS transition? Or is that from M&A cost synergies as well? And that's it.

Okay, so thanks for the question. As you'd felt the jump in the short term kind of unbilled and then the short-term backlog and total backlog, primarily, our multiyear deals has been in the space side of our business. And we started selling multiyear deals early in 2017 after Eyal, our Chief Revenue Officer, joined us in December of '16. And we really started getting some tractions more in Q3 and Q4 of last year in the space side. What was really exciting on our HCM side, a good chunk of those contracts are annual or month-to-month, so you wouldn't necessarily see them building into that backlog. And what happened, especially with the Wells Fargo acquisition, we were able to move those customers over to multiyear contracts. And in fact, we had 100% success rate of all of them signing 3-year deals. And so that's the reason why you start to see that visibility that we have coming in, in that commitment to three year deals. And I think in the future, you're going to continue to see more of that. Additionally, as Pat has said, which is not in our backlog numbers today is that we're cross-selling those opportunities, understanding the take-up breaks with, say, our advanced HR products or, perhaps, COBRA and benefit. But as customers say in the back half of 2018 and certainly in 2019, as they start to take these new products, they're getting attached at the same time to these multiyear deals. So it's basically, in this quarter, we really saw the results of our kind of incubating this, and you're going to see more multiyear deals in the HCM products. As far as the $3 million as we look at cost savings, it truly is a mixture. There is a piece of that, that is certainly AWS. There is a piece of that, that's going to come out of -- after we get the new ERP system in, you're not going to need as much -- you're going to be able to scale and not hire more people to be able to grow with the business. It's things like -- it's different tools that we can consolidate now, and we now have things that have increased volume, such as freight and supplies that as you think about how much more we're doing, we're able to go out and negotiate much better rates with, say, FedEx or DHL. Or -- and in that fact, given the amount of fund flow that we have now from the payroll side of our business, going out and reaching out to banks in driving cost savings and ACH charges and bank fees. So it truly is a mixture, not necessarily one large piece.

And our next question comes from line of Richard Baldry with Roth Capital Markets.

Rich?

Sorry about that. After the acquisition of USA Payroll, which serves as a hub in the Northeast, do you think you've got all of the hubs in place that you need to have full sort of coast-to-coast coverage? Or are you still looking at certain targeted areas maybe to add another 1 or 2?

Rich, that's a good question, and I think we'll be opportunistic about adding 1 or 2. I don't think we'd add a hub in '18, but it might be in '19. What I think the 3 hubs really does, and Wells Fargo is, I think, a great example of it, is we can now take a base, and we can process that base using our existing infrastructure nationally. So we have that in place. Should we want to focus on a region, and we think that those are quality operation, we might take advantage of that in '19. What also the three hubs does is allows us to take these what I'll call -- or Kelyn actually sponsored the name tiny tuck-in, where you have $0.5 million or $1 million of revenue, and we could add those basic customers within a hub and then process them at a very accretive way to have a landing spot for those type of businesses. So I think what you'll see is, for now, we're covered nationally, feel good about it. We'll be opportunistic in certain areas of the country if we do see fit, but that will be a '19 and beyond decision, not an '18.

Okay. And while professional services is an enabler, which we all understand that, it did grow 150% sequentially. So sort of curious, how much of that is sort of the natural fluctuations to it versus the seven acquisitions you've done, stepping it up to a new level? For kind of get a feel for what a new mid-level norm is to take out sort of the highs and lows for modeling.

Yes, I think, one of the -- we have increased our consulting in April. We acquired Austin HR. So you'll see some of the uptick was a result of the Austin HR acquisition, which we believe is positive and will continue going forward. Some of it's tied to some of the bigger deals around project plans and rollouts of our solutions globally and nationally. So I think it's a mix of acquisition. But I wouldn't model it -- all the improvement going forward. I'd probably look at some of it as acquisition-related. And then as hardware sales and sensor sales go up, I do think you'll see a professional services component to deploy those offerings.

Last would be, I think last quarter, you talked about having somewhere in the range of 60 sales heads, and maybe 60% of those had been with you for 2 years. I'm sort of curious, have any updates or even an outlook for how big you want that group to be as their tenure sorts of improves? Do you think [indiscernible] is sort of where we're at? Or do you keep pretty aggressively adding to that given that...

Yes, I think on the Q1 call -- no, Rich, I appreciate the question. On the Q1 call, I think we had 50 salespeople, 60% have been over 2 years, 40% under 2 years. I'd like to see Eyal drive to that 60, 65-ish number or so or by January, February. What I'm excited about is when we acquired these regional hubs, we're getting access to talent. And whenever we have access to talent -- I mean, good salespeople are gold, and we want to keep them, and we want to mine them and help them mine business for us. So we'll continue to drive that. I think I've been pleased with some of the tenure of some of the people. When we turn over salespeople, usually, it's our choice, not their choice. So I think the comp plans are the right plans. They're driving the behavior we want. We've had good improvement. Eyal is relentless on getting good talent. And so I would target the January number to be somewhere between 60 and 65, which would be increasing the number. But I would say we are finding that as we get scale, and we're just known better. We get some good salespeople finding us as opposed to us finding them, which is a good feeling to have.

Last would be is, you've increased scale pretty dramatically. How do you feel about sort of your marketing and sales systems in the back-end to sort of do anything from lead-gen to nurturing along the path for the larger sale steam you're dealing with now?

First of all, I feel really good about our Chief Revenue Officer, Eyal Goldstein. I think he has done a good job since he came in, in '18. I think you'll see an investment in a VP of Marketing soon. That's kind of the next step. And then as far as the headcount underneath sales and marketing, we have some pretty good people that have grown with Asure, and I'm excited about their possibility to continue to grow because I think they've done a great job and they fit into the culture really well. From a systems perspective, I'm very pleased that we have one sales force system. I think the NetSuite implementation as we get to book-to-bill and kind of idea or sale all the way to revenue will make some improvements as Kelyn and the team are really working on things like simplifying our product SKUs and some of that stuff. So we'll get some natural benefit of that. And then as far as marketing program, et cetera, I think you're going to see us come out with some language of how to position Asure around the world for talent and some of the kind of unique messaging that we have, and I think you'll see that towards the second half of the year. So I think it's a work in progress. We feel good. We're excited, but we know we've got a lot of work to do, too.

And our next question comes from the line of Mike Latimore with Northland Capital Markets.

Great. Yes, on the HR front, you said -- I think you said that 30% of the Wells Fargo base took HR. I guess, is that a good proxy for where penetration may be, I don't know, a year from now across the entire Asure base?

You know what, Mike, I don't know if it's -- if I can I take a victory lap right now on that. What I can say is I'm really pleased with that pilot program. I think what we want to see is the second half, the integration of that, the execution of that. We do know we have a huge opportunity to penetrate our payroll customers with HR time, benefits, space. And I think what's encouraging about it is it gives a window into the future, and we can go out and get it. But I don't want to kind of model that quite yet.

And the HR source code, that's fully integrated now? Is that what you said?

Yes, it is. HRnext was the deal that we completed in May. The 2 teams were working together, but they were 2 development teams, and they were working together as teams but with different organizations. Now we have control over the development. We still will partner with HRnext on some development efforts, but the team is internal and then the systems now are hosted in Amazon. So from a client experience, we keep improving that and integrating that. And then I think some of the enhancements that we received at the C3 conference in the area of benefits and paid time off, you're going to see a kind of product road map that not only will integrate but enhance and make it a more robust HR service product as we continue. And I think everybody is pretty excited about that opportunity.

And then on -- I think about you mentioned that AT&T was a customer for OccupEye, I believe. And I guess, is that being used throughout the entire AT&T organization? That's a pretty big organization. And then also I believe AT&T does a lot of kind of just reselling of collaboration solutions. I mean, could they be a reseller for you guys as well?

You know what, first of all, I'm open for business if they want to be a reseller, so we'd love to have that. If you know anybody, I'm happy to talk through them. The initial success of AT&T was more in Eastern Europe and Europe, so we're excited about those programs. I think that -- I mean, obviously, I would welcome AT&T worldwide. I don't think we're quite there yet, but the first initial success is Eastern Europe and in parts of India.

Got it. And just last question on the -- just seasonality in the business. I guess -- should we assume that fourth quarter is a little higher than third quarter generally here?

Yes, I would -- absolutely, if you think the -- our quarters are fairly even. And as I say, Q1 is kind of seasonally down but offset because of the onetimes of W-2 and ACH. I would also say that Q4 is a little bit stronger than, say, Q3, because we'll have some bonus runs in there, and again, maybe an extra payroll as you come up to the end of the tax year.

And then I think just the integration effort.

Right.

The seven acquisitions. From a timing perspective, I think fourth quarter will be higher than third quarter just as we get more time under our belt with the growing revenue and growing client base.

And our next question comes from the line of Vincent Colicchio with Barrington Research.

Yes. Pat, you had mentioned that your space product is the most robust product in the market. I just wanted to know if you can give us a little more color on that. Is it the OccupEye that really puts you over the top versus your leader -- leading competitors? Any color will be helpful.

Yes, no, Vince, I think the key here is the analytics. And by owning the supply chain, the fact that -- and if anybody wants to come to our offices, they can see example, or better, we can set up a site visit. But you have a sense, two minutes, five minutes after you leave your chair, what rooms, what chairs, what seats are being utilized and by whom and where do you want to sit by. Nobody really has control over the supply chain like that, that we do. And then from just the logos or industry successes around multi-continent deployment, I think we have a very, very strong analytics, very strong cloud-based solution, very strong mobile-based solutions. And then to deploy them in those many countries with a service that is still early in the adoption in the market, the TAM of the market, I think it's a tremendous platform to build from. And then when you couple that with human capital management and where HR people want to go, we do believe we're ahead of the market and -- we're in a first mover advantage. And I just look at -- I think this week, one of our competitors was sold twice in 90 days. So clearly, there's some jockeying for position, and the premiums paid were pretty robust. I think we have opportunity here to really grow revenue and grow into the solutions, so we're pretty excited about it.

And then looking for some more color on C3. How did attendance compare to recent years? And how many of the attendees were from large enterprises?

We were almost double year-over-year, which we're very pleased with. And as far as large enterprise, we had a good mixture. We had some government agencies. We had some large organizations. We had some resellers. Like I mentioned before, I think I personally met with about 75 people over the course the week, and they got a chance to influence our product road map. We got a chance to listen in where they're going. We showed demonstrations on the video screen of our sensors. And our -- Alexa started the meeting integration with Cisco and some other services. So it was truly a future but then also a current year road map in offering that. We're excited about our next year in New Orleans, and we think we'll have increased attendance over that. And it's really good for our employees, and it's really good for our clients.

And then last one for me. What organic growth is embedded in your guidance for the year?

Organic growth, right now, we have -- our core organic growth in the products that are more legacy, like space and force, is roughly 10% in the cloud area. On the human capital management, we've been with 7 acquisitions. We've been focused on cost synergies and standardization of the hosting and getting into NetSuite. And because of NetSuite, we want to be able to report on this in the '19 time frame. But if you take the double count out of royalty, this pilot program Advanced HR will lead us to some future growth here in '19. But we'll break out human capital management. But for our old line products, it's 10% cloud in space and force. Human capital management will have a metric to come. We do publish in our Qs some of the legacy pro formas. But a lot of times, they don't have the royalty, and they're on a cash basis first and accrual basis. So there's a lot of noise in those numbers. We'll get further detail as we get into '19.

And we have time for one more question, and our last question comes from the line of Eric Martinuzzi with Lake Street Capital Markets.

I got a question on the USA Payroll. I know it closed after the quarter, so it may not be captured in the financials and in the Q. But just based on the revenue run rate sort of annualized there right back into an acquisition price of around $13 million to $15 million, and that was using your historical acquisition multiples of about 2.2 to 2.5x on a [indiscernible] acquisition multiple. Is that on the reservation kind of that guesstimate?

Yes, what I would say, Eric, is we're not going to disclose because of competitive reasons. Our competitors, obviously, are watching us grow up, and they're trying to take advantage of all the information that we share. I would say from a methodology perspective, it's very similar to our hub acquisitions. And then we're excited about retaining and growing with Ralph, the President there. But I don't think you're a million miles away, but from a competitive perspective, we just chose not to disclose.

Okay. And then as far as the revision of a guidance, incorporating USA Payroll, historically, you buy -- you're buying businesses that are profitable. You didn't change the EBITDA outlook. I know in some cases that can be because you're taking on the hub. There's not as much synergies available to you. But I was wondering, does it say maybe more about the profitability of USA Payroll? Or does it say something about the business prior to the USA Payroll acquisition? In other words...

No, so first of all, thank you for the question, Eric. And I think when I look at it, it's just really a synopsis of this whole phone call. We're taking out cost synergies. We're standardizing. We're going into NetSuite. We're doing things like hosting telephone. We've got a lot going on. We're acquiring USA in the back half of the year. So USA is a very well-run operation. We're happy with USA. So I think it's more to do with the activity. I mean, we've done our full years of acquisitions in 6 months. So the second half of the year is going to be more about integration, doing it right. I do think you'll see some synergies pop in '19 as it relates to this. But -- and I would say our visibility to EBITDA is very strong. So for being conservative, so be it. But I think it was just more prudent to keep the guidance the same in the first week of July, given all that we have going on.

I would now like to turn the call back over to Pat Goepel, CEO, for any closing remarks.

Yes. Just, I really want to thank everybody for the call. Sorry, there was a lot unpacked today, so it was a long call, but I appreciate the nature of the questions. Having been here now 9 years, I'm just sometimes awestruck by the progress that we're making. I know people are really working hard. I think our employees, to be able to do what we've done over the first half of the year and what we're going to do in the second half of the year, is extraordinary commitment on their behalf, and I want to thank everyone of them. And then from a market perspective, we think we have a chance to really do something special here, and we're on a journey to do that, and we hope you're pleased with our progress. We know we got a lot of work to do, and we will do it on behalf of our clients and the marketplace. And we sure appreciate your interest, and we want to thank you for your time today, and we'll talk to you in the third quarter.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.