Good afternoon and welcome to Asure Software’s Third Quarter 2019 Earnings Conference Call. Joining us today for today’s call are Asure’s CEO, Pat Goepel; CFO, Kelyn Brannon; and Vice President of HR, Cheryl Trbula. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] With that, I’d like to turn the call over to Cheryl for introductory remarks. Cheryl?

Thank you, operator, and good afternoon, everyone. Before we start, I’d like to mention that some of the statements made by management during today’s 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 on the Investor Relations section of our website at www.asuresoftware.com. Finally, I would note that we have posted some slides on our Investor Relations website regarding the proposed transaction. Please refer to the Events and Presentations section on our IR website. With that, I would now like to turn the call over to Pat Goepel, CEO. Pat?

Hi, thank you Cheryl, and I’d like to welcome everyone to our third quarter of 2019 earnings call. We sure appreciate your interest whether you’re an employee, client, investor, analyst or valued interested party. I also want to recognize all the veterans out there and we’re very fortunate to have some veterans as clients, investors, employees and in the communities we serve. So thank you for your service. Now, let me get to some of quarter three’s financial highlights. As Cheryl mentioned, we posted some slides on the Asure’s Investor Relations website. During my prepared remarks, I’ll refer to some of these slides. During the third quarter, we exceeded consensus expectations for non-GAAP EBITDA and non-GAAP earnings per share. Human capital management revenue, which is the go-forward business of Asure, beat our internal plan, but workspace revenue came in a little light attributable to some distraction as we were in the midst of the sale of that business. Looking at the quarter, total revenue increased 5% year-over-year to $24.6 million. Human capital management revenue was $17.9 million, in Q3 up 8% year-over-year and ahead of our expectation. I’m pleased with the growing mix of high margin recurring revenue. Recurring revenue as a percent of total revenue in third quarter was 86%, an increase from 83% in the third quarter of 2018 with our human capital management recurring revenue at 94% for the quarter. During the quarter, core human capital management bookings grew 38% year-over-year. Now, moving on to client wins. During the third quarter, Asure secured human capital management wins across a range of companies, including Megha Alliance, Startkleen Legacy, the minor league baseball team, Florence Freedom and CRS Software. We also added 16 new reseller organizations to our small business payroll family. Third quarter workspace wins included Whole Foods…

Thank you, Pat, and good afternoon, everyone. As Pat noted, during the third quarter, we exceeded consensus expectations for non-GAAP EBITDA and non-GAAP earnings per share. HCM revenue came in ahead of our internal plan, but Workspace revenue came in lower-than-expected due to some distraction as we were in the midst of a sale of this business. Now let me run through the details. As a reminder, as usual, all 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. During the quarter, core HCM bookings grew 38% year-over-year. This is a new term we’re introducing as a result for the sale of Workspace. This represents the focus of our go-forward HCM business and will be the best indicator of the growth of Asure. Total revenue for the third quarter increased 5% to $24.6 million from $23.5 million in Q3 of last year. Recurring revenue grew 8% year-over-year. In Q3, professional services, hardware and other revenue decreased 14% over Q3 of the prior year. Recurring revenue in Q3 as a percentage of total revenue was 86% compared to 83% in Q3 of 2018. HCM revenue represented 73% of the total compared to 71% in Q3 of last year. And Workspace was 27% compared to 29% in the prior year. HCM revenue grew 8% over Q3 of last year and exceeded our expectations. Workspace revenue decreased 4% year-over-year due to some distraction related to the sale of the business. Next, I’ll discuss our profitability metrics. Q3 non-GAAP gross profit increased to $16.1 million, equating to a non-GAAP gross margin of 65.6%. This compares to $15.9 million or gross margin of 67.9% in Q3 of 2018. Q3’s non-GAAP gross margin…

Thanks, Kelyn. And turning to guidance, as I mentioned earlier, given the noise to our P&L due to timing of the workspace sale, I’ll be guiding the 2019 based on Human Capital Management performance only. Also note that, 2014 Q4, excuse me – also note that Q4 will include a large capital gain at the time of closing again, which we expect to take place during December. If I turn to Slide 13, for the full year 2019, we expect Human Capital revenue to be between $72 million to $73 million with non-GAAP EBITDA of $11 million to $12 million, equating the non-GAAP EBITDA margin of about 15.3% to 16.4%. We’ll break out Human Capital Management’s performance, when we report our Q4 results, so we’re completely transparent. 2020, as we discussed at the announcement of the sale will be a transition year with reduced year-over-year top line growth as a result of the sale. We’ll continue to pay some investment towards organic Human Capital Management growth. However, we’ll need some time to absorb the incremental overhead from workspace, and as such, this will drag to our EBITDA margins in 2020. The good news is that this will be offset by the elimination of approximately $9 million of annual interest expense. As mentioned earlier, we’ll be fulfilling the transition services agreement for a period upon close to approximately six months. And the incremental overhead absorption will take approximately 12 months. We will be making organic growth investments, such as new sales hires in 2020 and we expect positive organic growth exiting 2020 complimented by acquisitions throughout the year. I’ll update you with the specific 2020 guidance next earnings call, but today I thought I’d present a framework for you. As we think about 2020, we expect Human Capital revenue growth to…

Thank you. [Operator Instructions] And our first question comes from the line of Richard Baldry with ROTH Capital. Your line is now open.

Thanks. With the NetSuite implementation done, I’m sort of curious if you can talk at all about any challenges in the divestiture process of, IT, overlapping systems, any other implementations you might be doing as you sort of carve the two entities apart. How far you are through that process? How much do you think that’s going to be a challenge? Thanks.

No, I’m relatively – thanks Rich for the question. I’m relatively comfortable where we’ve implemented NetSuite. It’s complete. What we are going to do internally is continued to enhance it. AWS is up and set up for our payroll HCM business. When I think about our IT structure, whether that’s helpdesk, as we move through the transition agreement, as we continue to kind of harmonize across our hubs, I think you’re going to see more efficiencies and more opportunities within our infrastructure system.

And then, Pat, maybe, I don’t know if he can even answer this, but in the past when you’ve done acquisitions or has been, more debt used. So can you think back maybe to some of those negotiations or conversations maybe currently having how you think the response will be from the sellers to the concept that there’d be more stock and more seller notes involved? Do you think that changes price points people are looking at willingness to sell? Any other factors like that? Thanks.

Yes. So thanks, Rich. And a couple of things I just want to be clear. First of all, I point to, now that the infrastructure’s in place we really, if I point you to the long-term model where we plan on 8% to 12% a year in acquisitions, the pace becomes manageable. Now that the infrastructure’s in place with NetSuite and AWS and the service hubs across the country, we feel that we can make acquisitions very prudently, and we have a combination of cash notes and seller notes, but we always did a seller node for indemnification. So really not much changes. It’s all about the pace. And then from a layering in a self-sustaining also organic growth model with the multiple products that we have now in place on cross-selling and hiring the sales reps, the model just feeds on each other, whereas the last couple of years we grew at a brisk pace. We did use debt or capital raises. Our intent here is to grow in a little bit more measured place that we have scale and now get the advantage of the – advantages of scale, especially in the out years starting in 2021. And then 2020 being the transition year, where we’ll get off the support of the space business, and by the way, we have a great partner in AKKR and FM:Systems. We’re aligned in that area very well, and that’ll take about six months and then really grow into our model. So I feel really good about where we are and how we’re positioned. And I just want to make sure investors acknowledge and understand 2020 is a transition year, but as we get to the backside of 2020 and 2021, now you can start to look at forward to the long-term growth model which we laid out.

And then last would be, when I look at your target organic growth model, Slide 12. It’s – with the number of heads it looks like you appear to be adding in the sales side. I’m a little surprised the new business target growth rate of 5-plus-percent is not a higher number. If you maybe talk about how much the existing base or reps are used for retention, et cetera, to kind of put that new business number in relative terms to the existing team you have now?

Yes, Rich, thank you for the question. First of all, from a new business, we’re hiring reps for cross-sell in new business. So when I look at the 5%, I’m really looking at kind of a combination of both of those line items. And then as far as new sales reps, we’re going to have to hire, train and in some cases we’ll do that during the first part of the year and in some cases we’ll do it second part of the year. We want to be prudent about that. And then that model really not only we have to sell it but we also have to install it and it has to be ratably recognized. So we think 2021, we really get into our long-term model and we’re excited about that. In 2020, with the motto moving parts, we just want to be very conservative and we want to nail our numbers and exceed them. Over time given the moving parts and we think we’re positioned very nicely here.

All right. Thanks.

Thank you. And our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is now open.

Hi. Good afternoon, Pat and Kelyn. Thanks for taking my questions. I guess, first off, as we look at the guidance in heading into 2020, can you kind of break down sort of the moving parts on the adjusted EBITDA side as you look at that and perhaps give us sort of a little more detail on the extent of the absorption of costs with the divestiture? And I guess what that potentially could look like that EBITDA margin structure sort of taking those absorption costs out? Thanks.

Ryan, I think it’s probably premature to get into that kind of discussion now. I will tell you, I think from a transition services agreement, our costs recoveries between $2 million and $2.5 million, some of that’s very phased over six months and it depends on how quickly FM:Systems can take on the separating of the business, and then two, we close in December and some of these agreements are in the process of being finalized. That’s really why we pointed out the 2020 as a transition year with 2021 being our long-term model. And I think we’ll get into some more detail as we get the fourth quarter in the rear view mirror, but as we’re going to close here now is probably a little bit premature to speculate on some of those items.

Got it. And I guess in terms of a follow-up on the new sales hires, what’s the expected cadence or how should we think about that as we’re going to 2020? And how quickly can you get these reps sort of ramp the productivity?

Yes. Thanks Ryan for the question. We feel based on experience that we did this year, a new sales rep is between three and six months productive and contributing to the business, and then really full productivity is about nine months to a year. So we do feel like we have a playbook and then we have a playbook with the cross-sell initiatives that are in place. We are going through the distraction of separating the business and transitioning that in the fourth quarter. So that’ll be in our rear view mirror. What I’m excited about is going forward with the focus of a human capital management company, there – everybody’s used to get all our attention and love, and I think from that productivity will happen. So we’re real excited going forward.

Awesome. Thank you very much.

Thank you. And our next question comes from the line of Derrick Wood with Cowen and Company. Your line is now open.

Great. Thanks. Pat, last quarter you talked about reducing consulting revenue focus. I guess, given the sale of spaces, is this still the plan? And now that you’re a quarter through this effort, how do you feel about your ability to take down that business without impacting your software sales or retention rates?

Yes, Derrick, that’s a good point. Explicitly in our guidance for 2020 being a transition year, we’re less interested in doing consulting for consulting sake and getting onetime consulting revenue. We’re more interested in growing the core human capital management business. So we’ve already kind of put that into the guidance for 2020 as we transition away from that type of revenue, but really focus on the value-add repetitive revenue that we can lend to our clients, and so, we think that that really 2020 is a jumping off point, 2021. And when that revenue is completely out of the system, we’re growing at where we’d like to be at a 20% clip, both with organic as well as acquisitions year-over-year and growing at a 20% margin plus.

Okay. And then, Kelyn, I guess you mentioned that core HCM bookings was up 38% year-on-year, which obviously seems like a very impressive number, but you’re talking about kind of no growth in core HCM. So could you just kind of flush out a little bit more color as to what this 38% bookings figure is? Perhaps, how you define it and how should we think about it and the impact on the model?

Yes. No. Derrick, this is Pat. Kelyn’s lost her voice a little bit today, but she’ll jump into. But really what I wanted to make sure of, in the core human capital management what it represents is our core SMB solutions. It does remove consulting, which we’re deemphasizing. We started that process and we’re emphasizing the recurring kind of areas of consulting along with the human capital management and that’s the core business now going forward. So to have the 38% bookings growth, which is a leading indicator ultimately of revenue growth and as we worked through that onetime consulting, you’ll see towards the second half of the year in 2020 that those compares will be past us and we anticipate now growing at the long-term model, which we outlined, Derrick.

Okay. Thank you.

Thank you. And our next question comes from the line of David Hynes with Canaccord. Your line is now open.

Hey, thanks, guys. Thanks for all the color and the slides, and congrats on the progress on several of the key initiatives here. Pat, one question strategic for you and then maybe one on the numbers. I’m curious why the direct sales build out versus just doubling down on the channel and helping those folks learn how to better cross-sell? My sense is, is that these SMB markets have historically been pretty hard to navigate with direct sales? So just kind of walk through the thinking there and I realize it’s going to be a kind of a multipronged go-to-market tack, but why the direct emphasis?

No, I think couple of things. First of all, I refer you to Slide 8 and then we can have more detailed conversations as we go. But how we see is we have an integrated go-to-market strategy. And now that we built out our four reseller hubs, really, we have a national business and a national footprint to take advantage of both direct sales teams. And typically, we’re going to put headcount in Tier 2 and Tier 3 cities. If I am in Downtown Manhattan and I need Payroll Services, I might have 15 vendors within 0.5 hour, either Internet call were away. And – but in Tier 2 and Tier 3 as we do a good job of cultivating influence centers, whether it’s CPA, banks, consulting services, benefit brokers, et cetera. Now when you’re in those type of cities, there’s a lot of overlap and a lot of a halo effect around the partners. We think that direct sales teams can take advantage of that and we’ll do that. As far as referral channels, we’ll continue to cultivate them to get those leads. Now if they want to become a reseller, they have that option then to graduate to reseller. And then finally, if they are a reseller and they want to exit, for whatever reason, whether it’s a life event or the business cycle. We’re there to provide an exit strategy for them. And we think we’re unique in this approach, and we think we have the opportunity to grow our revenue in a very predictable way, take advantage of scale. As I’ve studied other vendors in the space. Typically, you grow a ditch in the P&L. If you really emphasize a lot of direct sales growth. We want to do more measured in Tier 2, Tier 3 cities, where we’ve had success in the past, where we have a reseller channel and then follow this go-to-market strategy. We think we can yield the appropriate results we talked about. We think we can become a very predictable company over the next couple of years, doubling in size, and conceptually tripling in EBITDA in that same kind of as we get margin expansion. So we think this is the way to go, and that’s kind of the way we’ve been focused on it.

Yes. Okay, helpful color. And then on the numbers, so the HCM guide for 2019, implicit in there is a sequential drop in Q4 revenue. I think my math, it’s like 17.9% going to 17.1% at the midpoint. Is this just conservatism? Or is there something happening in the business that cause that? And I guess as part of that, are you factoring in potential disruption on the HCM side in Q4? I mean all your employees know if and where they have a seat by now? Like how are you thinking those things could impact the HCM business?

No, great question, DJ, and thanks for calling out. We think we’re conservative, right. We want to make sure because we have a lot of moving parts going and happening all around, but we want to make sure we’re splitting the business. We’re going – the sale we’re not quite sure when the sale is. We are going to have some management attention a little bit with completing that sale. Although, we feel really good about the partnership with FM:Systems and A-KKR. Secondly, I mentioned the deemphasizing of the onetime revenue on consulting, where we’re at now somewhere around 94% repetitive revenue, up even from an HCM perspective. So our business is becoming more predictable. We’re getting rid of the lumpiness, if you want to say that of the one-time consulting revenue. So that really is the factor in our guide. And then as we look at 2020, we’re getting out of the transition service agreement, which will take us approximately six months, we’re adding sales headcount, we’re growing in that SMB place. And then really developing four channels: Direct, as you’ve mentioned; the referral; the resellers of which we were very pleased, we had a great reselling month of 20 new resellers that we’ve sold; and then finally, to complete it if they want to acquire, we can acquire our own technology at what we think will also add to the benefits of scale. So that’s kind of how we built the model short-term and long-term.

Very good. Thanks for the color.

Thank you.

Thank you. And our next question comes from the line of Eric Martinuzzi with Lake Street. Your line is now open.

Yes. I wanted to follow-up on the bookings at 38% number, did you translate that into an incremental ARR, kind of parsing out the – maybe the re-upping of existing contracts versus new business?

Yes. We haven’t yet, Eric. I think we’ll look at providing more color in 2020. As Kelyn mentioned, we’re just finishing NetSuite and completed that. So we felt good about that milestone. We have some analytics where we can start to report on that data. From a new bookings perspective, the way we measure to 38% new bookings is new bookings and additional cross-sell revenue. We haven’t parsed it out on ARR. The good news, though, going forward, is when you look at a business that’s 90% plus reoccurring revenue, we can start to lead with some of those type of metrics as we kind of split the business and get focused. So my expectation over time is we’ll get much more deeper in the leading edge indicators.

Okay. And then on the target organic growth, so I’m referring to Slide 12 here. The pricing aspects, so that 2% to 4% range, is that technically, is that price increases that are kind of wired into the contracts? Or would that have to be a separate raising prices event?

It’s a couple – It’s three things, basically. It’s raising prices in some cases. It is pricing on additional – there’s some newer services that are in the market that we’re able to not only sell, but to take advantage of some of the pricing around our harmonization and nationalization of all the reseller hubs. Those two are primarily the events. And then three, some contractual pricing that’s already in place.

Okay. Thanks for taking the questions.

Thank you, Eric.

Thank you. And our next question comes from the line of Jeff Van Rhee with Craig-Hallum. Your line is now open.

Great. Several for me. Maybe, Pat, just start with the resellers, just put a little bit more context around that. I think you said you added 16 in the quarter. How has that typically trended? What are the last handful of quarters, last couple of years, just give us kind of a trajectory there?

I don’t have all the exact in front of me. But what I would tell you is I think we’ve had 36 so in the current year or so, which is up significantly over the past years. And there’s been a couple of events, I think, our move to AWS and our move to really focus on scale and security. The payroll industry, anytime you have money movement, et cetera, there are some vendors that, frankly, have had a hard time keeping up from disaster recovery, from systems, from other events in the marketplace. So there’s been a flight to quality. And we’ve been able to get several resellers to come to our company and we’re excited about that. We do as we’ve really reached out to some of the referral sources. Some of our valued competitors will compete with the resellers in the area of benefits, of the broker and record services, of the – as well as even the banking, et cetera, where they see us as less of competition but more enabling the partnership. And now that we have a national business, we have the footprint to allow us to grow based on those reseller or affiliated networks. So that’s been kind of area. And then we’ve delivered on some of the product enhancements. You’ve been able to do some channel checks, Jeff. And our resellers are starting to get the product at in a place, and we still got always room to grow. But in a place now, they can grow. And as they grow, good things happen. And then we can be an exit strategy for them going forward. So certainly, you got a lot of momentum that’s where we are. And what I would say, if you were looking at compares, those are maybe over three to five resellers a year ago or so. So we’ve seen significant movement.

Well. Okay, that’s good progress. And then on the EBITDA, I think the 19%, you said was 11% to 12%. What is Q4? What does that imply for Q4 EBITDA guidance?

I think, as far as Q4, we had the sale take place, et cetera. I don’t think we specifically guided for the overall business on it because of how we treat the sale, potentially the disposition of a business combination and when the timing is. So I think from a math exercise, we backed into a small range there. You see of the quarters, and we can provide that or provide more color as we go. But really, I think there were a couple of moving parts around the non-GAAP onetime items. And Kelyn, I don’t know if you have anything to add…

I’m sorry, my voice is almost gone. I would just add to that, as we think about – I know I sound like a teenage boy. But when we looked at it, there’s discontinued operations. As we focus on our core HCM and what that means, there’s opportunities for us to think about restructuring. So I kind of thought about the guide for the year as the year versus breaking it down into the three first quarters and the fourth quarter because there’s going to be a lot of kind of moving parts around that. Is that helpful?

It is. I guess, just last one. The cross-sells, I think you said in one of the slides that you had 95% of the base is on one product. And I heard a lot of discussion about expansion of sales, et cetera. Just talk about what’s worked and what hasn’t worked, thus far? And where does cross-sell come? I mean, I know it was part of the build of the growth matrix, but it didn’t get a lot of discussion. I mean, is there some low-hanging fruit you see there for sort of the near-term to really accelerate that and get a lot more people beyond just one product?

I would just start, and then I’m going to turn it over to Pat. If you go back to the slide deck and look at the slide about where our investments, what we’re going to do. I think what you see is that we now can really just laser focus on our core HCM products, and that will allow us to focus our R&D organization around our cross-sell opportunities, be that attendance – time and attendance, or more web-based opportunities, continuing to build out our advanced-HR to fully blow out an HCM solution for small businesses, that’s what’s going to allow us. So the good news is, is that we’re really nascent in our penetration on cross-sell. So we have about 95% of our current base to be able to go after with those initiatives that you see in the slide deck. So I know me personally, from a technology perspective for the company, I’m really excited.

And for us, I think just time and labor management is a real quick hit in addition to HR. And it’s – I do think, over time, additional level services, whether it’s the area of HR, benefit, et cetera, those repeatable events like open enrollment, HR consulting, whether it’s performance management, OSHA, those events that happen yearly and quarterly. Now we can go after that very systematically. That’s what we’re excited about.

Got it. Okay, great. Thanks for taking my question.

Thank you.

Thank you. And our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is now open.

Yes. Pat, most of mine were asked. Just to be clear, on the consulting business, a quarter or so ago, you talked about automating parts of that. Are you still doing that at all? You’re completely deemphasizing the business?

No. No, I absolutely automating and consulting is a big part of our strategy going forward because when we implement a client, the first thing they say is, "How do you use the software? Or how do we learn how to use this software?" The second part is, can you help us learn the software? We want to be in that position all the time. And we want to be there with repeatable events. What I want to be clear is some aspects of our model had people on site, for example, being the payroll manager. Our model is not going to be the payroll manager on a client site, it’s going to be – we could be to help them be the payroll department, using software and/or best practices in a one-to-many environment. So the consulting for us is absolutely critical and important part of our strategy, it’s the one one-off consulting in a one-off engagement that we’re deemphasizing.

The only thing I would add to that is that we’re looking at our consulting, we now have this wonderful hub structure across the country. And as we look at repeatable consulting. We can bring that to our hubs. And be able to cross-sell that more locally versus in one location. So until we had the scale. And until we had consolidated in our hub structure, we didn’t have that opportunity. So whilst 2020 is a transition year. I think as we move through it, this repeatable business around consulting, which we think is a core excellence that we need to have, we can spread through our hubs.

And then finally, Vince, the automation of those activities is what we’ve been working on and implementing and feel good that we’re in a position to do that. And especially as we’re laser-focused as one company, we can train everybody and we can deliver across all services in one location.

Thanks for that clarity. And then, Kelyn, could you give us the first nine months EBITDA number for HCM.

Yes. I didn’t do that. And as I was explaining, I think earlier, is that as I looked at it – because there’s so many moving parts in Q4 were discontinued off with restructuring opportunities for us that, as I look at those lumps that I just thought about it for the year.

Thank you.

Thank you.

Thank you. And our next question comes from the line of Harry Heyer with MTX. Your line is now open.

Hi, guys. Thanks for taking the call from [indiscernible] analyst. I just want to get a little clarity around the timing and the – let’s just say, the cadence of the debt pay down? What your intent is in terms of how much debt you’re paying down? Whether the cost of debt will change post pay down? And also, you talked about kind of starting up the acquisition process again, and I’m trying to get an understanding of kind of when and the scale of that acquisition activity, if possible?

Thanks. Yes, thanks, Harry. So first of all, in the deck, we included a figure of $20 million to $30 million. We haven’t entered into that agreement yet. So that’s the expectation, kind of that we would carry that in debt. I think as far as the terms, if you look at our providers today, we have Wells Fargo in at five and change. And then Goldman is last in, last out. I think it’s fair to say that we won’t need a structure where you have two lenders, over time, you have one. I would look at the terms being more similar to our first in, first out provider. And in that $20 million to $30 range. And then as far as pay down, we will pay down debt, and we’ll pay down the vast majority of the 112 facility we have today, and then we’ll be carrying $20 million to $30 million. So we’ll exit the agreement of the institutional arrangement that we have today. I think you’ll see the debt level be somewhere in that closer to the first in, first out facility we have with Wells. I think from a partnership perspective, Wells has been our partner for a long period of time. I would anticipate that if it’s not Wells, it certainly could be or should be, they’re valued partner of ours. And we have to go through the process. As far as acquisitions, our intent here, and that’s why we showed the long-term model is to grow 8% to 12% in acquisitions a year. Now that NetSuite and AWS are in place, you could see acquisitions in the transition year. And then in 2021, you would see that as a matter of course. So it becomes more predictable from a capital structure and with the debt being a lot low. You have a self-sustaining capital structure where if you can grow EBITDA and cash flow you can acquire, invest in the salespeople get the organic growth now we don’t have to come to market or if we’re coming to market for really good reason. And from a debt structure, the investors like these businesses. We think we heard from the investors over the last couple of years, at 4%-plus EBITDA was too high. We’ll take that feedback and have a self-sustaining model.

Thanks.

Thank you. And we have time for one more question. And then last question comes from the line of David Flamholz with DF Trading LLC. Your line is now open.

Yes, hi. I had a question, being that you’re going to go back to having acquisition and the market seems to value Asure at less than two times revenue and you were paying basically two times revenue for most of those acquisitions. Are you thinking in terms of lowering the cost of that you would pay for some of these acquisitions being that, it doesn’t seem like the market is giving the value for the acquisition?

Yes. Thanks for the question, Dave. So a couple things. One, we’re – we really believe that our workspace product and we believe that over time the market rewarded us and the acquisitions that we made in that area, we were able to exit that a little over four times trailing revenues, which we’re very pleased with that outcome. Now, we’re really laser focused on Human Capital Management. The first kind of priority of the acquisitions was to build a national infrastructure to get the referral sources, the feet on the street and the acquisition pipeline, simply put, if you had $1 million acquisition, you can put that into a $7 million or $8 million reseller and be able to do that in a manageable way that ultimately leads you to higher EBITDA, et cetera. But if you put $8 million acquisition in a $1 million book of business, you probably couldn’t do that effectively. So now that we have the infrastructure, we think we can take advantage of some pricing opportunities in the marketplace. And then two, what we heard about our evaluation is three things: get organic growth higher, and we’re investing in salespeople to do that, now that we don’t have the bank debt. We’re able to do that, where we don’t have to worry as much about covenants. Two your debt is too high, investors might be waiting out a raise or waiting for almost a short position. So what we said is, hey, let’s just build a self-sustainable capital structure going forward to take that debt issue away. And then three, margins really matter and now that we’ve built scale, we think we can add margin. So we do believe that we have visibility into acquisitions. They’re going to be and are very profitable for us. They add to the scale. And given that we have technology that we want to take advantage of, we’re going to do that. So we don’t think we’re at two times valuation for long. But that being said, from a pay model and what we’re looking at going forward, we will adjust our models going accordingly to make sure we take advantage and benefit all shareholders.

Okay. Thank you.

Thank you. And that concludes today’s question-and-answer session. I’d now like to turn the call back to Pat Goepel, CEO for any closing remarks.

Well, we went through a lot of stuff today and we’re very appreciative of the questions and going through the model. We tried to be thoughtful, because we have the separation of the business. We’re excited that time track. We’re excited the partners in A-KKR and FM:Systems, we have very strong communication and a high degree of confidence that, that’s going to be really good for our business going forward and good for their business as well. Two, as we separate these businesses, we’re trying to do what’s right long-term for the value of the company. We believe we’ve positioned ourselves really nicely to do that. And then three, during this transition period, you see full transparency of what we have and how we’re moving going forward. So over time, we think this is a seminal event and it’ll pay off big for all Asure shareholders. We thank you for your time and we thank you for your investment and your interest and we look forward to talking to you soon. Thank you.

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.