Good morning, and welcome to Asure Software's Third Quarter 2018 Earnings Conference Call. Joining us today for today's call are Asure CEO, Pat Goepel; CFO, Kelyn Brannon; and Vice President of HR, Cheryl Trbula. [Operator Instructions] As a reminder, this conference is being recorded. With that, I would like to turn the call of the Cheryl for introductory remarks. Cheryl, please proceed.

Thank you, operator, and good morning, 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 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 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 now like to turn the call over to Pat Goepel, CEO.

Thank you, Cheryl. And I'd like to welcome everyone to Asure Software's third quarter 2018 earnings call. We certainly appreciate your interest, whether you are an employee, client, investor, analyst or valued third party member. The third quarter continued to see momentum highlighted by new client additions, expansion within our existing client base, growth of our pipeline and solid traction with multiyear contracts. That said, our financial results for the third quarter were influenced due to some changes we're undertaking in our workspace and hardware business, which I'll discuss in detail shortly. Let me run down a few financial highlights for the third quarter. Total revenue in the quarter grew 51% over the prior year. Importantly, reoccurring revenue now represents 84% of our revenue mix, allowing for strong visibility in the future. It also adds a healthy impact to our overall profit margins. Cloud revenue grew 66% from a year ago, and total backlog now exceeds $50 million, which is up $10 million sequentially. Now, let me get into the workspace business. The integration of our center technology has changed the way that we serve our customers. In order to transform more of our business towards a reoccurring revenue model, we've started integrating our software and hardware solutions into a reoccurring HaaS model, or hardware-as-a-service offering. As we bring this elegant solution of both hardware and software combined to the market, it has also impacted deal cycles and implementation cycles, especially at the high end where we've seen some large prospects evaluating these new technologies. What is exciting in that Asure's next-generation workspace solutions is garnering attention from some very large enterprises and the pace of former RFPs was a testament to the strategic importance of these solutions. Many times, these large enterprises want to begin with a proof of…

Thank you, Pat, and good morning, everyone. As you heard from that, we continue to execute during Q3. As usual, all the non-revenue financial figures I will discuss today are non-GAAP, unless I state them as a GAAP measure. As always, you'll find a reconciliation from GAAP to non-GAAP results in today's press release. Now, let me review our financial results for the third quarter ended September 30, 2018. Total revenue for the third quarter increased 51% to $23.5 million from $15.5 million in Q3 of last year. The primary contributor of this increase was recurring Cloud revenue, which grew 66% year-over-year. Cloud revenue represented 78% of the total, up from 71% in Q3 of last year. We continue to focus on driving the business towards a visible recurring revenue-focused cloud company. In Q3, recurring revenue, which includes the sum of Cloud revenue and maintenance and support revenue, represented 84% of total revenue. Now, I'll review our P&L in more detail. Hardware revenue was $1.5 million, an increase of 45% over Q3 of last year, but relatively flat from the prior quarter. As Pat discussed, hardware was lower than our expectations due to 2 factors: one, elongated decision-making at the large enterprise level as customers and prospects evaluate our most sophisticated product offering integrated with OccupEye; and two, our new HaaS, or hardware-as-a-service offering, which reduces near-term revenue recognition and trade off for a longer-term recurring revenue stream. While hardware isn't a material contributor to our business, representing just 6% of total revenue in the quarter, our goal over the long term is to drive growth in this area with our new integrated offering with an emphasis on recurring HaaS or hardware-as-a-service. Maintenance and support revenue was $1.3 million, and I'm pleased to see on-premise software declined as it demonstrates…

Thanks, Kelyn. And from a guidance perspective, we are revising our full year guidance. We want to take a more conservative approach given the nature of the pipeline that we discussed in the workspace opportunities. We've come to realized that these large enterprise prospects are seeking a more phased approach with install and repetitive hardware-as-a-service purchases as they layer out department levels or regional first before going enterprise-wide. This also creates a more repetitive buying pattern, which gives us more predictability on recurring revenue. Taking a more prudent stance for 2018, we expect revenue to range between $88 million and $.89 million, with non-GAAP EBITDA to be about $19 million to $20 million, equating to an EBITDA margin of approximately 22% for the year. Looking forward to 2019, we're confident that we'll see additional operating margin leverage in '19 as we benefit from the ramp of scale of the business from 2018. Now that our regional centers are established and up and running, we expect synergies to be even greater for future reseller acquisitions that plug into these regional hubs. In terms of M&A opportunities, our pipeline of targets looking ahead into '19 is strong and our vision is steadfast. Looking ahead to 2019, we expect to generate $110 million to $113 million in revenue, with non-GAAP EBITDA margin 22% to 24%, which includes approximately $10 million in complementary accretive acquisitions expected to close in the first half of 2019. Our long-term strategy is 100% on course. Asure's current product suite and depth of offerings has never been more robust. We continue to aim for both top line growth and bottom line leverage. And with that, we're open for your questions. Operator?

[Operator Instructions] Our first question comes from David Hynes with Canaccord.

So Pat, I understand what's happening on the workspace side of the house. I wanted to ask more on the Payroll business. I'm curious what you're seeing from a retention perspective of customers at your acquired service bureaus. I mean, have you had any attrition issues? What are you seeing in terms of retention there? And obviously, that has important implications on growth and margins in the cloud business.

No. Really, retention has been fine. I think, for us, the human capital management business is very predictable. What I would say is the pace of acquisitions, we had a very good Wells Fargo program around cross-selling and we're going to take that nationwide. We probably are about 90 days late in the cross-sell efforts. So we'll see cross-sell components to be -- to really help us in 2019 as opposed into the second half of '18. But from a retention perspective, we're pleased with the retention that we've had in the regional hubs as well as the acquisitions. So there isn't -- there hasn't been a decline at all.

Okay. And then with the M&A that's being baked into the 2019 view, is your expectation -- I mean, you said the pipeline is strong, is the expectation that those are kind of more vanilla service bureau tuck-ins? Or are there other adjacent opportunities that you're expecting to fall in next year?

Yes. No, thank you for the question, David. And what we see is because we had a fast pace in the first half of the year, we paused in the second half of the year. I think we've done some really good work around AWS and around NetSuite. We're going to continue to bill that out. We wanted to -- we see the pipeline of tuck-in acquisitions not necessarily going wider, but putting more volume of this kind of the vanilla tuck-in acquisitions. We have good visibility into the first half of the year. And then long term, towards the second half of '19 as we fully complete NetSuite and AWS, we think we'll have other opportunities in the future. But we want it to signal exactly what we're doing in 2019, and therefore, the guidance.

Yes, okay. And then maybe one for Kelyn, if I can. Cash conversion on EBITDA has always -- has been something I've talked about with you guys in the past. Through 9 months, I think you have $14 million of EBITDA, we've lost $6 million in operating cash flow. Do you think that, that gap narrows in '19? And if we're talking to $25 million of EBITDA in '19, I mean, what do you think you can do from a cash generation standpoint?

I think you're going to see that narrow in 2019, but we're still making some significant investments in our -- and what I mean by that is that we're spending money around our infrastructure. So our ERP and -- it's not only ERP, but it's other products such as Domo for analytics. It's Mulesoft at kind of middleware. It's getting our EEI kind of set up. And so I think through 2019, you're going to see continued investments around AWS. And so -- but you'll see that cash kind of narrow, and then what I really expect to see the turn is in 2020.

Our next question comes from Derrick Wood with Cowen & Company.

So you flushed out some of the aspects on workspace and on payroll. I guess, I wanted to touch on Time and Attendance, which is part of the portfolio we don't talk about too much. It this still a strategic product area for you? Or is this maybe an area that's not seen as much growth?

No. It absolutely is a strategic offering for us. And what we see with the payroll base, we think, over time, that the attached rates will come formally with some kind of attach rates in 2019, but we believe that Time and Attendance will be included in a lot of the new deals as well as the existing clients. So it's absolutely strategic for us. More and more clients are buying what I'll call the full meal deal, which would be time, benefits, HR, payroll. And we think time is obviously, very important to that. And then, as far as the facial recognition technology that we have, we've had interests from a number of fronts. Because what that does is -- the marketplace can't tell my fingerprint, Derrick, from yours, but they certainly can tell the facial recognition features between the 2 of us. And when you think about workflow, facial recognition is becoming more and more important. So we definitely see that as strategic. What I would say, sometimes the reason we don't talk about it as much is as opposed to selling it stand-alone, it's now being sold more and more integrated with the solution.

Got it. Yes, that makes sense. Kelyn, on the gross margin side, it's obviously come down over the last years as your mix of business has changed. But can you remind us what elements have impacted gross margins? And then how are you -- I know you gave guidance on Q4, but how are you seeing that trend for next year in particular?

So I would say primarily if you look -- two things area are going on if you look year-over-year, right? It's -- absolutely number one is the mix of business, right? So as we have added more service bureaus or resellers into our mix, so the ACM side, it has lower gross margins. And that's represented by the payroll tax processors and -- the payroll processors, tax processors, and those salaries and benefits flow through our COGS model. So it's absolutely mixed. And if you look particularly Q3 over Q3, we were not properly classifying those professional services and those costs were not flowing through COGS, so it was a classification issue that I've cleaned up. I would say, secondly, in Q3, as we get ready to implement our new ERP system, we've been cleaning up data. We started doing monthly stock takes. So we had basically been cleaning up the inventory sub-ledger to the general ledger, and so that impacted Q3. As I look forward, I'm kind of forecasting a 66% to 68%, which in 2019 could come down 100 basis points as we continue to add resellers into our revenue mix. Having said all of that, if you compare us to some of our competitors, we have absolutely stronger gross margins than do a number of our competitors, and that's due to the scalability of our software.

If I could squeeze one more in, Pat. I see you guys were authorized for FedRAMP recently. Is government a focus -- a new focus for you, probably on the workspace side? And what are the opportunities there?

Yes. No, the opportunities are enormous and we have some legacy systems in the government, and the government -- FedRAMP, we're the only competitor that I'm aware of that's currently certified and we plan on taking advantage of that. And we have a blue chip base already in that. We do have a dedicated vertical rep and team that really is going after that opportunity, and I think there'll be more to come in the future. But that certification, which was no small feat, is a ticket to play and a license to hunt. And we're going to be hunting in that area through '19 and '20.

Our next question comes from Richard Baldry with Roth Capital.

It looks like R&D spiked a little bit unusually in the quarter. So I'm curious if you can go through that. And then on the new HaaS model, the implications on gross margin on that, maybe near term or long term, and on the revenue side. Does that really create a higher revenue over the lifetime of that customer versus the older model?

Yes. No, Rich, thanks for the questions. First of all, on the HaaS model and the -- over the life of the contract, I think the example that we provided would have been about roughly $2.4 million over a 3-year contract versus the previous model, which would have been $1 million upfront with some small maintenance of, call it, $1.4 million. So in that example, over the life of the contract, we're going to paid about $1 million more, which we think over time that is -- and that it's more predictable is the right way to go. And then as far as the gross margins around hardware, given that pricing power and the repetitive nature of it and the integration of software, we feel that, that is inclusive of the guidance that Kelyn gave.

And then on to the spike or the increase in R&D. We continue, with the acquisition of OccupEye, embedding the new hardware and software into our resource schedulers, so into our workspace products. We have new hardware coming out from -- in 2019 representing new panels. So we're continuing to invest, both in the space product and in our HCM product as we look at taking our time and labor management to the base as we look at our new product, Advanced HR, that we took at Wells Fargo and extending that to the base. So there's absolutely integration opportunities going forward, and you should expect the same level, if not slightly increased, as we invest in technology.

And maybe just one more. Talk a little more in depth to me about internal metrics around organic growth. I'm not sure what you'd be willing to share on headcount, deal flow, pipelines. I think there was a target maybe to go from somewhere around a 50 headcount in sales to something like 60, 65 by year-end, how that's progressing. Maybe even what your goal exiting in 2019 to give us a thought for investment longer term.

Yes. Thanks, Rich. As far as the sales folks or so, we're on our way to that 60-ish number. I think we're probably somewhere closer to -- right now, probably in the area of 55, 56 and then enter at 60. I think in 2019, we probably enter at another -- closer to high 60s or perhaps 70, roughly, with the sales pipeline. And then as far as the other question...

On pipeline.

On pipeline. We referenced the pipeline to be 4x in space. And then as far as of the other areas of the business, pipeline is up a healthy amount as well. And then as far as organic growth, we will have metrics as NetSuite comes in. But I would say as we've really dug in to organic growth, the cloud based reoccurring growth in space is double digits, between 11% and 13%. And then in HCM -- and I'd remind people that we weren't even in the payroll business probably 2.5 years ago. So the organic growth in HCM on a repetitive basis is about 6% to 9%. And then on the non-repetitive is where we're feeling it because the overall organic growth is flattish. And that's the example that we talked about with the onetime revenue being down. So the reoccurring revenue which everybody wants is up, both in the human capital management business as well as the workspace business, where we're feeling it in the non-repetitive business and we believe part of that is we're driving to repetitive revenue. It's healthy long term, but we're feeling it short term.

Our next question comes from Scott Berg with Needham.

I only have one because a couple of them have already been taken. Pat, wanted to hear your kind of thesis on margin leverage with your acquisitions going forward. Obviously, revenues have been up pretty significantly the last couple of years, but EBITDA margins remained relatively flattish. And I understand now the payroll margin business is, at least on the gross margins, sat a little bit lower. But do you think we can, over the next 12 or 18 months, see some expansion for those levels? Or is it more of an investment phase still?

Yes. No, thanks, Scott. I think a couple of things. One, we're continuing to invest in product and integration. I think we have the building blocks that we're putting in place. One is the ERP, it will get us much smarter on the business with real-time analytics. As Kelyn referred to, we're implementing Domo, which we're already getting better analytics this quarter based on that. And then integration of Salesforce within NetSuite, we're going to continue to see benefits. I think the other thing that we really believe will get the benefits of and we're kind of almost in the back half of implementation is the AWS consolidation, and what that does is make our products easier to integrate. What it also sets up its further margin expansion of our nationalization and globalization of the business. So our thesis all along is when you buy some of these local businesses and regional businesses, if you nationalize some of the back office functions, you're going to get margin and they're more repetitive in nature. So you can expand there. So, we're well on our way to be able to do that. The building blocks are being put into place. And I think '19, we've guided to a potential improvement. And then we believe, as the business continues to scale and grow, we certainly can get margin, We're in that investment phase, consolidation phase, and to be able to have these type of margin opportunities is pretty exciting for us. I think also what we've said in the second half of this year is we we're going to focus on integration and making sure we get the margin. That's exactly what we're doing. We did grow very quickly, we're catching up with that. And then in 2019, we'll see a measured pace where we get revenue growth and margin expansion, and then we'd set it up really nicely for 2020.

Our next question comes from Mike Latimore with Northland Capital Markets.

Great. Just on the hardware, the HaaS chip. I assume that would mean that hardware revenues, specifically, would probably decline next year. And then second, Pat, you said -- you touched on some of your workspace customers are looking to deploy regionally instead of enterprise-wide, I think you said. Is that a separate factor here? Or is that just kind of part of the mix?

Yes. So first of all on your hardware question, I do think hardware will grow just because the -- we embed sensors. First of all, we get a full year of acquisition; and then secondly, we're embedding hardware-as-a-service. It's just it's not going to be as lumpy. And given that the pipeline is 4x, we think we'll have more shots on goal, if you will, and that we'll be able to grow. But it won't grow or spike up based on large deals. And that's -- we're going to get -- make it more predictable in the business. And then as far as pipeline. What we're finding in the enterprise -- I mean, these are sea-level deals. They're very strategic in nature. And what they want to do increasingly has a proof-of-concept or what we'd call a POC, where they want to test it within a department or test it within a region before they go enterprise-wide. And the ROI is pretty exciting. So what they wanted to do is see that the ROI and then bake it into their budget. It's a relatively new phenomenon. And what gets us jazzed about it is some of the results of these POCs are pretty exciting and we think will bode well for the future. What we don't want to do though is become big deal-dependent, and then if we don't get something we're missing expectations. But these are 2-comma multimillion-dollar deal opportunities and we have visibility into some really exciting proof of concepts.

Got it. And then just as you think about fiscal '19, what percent of revenue should be cloud or SaaS, do you think?

No, I think we will continue to grow cloud revenue. We've grown up nicely, where we've had -- I think almost 20% 2-year improvement in the cloud revenue. We're not going to -- obviously, we're starting to grow out of this kind of percentage improvement, but you will continue to see a tick up single digits in our offering. And if you see our pricing strategy, it's been all about getting it to reoccurring revenue where we can predict the business.

Our next question comes from Jeff Van Rhee with Craig-Hallum.

A couple from me. First, on the HaaS shift. Just give me a little sense of the timing here, the thought process in terms of when you came to the conclusion -- when and why that you needed to make the shift now?

Yes. No, I think just really with the acquisition of OccupEye, that -- what we did is -- originally, we were either a reseller or a partner with some of the hardware. And as we got into some of the deals, some of the deals -- because you can embed a hardware and software together for the solution, the customers requested and wanted to buy it that way. We all always had a kind of a pilot program. But what they wanted to do instead of a pilot program was sign on multiple years, but the purchase of the hardware would get in the way. So as we solution this out, we already had an offering, and especially even in our time product, we already had an offering. So I would say the model is flipped a little faster than we had originally budgeted for. But part of this is a good thing because we get more money and we get very much more predictability in the business. And so in working with the acquisition, we've come to not fight the paper, not fight the market. And we think, overall, this will bode well for us in the future.

On the -- it looks like roughly $3 million, $3.5 million below on the December quarter. Of that $3.5 million, just roughly, how much of that is the HaaS or hardware?

If I take onetime revenue in general, it's probably 2/3 of it or so. I would say the other piece of it, we guide yearly. And when I take a step back from the year and say, okay, where do we want to look at this? I think the business mix has been an issue and then I would say the other thing is the pace of the acquisitions, the 7 acquisitions in the first half of the year, we've had -- we focused on the integration of that. We have the cross-sell component of that, and that cross-sell component is, call it, 90 to 180 days, probably later than we want. That being said, we're very excited about the pilot program that we're taking nationwide and instead of the fourth quarter where that revenue hits, it'll start to hit in '19. So -- and again, it'll be in a more repetitive way.

And I would just add to that, Pat, at the end of Q4, beginning Q1 of 29, we have a generation 2 sensor coming in and this is our environmental smart sensors. And so we're starting -- as we talk about our pipeline being up 400%, it's really driven by the demand of this new sensor that's coming out, because now our customers can put one sensor in that not only does motion, but five environmental, be that heat, light, carbon monoxide monitoring. And so there's a lot of demand then and excitement around, and it's coming in at the end of Q4, beginning of Q1, as the certifications fall in line.

Got it. Okay. And then just last one on the acquisitions that are embedded '19 guide. How should we think about likely purchase price and where does that leave you? Just kind of tie that into leverage, what that leaves you at and what you're comfortable with.

Yes. No, thank you. On the purchase price, we're -- I would say, it's very close to historical. We're not going to go too deep into it because our competitors tend to look at this call or look at what we pay. But I would say, it would be consistent with previous deals. I would say as far as -- it's not going to be any new business lines, it's going to be existing reseller relationships and we feel good about that pipeline. And then as far as the integration, we focused on integration this second half of the year, and the first half of next year we're going to complete kind of the NetSuite and AWS. So we think we're well poised. As far as in the future on leverage and acquisitions, first of all, we do have $133 million on the shelf. We have a $25 million delayed draw term loan that's with our current lending providers and ready to pull. We have a $5 million revolver and we have cash. So we have multiple levers to pull. What I would say, in general, is management sees a big opportunity, and I've been with the company now 9.5 years, and I'm really excited about the opportunity that we have. What I would say is, when I look in the future and where this could be in the second half of '19 and '20, we believe that we have the ability, especially with what we're doing from a scalability to grow at a really nice place. And we think we have that opportunity to do that. And what we'll do is we'll -- we're all about shareholder value and driving shareholder value and driving what we need to do to maximize this opportunity, and we'll leave no stone unturned in order to do that.

Got it. If I just ask one last quick one. On competitive win rates, I don't know how closely you're able to track that, but what have you seen over the last couple of quarters?

As far as -- a lot of our -- what I would say in this space area, we're excited about the pipeline that we're driving. We want to drive kind of -- I think the win rates have been consistent, but I would say the decisions have been elongated a little bit and that's for the reasons we talked about. In HCM, a lot of our win rates aren't competitive. They're just -- they have a relationship with us and it -- they're small enough that it's reoccurring. It's influenced center driven, and we get that. Where we do compete, we have been consistent in winning deals. I do think, from an integration perspective as we've come out now with multiple products and services, we'll track that a little bit more carefully in '19 with attached rates, but there has been no appreciable uptick or downtick in win rates.

Our next question comes from Jeremy Hamblin with Dougherty.

This is actually David on for Jeremy. So first, in terms of the guidance for 2019, what percent of the revs are cloud revenues implied in the guidance and what percent are reoccurring?

So I would just -- we don't really guide to that, but let me talk a little bit about what we saw on 2018. So cloud is about 74% in Q3 and then cloud and recurring is around 83%. We have gotten that percentage so high, you're not going to see the same type of increases. So I would expect to see kind of single-digit increases going into 2019 if you look at cloud and recurring. So Q3 was 74% -- 76% and 83%, respectively, if that's helpful.

Okay. Yes, that's helpful. And then just following up regarding the cross-selling opportunities as you do take on some of these acquisitions. Can you just talk about where your average revenue per user stands today and then where you think you can get that over time?

So one of our examples that we talked about in Q2 and Q3 was taking Advanced HR to the Wells Fargo base. And what we saw, we saw about a 38% to 40% of our customer base opt in for Advanced HR. And we priced that on a per employee, per month. And we get between, say, $3 and $4, maybe depending on what they're leveraging there. So as you think about that customer base, you think about a 40% plus opt-in rate and then adding that $3 per -- $3 to $4 per employee, per month. And we're starting to see that revenue begin to trickle in, in Q4. And now, when you think about that and the number of resellers that we have out there, that we brought into the family, the opportunity to take that out to the bases is quite significant. And one last thing, and they signed up for multiyear deals, right? So these are 3-year deals for Advanced HR.

And what Kelyn referenced is, is one product and we have other products available, too, as well. So over time, we certainly see that you could continue to drive those kind of numbers up, but we thought that there was a very good proof of concept.

Okay. So that would take -- the cross-selling opportunity, that would take -- maybe you'd start to see some of that next year, off of a bunch of these acquisitions?

Absolutely. So as you think about that, our time and labor management, we're -- Pat and I look at each other and we would say that we're at the top of the first inning on revenue synergies and cross and upsell opportunities. We're very excited. And I -- you're going to start to see that in 2019. And more importantly, that base growing in 2020 and onwards, these are multiyear deals, and we have a number of products that we can take out, not just Advanced HR.

Our next question comes from Vincent Colicchio with Barrington Research.

Yes, Pat, most of mine were asked, but can you talk a little bit about the acquisitions that you made this year and how the performance has been versus your expectations?

Yes. No, I think -- first of all, in general, we're very pleased with the opportunities that presented themselves this year. I think we talked a little bit today on the OccupEye integration, we're -- somebody asked me if I'd do that deal again and I would do at 100 times over. I think the pipeline that we're starting to build and what we're trying to do is really exciting in the marketplace. As far as the payroll acquisitions, I think we had the pace of the acquisitions was fast and those opportunities present themselves at the right period of time. We had to move when we had to move. I would say, we put the organization through its paces. And we are having the execution catch up to our ambition here the second half of the year, but I'm very proud of the work we're doing and I think we've set ourselves up for '19 and '20 in a very positive light. We're now ready to take on a couple of more next year, which we've guided appropriately. And then what I would say is we've also have some capability acquisitions that have helped us, whether it's the managed payroll services or the consulting area. And in that area, we believe it'll add a lot of value to our current clients in 2019. So overall, we're very pleased and we think -- if I step back from it and say we've grown from 35 to 54, to close to 90 this year, to over 110 next year, that's a pretty good story. And there's a lot of people that worked very hard to get there. So I'm very proud of that.

And then Kelyn, do you have the contribution of acquisitions in the quarter?

Pardon?

Do you have the revenue contribution of acquisitions in the quarter?

We don't disclose that, but they're in my quarter.

Vince, I just want to clarify. Are you saying are we going to have an acquisition this quarter? Or I...

No, no. The contribution of acquisitions in the Q3 period, the revenue contribution.

Yes. We don't disclose that.

That's fine.

Our next question comes from Eric Martinuzzi with Lake Street.

The internal forecasting, you used the term overly aggressive or is -- was below aggressive internal forecast on the hardware side. Was that around just not understanding how the customers are preferring to buy on the onetime versus HaaS or is there something else you meant by that comment?

Yes. No, I think 3 reasons, really, Eric. I think, one, the pipeline is 400% over last year. And so that tells you we're in a lot of deals. I think the deals are getting phased and the enterprise and we've -- so sometimes the buying cycles were a little longer and we talked a little bit about that last time. And then also, they want to see the ROI in a petri dish or in a proof of concept. So we didn't model that to that extent. And then on the implementation or on the solutioning, certainly the HaaS, as we outlined in that example, is another factor. So there is three factors. One, the is pipeline was huge and that got us really excited. Two, kind of a phased approach or a petri dish approach would elongate some of the sales cycles. And then three, the repetitive nature of it. Those 3 kind of components have influenced it. And then I think just slightly on the HCM side, the pace of the first half of the acquisitions and then the cross-sell opportunities shoving out 90 to 180 days, that'll be great for '19, but in the back half of '18, those were the factors.

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

I am very pleased. If I step back with the performance, I’m always disappointed if we don't meet expectations. That being said, I think '19, we're set up very well. And if I step back and see that progress we've made, I very much appreciate your investment and interest in Asure. I would like to remind us -- remind everybody, we own a lot of stock. We're shareholder-driven. We invest right alongside of you. I've never sold a share. I'm really excited about the opportunity going forward. I think our pipeline and the kind of work we're doing as we grow up, we're doing all the right things to build a scalable business and we think we have the opportunities in front of us that are pretty big. And we will look to exploit those opportunities by every means possible. I want to thank you again and until next time, we'll see you. Bye.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation. Have a wonderful day.