Financial Data and Key Metrics Changes - The company's second quarter revenues were $30.1 million, an increase of 7% year-over-year, and a 10% increase when excluding ERTC revenue [5][11][13] - Recurring revenues grew 6% year-over-year to $28.6 million, representing 95% of total revenue [13] - Gross profit increased to $19.9 million, with gross margins at 66% compared to 67% in the prior year [18] - Net loss for the quarter was $6.1 million, compared to a net loss of $4.4 million in the prior year [19] - Adjusted EBITDA increased to $5.2 million, with an adjusted EBITDA margin of 17% [19] Business Line Data and Key Metrics Changes - Payroll tax management product continued strong performance, contributing to revenue growth [5][10] - Attach rates for human capital management products improved by 400 basis points year-over-year [10][17] - Bookings for the second quarter declined by 53% year-over-year, but increased by 15% when excluding large enterprise deals from the previous year [11] Market Data and Key Metrics Changes - The company has a contracted revenue backlog of $82 million, up 68% year-over-year, indicating strong future revenue potential [11][25] - The acquisition of Latham Time Corporation is expected to enhance market presence and drive additional high-margin revenue [6][20] Company Strategy and Development Direction - The acquisition of Latham Time Corporation aims to enhance the company's workforce management capabilities and drive payroll sales [6][10] - The company is focused on integrating acquired point solutions to improve client experience and increase attach rates [10][24] - The long-term goal is to achieve adjusted EBITDA margins of over 30% at revenue levels of $180 million to $200 million [24][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2025, expecting a reduction in HR compliance-related headwinds [22][49] - The company is budgeting for increased capital spending to integrate acquired solutions and enhance service offerings [23][24] - Management anticipates continued growth in the high teens range for the full year of 2025 [25] Other Important Information - The company is increasing its full-year 2025 revenue guidance to a range of $138 million to $142 million, including the impact of the Latham acquisition [11][21] - The company is modeling for higher interest expenses due to the new debt from the acquisition [20] Q&A Session Summary Question: Update on payroll tax management revenue and large deals - Management confirmed progress in the tax business and noted that some large deals have experienced phased installations but no losses in backlog [27][29][30] Question: Growth rate of Latham's business and revenue expectations - Latham's business has grown at about 10%, and the acquisition is expected to contribute approximately $7 million in revenue for the second half of the year [33][35] Question: Penetration of time and attendance solutions within existing customer base - Management indicated that Latham's client base presents significant cross-sell opportunities, with expectations to increase attach rates [40][41][43] Question: Core payroll unit growth and organic revenue expectations - Management indicated that core payroll units are likely growing closer to 5% when excluding headwinds from HR compliance [47][49] Question: Cost synergies and integration timeline for Latham - Management expects to realize cost synergies over the next 18 months, with Latham contributing positively to adjusted EBITDA [81][84] Question: Future acquisition appetite post-Latham acquisition - Management remains open to further acquisitions but will focus on integrating Latham in the near term [89][90]

Financial Data and Key Metrics Changes - First quarter revenues were $34,900,000, an increase of 10% compared to the prior year [5][13] - Recurring revenues grew 10% to $33,200,000, representing 95% of total revenue [13][29] - Gross profit increased by 9% to $24,600,000, with gross margins consistent at 71% [15][16] - Net loss for the first quarter was $2,400,000 compared to a net loss of $308,000 in the prior period [16] - Adjusted EBITDA increased to $7,300,000 from $6,800,000 in the prior year, with an adjusted EBITDA margin of 21% [16] Business Line Data and Key Metrics Changes - Strong performance from payroll tax management products and contributions from payroll benefits and marketplace offerings [6][29] - HR compliance remains depressed due to the wind down of the ERTC program, but expected to improve in the second half of 2025 [15][29] - Assure Pay is witnessing positive trends, with over 70% of active card users utilizing it more than three times per month [9][29] Market Data and Key Metrics Changes - Contracted revenue backlog increased by 339% year over year to $82,000,000 [11][29] - The company has modeled conservatively for employment growth and potential interest rate cuts [27] Company Strategy and Development Direction - The company is focused on a multi-pronged growth strategy, including organic and inorganic methods [10][19] - Plans to continue expanding product offerings and cross-selling opportunities to existing clients [10][25] - A new $60,000,000 credit facility was finalized to support acquisitions and growth initiatives [18][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience despite macroeconomic uncertainties [27][46] - The company anticipates accelerated revenue growth in the second half of 2025, driven by improved attach rates and backlog [20][88] - Management believes the worst is over regarding HR compliance issues related to ERTC, with expectations for recovery in the second half of the year [40][42] Other Important Information - The company has made 16 acquisitions over the past eighteen months, primarily focused on customer acquisition [19] - The introduction of new benefit solutions, including a 401(k) solution, is contributing positively to revenue growth [17] Q&A Session Summary Question: What are you seeing in terms of productivity with dedicated sales teams? - Management highlighted that attach rates have improved, and dedicated sales specialists are expected to drive further growth [34][35] Question: How is HR compliance performing with ERTC and HR compliance bundles? - Management noted that retention rates had declined but are expected to improve in the second half of 2025 as the cohort stabilizes [39][42] Question: Any impact from tariffs on pipeline and economic uncertainty? - Management indicated that while there are some crosswinds, the small business segment remains active and pipeline metrics are positive [46][48] Question: Can you elaborate on the investments and product roadmap? - Management discussed recent acquisitions and the development of new products, emphasizing a focus on cross-selling and operational efficiency [55][60] Question: What is the outlook for acquisitions with the new credit facility? - Management confirmed two acquisitions in the first quarter and expects an increase in acquisition activity in the second half of the year [70][72] Question: How should we think about tax deals ramping into revenue? - Management indicated that contracted backlog is a key indicator, with expectations for larger deals in the second half of the year [75][76] Question: Can you provide updates on the Canada tax product and competition? - Management reported a strong early pipeline for the Canadian tax product and noted that interest levels are high in the competitive environment [99][101]

Financial Data and Key Metrics Changes - The company's first quarter revenues were $34.9 million, reflecting a 10% increase compared to the prior year [5][13] - Recurring revenues grew 10% year-over-year to $33.2 million, representing 95% of total revenue [13][30] - Gross profit increased by 9% to $24.6 million, with gross margins remaining consistent at 71% [14] - The net loss for the first quarter was $2.4 million, compared to a net loss of $308,000 in the prior year [15] - Adjusted EBITDA for the first quarter increased to $7.3 million from $6.8 million in the prior year, with an adjusted EBITDA margin of 21% [16] Business Line Data and Key Metrics Changes - Strong performance was noted in payroll tax management, payroll benefits, and marketplace offerings [5][30] - The payroll tax management product has seen continued momentum, with new capabilities launched for large Canadian companies [7][8] - The company reported a 45% increase in new bookings compared to the prior year, with a contracted revenue backlog up 339% year-over-year to $82 million [11][30] Market Data and Key Metrics Changes - The company has a well-diversified U.S. client base, with revenues being more than 95% recurring [29] - The HR compliance segment remains depressed due to the wind down of the ERTC program, but better performance is expected in the second half of 2025 [14][30] Company Strategy and Development Direction - The company is focused on a multi-pronged growth strategy that includes organic growth, enhanced organic growth, and inorganic methods through acquisitions [9][10] - A new $60 million credit facility was finalized to support customer acquisition and drive inorganic growth [18][72] - The company aims to achieve revenues of $180 million to $200 million in the medium term, with adjusted EBITDA margins of 30% or more [26][91] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's ability to grow, citing a robust pipeline of opportunities and positive trends in product launches [23][30] - The company anticipates accelerated revenue growth in the second half of 2025, driven by improved attach rates and cross-selling efforts [87] - Management noted that the worst is over regarding the HR compliance segment, with expectations for a strong second half of the year [41][42] Other Important Information - The company has made 16 acquisitions over the past 18 months, primarily focused on customer acquisition and expanding the product suite [19] - The company is leveraging artificial intelligence to enhance customer interactions and product development [27] Q&A Session Summary Question: What are you seeing in terms of productivity with dedicated sales teams? - Management highlighted that attach rates have improved, with a notable example of a client increasing their spend significantly after adopting multiple products [35][36] Question: How much progress have you made on maintaining HR compliance with customers? - Management indicated that retention rates had declined due to the ERTC program but expect to see improvement in the second half of 2025 as the cohort stabilizes [40][41] Question: Any slowdown in pipeline based on economic uncertainty? - Management reported that while sales cycles may have lengthened slightly, the pipeline remains strong, and small businesses are active [48][50] Question: Can you discuss your investments and product roadmap? - Management confirmed ongoing investments in technology and product development, with a focus on enhancing the product suite and cross-selling opportunities [56][61] Question: How should we think about acquisitions with the new credit facility? - Management confirmed two acquisitions in the first quarter and expects an increased cadence in the second half of the year, supported by the new credit facility [70][72] Question: What are the primary drivers for accelerated revenue growth in the back half of the year? - Management cited improved attach rates, a growing contracted backlog, and the ramp-up of enterprise deals as key drivers for expected growth [85][87]