Q4 2023 Asure Software Inc Earnings Call
Participants
Patrick McKillop; VP of IR; Asure Software, Inc.
Pat Goepel; Chairman and CEO; Asure Software, Inc.
John Pence; CFO; Asure Software, Inc.
Joshua REilly; Analyst; Needham & Company, Inc.
Bryan Bergin; Analyst; TD Cowen
Eric Martinuzzi; Analyst; Lake Street Capital Markets
Richard Baldry; Analyst; ROTH Capital Partners
Jeff Van Rhee; Analyst; Craig Hallum Capital Group LLC
Greg Gibas; Analyst; Northland Securities, Inc.
Vincent Colicchio; Analyst; Barrington Research Associates
Presentation
Operator
Good afternoon, and welcome to Assure's Fourth Quarter and Full Year 2023 earnings conference call. Joining us for today's call, our Chairman and CEO, Pat Goepel; Chief Financial Officer, John Pence; and VP of Investor Relations, Patrick McKillop. Following the prepared remarks will be a question and answer session for analysts and investors. I'll now turn the call over to Patrick McKillop for introductory remarks. Please go ahead, Patrick.
Patrick McKillop
Thank you, operator. Good afternoon, everyone, and thank you for joining us for Assure's Fourth Quarter and Full Year 2023 earnings results call. Following the close of the market, we released our financial results. The earnings release is available on the SEC's website and our Investor Relations website at investor dot assure software.com, where you can also find the investor presentation.
During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items. A description and timing of these items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measures can be found in our earnings release.
Today's call will also contain forward-looking statements that refer to future events and as such, involve some risks we use the words such as expects, believes in May to indicate forward-looking statements, and we encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from current expectations.
I will hand the call over to Pat in a moment, but I just wanted to take a moment to remind folks of our upcoming Investor Relations activities by March 17 through the 19. we will attend to 36 Xantic Annual ROTH Conference in Dana Point California. We also plan to do a few non-deal roadshows, major this spring as well. Investor outreach is very important to reassure, and I would like to thank all of those that assist us in our efforts to connect with investors.
Finally, I would like to remind everyone that this call is being recorded and it will be made available for replay a replay via a link available on the Investor Relations section of our website. With that, I will now turn over the call to Pat Goepel, Chairman and CEO. Pat?
Pat Goepel
Thank you, Patrick, and welcome, everyone, to Assure's Software's Fourth Quarter and Full Year 2023 earnings results call. I am joined on this call by our CFO, John Pitts, and we'll provide a business update for our fourth quarter and full year 2023 results as well as our outlook for 2024. Following our remarks will be available to answer your questions.
As you can see from our reported results, our strong momentum continued during 2023, with strength coming from solid execution across the business. Our total revenue growth in 2023 was 24% up versus the prior year, excluding ERTC., our revenues were up 19%. Our reoccurring revenues grew 16% versus the prior year. Excluding ERTC., our reoccurring revenues were up 19%. Our net loss was $9.2 million, a $5.3 million improvement versus the prior year, and adjusted EBITDA was up 97% versus the prior year period.
Lastly, our cash from operations for 2023 was $18.9 million versus $13.7 million in 2022. We have multiple growth drivers in our business with HR compliance, I sure marketplace and our payroll tax management solutions showing very strong growth in 2023. We believe that over time, these business lines can become much larger contributors to our overall revenue as our payroll tax management offering continues to grow, it can contribute to our float balances growing as well. We continue to build on our momentum by advancing our technology through leading partnerships and launching strategic sales initiatives such as the bundling of our floral and tape products with payroll to drive new client additions.
This particular initiative was launched a short time ago and the reception we have received thus far has been very positive. Many small businesses traditionally have not had the resources to offer 401K retirement solutions, but around 20 or more states in the U.S. have mandated these plans and many more have introduced legislation mandating for O. one K plans for small businesses, US government securities act 2.0 aims to increase employee participation in retirement plans by providing tax credits to support the setup, have employer-based retirement plans and assure has this solution they need to set up those plans. We continue to advance our technology partnerships as evidenced by the recent invitation to join the SAP partner edge open ecosystem.
A partnership with SAP will allow its share to enhance its payroll tax engine by integrating with the SAP systems and streamline payroll tax processes for its existing SAP clients. Also in today's press release, we mentioned previously Workday global payroll certification for integration into Workday HCM and ensure payroll tax management. This solution helps large enterprises, streamline processes, enhance compliance accuracy and stay ahead of regulatory changes.
Certification, Excellarate assures payroll tax business into the Workday Human Capital Management ecosystem. Our sales efforts during 2023 resulted in a 56% increase in new bookings versus the prior year, and we're pleased with the productivity per rep we're experiencing. We've expanded our sales force during the year two approximately 110 reps with plans to go about one 30 and have been very pleased with the quality of new hires that we've made. We're supporting our sales efforts with digital marketing, which will drive higher levels of sales leads and productivity in 2024.
Based on our current business trends, we're reiterating our full year 2024 revenue guidance of $125 million to $129 million with EBITDA margins of between 20% and 21%. As a reminder, this 24 guidance excludes any potential contributions from ERTC. filing, but does include our plan to resume acquisitions in earnest, we have signed agreements to purchase approximately $7 million of annual reoccurring revenue and the pipeline is very strong as we look at the business, excluding ERTC. from 2023. Our guidance for 2024 implies a 25% plus growth rate, which is very positive. Additionally, reviewing our growth, excluding ERTC. for the past few years, we're witnessing solid double digit growth in the implied 25% growth rate in our guidance of 2024 would be an acceleration of the rates we saw in previous years.
Now I would like to hand it off to John Pat to discuss our financial results in more detail as well as our Q1 guidance. John, thanks, Pat.
John Pence
As Patrick mentioned at the beginning of this call, several of the financial figures discussed today are given on a non-GAAP or adjusted basis will find a description of these GAAP to non-GAAP reconciliations in the earnings release it was made available earlier today. The reconciliations themselves are also included in our most recent investor presentation posted in the Investor Relations section of our website at investor dot assure software.com. Now onto the fourth quarter and 2023 results. Fourth quarter total revenues were $26.3 million, decreasing by 10% relative to prior year. Excluding ERTC., total revenues were up 15% from the prior year.
Full year 2023, total revenues grew by 24% to $119.1 million. Excluding ERTC., total revenues were up 19% from the prior year. Recurring revenues for the fourth quarter grew 4% versus the prior year to $25 million. Excluding ERTC., revenues were up 15% from the prior year. Full year recurring revenues grew by 16% to $99.7 million year over year, and excluding APC, revenues were up 19% from the prior year. Full year and fourth quarter recurring revenues grew on the strength of HR compliance solutions, pure marketplace and increased interest revenues with average client balances exceeding $200 million during the year.
Net loss for the fourth quarter was $3.6 million versus $1.1 million during the prior year. Net loss for the full year 2023 was $9.2 million, an improvement of $5.3 million versus the prior year loss of $14.5 million. Gross margins for the fourth quarter decreased to 68% from 72% in the prior year. Full year gross margins increased to 72% from 65% in the prior year. Non-gaap gross margins for the fourth quarter decreased to 72% from 76% in the prior year. Non-gaap gross margins for the full year increased to 76% from 70% in the prior year. The decline in margins during the fourth quarter, driven by lower revenues versus the prior year as a result of lower ERTC. revenue. Margin expansion for the full year was driven by growing high-margin revenue streams, continued progress with our efficiency initiatives and scale benefits from our growth.
We continue to believe there is substantial margin upside over the longer term as the business scales. Ebitda for the fourth quarter was $1.1 million, down from $5 million in the prior year. EBITDAof $14.3 million for the full year was up 63% versus the prior year. Adjusted EBITDA for the fourth quarter decreased to $2.8 million from $6 million in the prior year, and adjusted EBITDA margin was 11% in the quarter compared with 21% in the prior year. Adjusted EBITDA of $23.3 million for the full year was up 97% versus the prior year adjusted EBITDA margin for the full year was 20% versus 12% in the prior year. Our cash from operations for 2023 was $18.9 million versus $13.7 million in 2022.
We ended the year with cash and cash equivalents of $30.3 million, and we had debt $4.3 million now in terms of guidance for the first quarter of 2024, we are guiding the first quarter revenues to be in the range of 30 to $32 million adjusted EBITDA for the first quarter is anticipated to be between six and $7 million. We are reiterating our 2024 revenue guidance to be in a range of $125 million to $129 million, with adjusted EBITDA margins of between 20% to 21% at these revenue levels. As Pat mentioned in his comments earlier these guidance figures exclude any contribution from ERTC. revenues, but assume a resumption of acquisitions.
We are excluding ERTC., given the uncertainty about the future of the program growth from our HR compliance assure marketplace are expected to continue to be strong contributors going forward. Also during 2023, we saw very good growth from our standalone payroll tax management product offering as well. Our payroll tax management product has multiple shots on goal with the platform being offered as a service to large enterprises as well as HCM vendors. While the above mentioned our strong contributors to our growth, we also expect to drive growth through inorganic methods.
We have signed agreements to purchase approximately $7 million of annual recurring revenue so far and the pipeline is strong. In conclusion, we are pleased with our performance in 2023 and the momentum we have built on the strength of product development technology and sales. This gives us confidence in our forward-looking guidance. As we look at the business, excluding ERTC. revenues in 23, we are generating approximately $100 million in revenues. And the guidance we have given 2.4 implies 25% plus growth for this year, which is very healthy rate.
We look back the core business grew 16% in 2021 to 2022 and 19% from 2020 to 2023. And then you look to guidance for this year and you can see the growth rate accelerating, assuming we achieve our goals. We are excited about 2024 and look forward to it being a breakout year for sure and driving profitable growth and leveraging the initiatives we've implemented across the business to generate sustainable growth and create shareholder value. With that, I will turn the call back to Pat for closing remarks.
Pat Goepel
Thank you, John. We are pleased to deliver continued growth in 2023, achieving 24% total revenue growth. We remain committed to creating products and technologies that make a difference for our customers. The continued improvement of our solutions over the last few years is being reflected by our continued growth and where I laid it to see positive impression from our client base as well as we are creating valuable solutions, which will enable them to focus on their core business operations. Our business has multiple growth drivers in HR, compliance by Sure marketplace, payroll tax management and our new floral and K. offerings. Small business owners face an increasingly complex world to operate in, and we're offering multiple solutions to these business owners to ease the demands on their time so that they can focus on the things that are most important.
Our recent sales initiative and bundling for oil and gas with payroll has gotten a positive reception thus far, the secure 2.0, if small businesses the funding they need to implement for ONTAK plans, which many states are mandating now, and we expect more to pass mandates in the future. We also anticipate demand for our HR compliance solution will continue to be healthy as businesses increasingly seek to supplement their internal capabilities with external experts who can help them navigate the increasing complexity of doing their business day-to-day.
Marketplace has been a strong contributor as well, be our partnerships with Equifax, H&R Block and say soon our payroll tax management solution has had great potential with this solution being offered to large enterprise clients and human capital management vendors. Our recent partnership announcement with Workday and SAP are great accomplishments for our payroll tax management business. And as John mentioned, we saw good growth for that product offering during 2023. We remain excited about what lies ahead for this business. Our guidance for 2024 reflects our expectations for continued growth, which will be delivered with a combination of organic and inorganic growth.
We signed agreements to purchase approximately $7 million of annual reoccurring revenues so far and the pipeline is strong. Our margins and cash flow have continued to improve as the business scales, and we have focused on improving efficiency across the business, which helps improve the cost structure. As John mentioned earlier, when we view the business, excluding ERTC., the core revenues continue to grow at a healthy double digit rate. And our guidance for 2024 implies a 25% plus potential growth rate. While we're pleased to have been able to generate revenues from the ERTC. program.
We want to remind you that our core business continues to perform very well and we hope that our discussion today helps illustrate our plan for the future as we move on from ERTC. during 2023, we have expanded the sales force as well as invested in marketing initiatives, and we now feel the business is right-sized for future success. As we enter the remainder of 2024, we will continue to provide innovative human capital management solutions that help small businesses thrive, human capital manage met providers, grow their base and large enterprises, streamline tax compliance.
Thank you for listening to our prepared remarks. And so with that, I'll turn the call back to the operator for the question and answer session. Operator?
Question and Answer Session
Operator
(Operator Instructions) Joshua Reilly, Needham & Company.
Joshua REilly
All right. Thanks for taking my questions here and nice job on wrapping up your team. Maybe just starting off on ERTC. I know we're moving on from that, but just to wrap up a couple of items. There's some proposed legislation to make the end date retroactive January 31st, I've been getting some questions. Have you guys still been submitting application for ERTC. even while the program is technically paused? And has there been a cost associated with submitting these applications before you've actually generated any revenue there? Just maybe an update on a couple of those more technical items start?
Pat Goepel
Yes, Josh, thanks. Thanks for the question from ERTC., we're a processor on behalf of our clients. So where the IRS's pause there has been some legislation, whether on the let the product or lead the program run out in 2020 in April, 15 flights scheduled and then in 2021, April 15th of the following year as scheduled, or will they have retroactive to January 31st, that remains a question for Congress and the IRS. What we've done is we'll make sure that if somebody wants to file an ERTC. claim, we'll process on that on their behalf. And there are some what I'll call minor costs that are involved in that process. But really we've not kept out the revenue in our guidance going forward.
And when the the bill or or potentially the legislation environment changes will inform our customers as well as our investors alike. But we have taken it out of the guidance and they'll be small run rate dollars. But we at this point in time, the volume of activity with ERTC. has gone down quite a bit. We want to make sure that if somebody does deserve a refund, we'll process on their behalf, but that's kind of where we are in the program.
Joshua REilly
Got it. And then just to follow-up items on the March quarter guidance, first item being, what are you assuming for W-2 and forms revenue on a year-over-year basis? Are you assuming it's going to be flat or maybe even slightly down year over year and how much is job switching impacting that revenue? That's the first item. And then just one other quick item on the March guidance, just same-store sales is roughly flat our year over year.
Pat Goepel
There was sometimes has effects of turnover, et cetera. You know, the W-2 and year end revenue. And when we have W-2 revenue, we have W. twos. We also have ACA and then we have kind of tax filing forms was payroll forms. But you know, the revenue is, I think, slightly up year over year, but you know if you kind of ballpark that in the high fours, that's kind of where we are from a revenue perspective.
Joshua REilly
Got it. And then what are you assuming also in the March quarter guidance for the H&R Block revenue. And can you just remind us if there was any H&R Block revenue last year in the March quarter? And then any seasonality around how that might abruptly and when on April 15th or when the tax filing date? Thank you.
Pat Goepel
Added the W-2 revenue, whether it's Intuit or it's H&R Block to seasonality is more in the first quarter as opposed to all year round. And that's just because personal tax returns is heavy emphasis on first quarter and with the little bit sliding into the second quarter, the use of the W-2 E&O follows that kind of process. We're probably talking about a minor six figures. So be it at a little over 100,000 of revenue in that kind of area and that's up from last year.
But you know, all in all, that's not a huge contributor of our marketplace revenue. We've announced some recent UM programs in the marketplace and H&R Block as well as into it will be a nice kind of program for convenience of our employees and getting their taxes done. But it's not a huge revenue stream for us.
Joshua REilly
Got it. Thanks, guys.
Operator
Bryan Bergin, TD Cowen.
Bryan Bergin
In terms of us 4Q and into 1Q so far, have you noticed any change in the demand environment or even the competitive environment relative to prior quarters?
Pat Goepel
You know, on the first quarter based on fourth quarter, I haven't seen a great change in demand. I would tell you, I think, were pretty robust demand. We're launching a number of new programs that we talked about, whether it's for one k., the marketplace we have on B&O care, a new capability in the area of benefits around receiving commissions as well. So a number of different drivers for us, but the demand environment's been pretty strong. I did come from in our sales kickoff here in the last month or three weeks, I should say.
And I think people are pretty fired up, and I'm pretty confident that they can make their plans. So as you know, I think we had a bit of a pivot in September 14th when the year TC pause. But we have no shortage of opportunities with new product introduction, new technology as well as our bundling. And people are, quite frankly, pretty pretty fired up so on? No, for us, it's been pretty positive. Okay. And then that competitive environment as well?
Bryan Bergin
I'm sorry, Jay, you cut out for a second. If you could ask that question. Yes. So the second part of the question was in terms of the any change in the competitor, competitive environment as well?
Pat Goepel
No, no, we see a small and we might see a gas towards a private company. We see ADP and Paychex from me. And although those are the vendors we see, I would say, you know, similar to regional banking, our compliance and Money Transmission licenses, the government's leaning in more and more, whether it's state or federal or ACH on the compliance environment, we are seeing that there's a trend where the smaller providers that did payroll either as a service for their CPA clients or there they were doing payroll, you know, now that they have to be licensed.
There is a kind of a flight to companies such as ourselves because we are in our license stand. As you know, they have expertise in money movement and tax filing. So I think that's been a positive for us, but no, super huge change in the marketplace. We see the same people that we saw last year.
Bryan Bergin
Okay, great. And then for my follow-up, what was the flow revenue in FY 23? And then what are you assuming in that FY 24 guide in terms of float revenue than we were a little under $9 million this year when it's all said and done from that compare roughly to about 2.5% of the year where we've got a growth kind of a combination of two or three things that we're thinking about?
Pat Goepel
In terms of the forecast on overall, we've modeled a half-point decline this year in our core business. But we see, yes, some growth in float as a result of a couple of factors, right? So we talked about acquisitions. When we acquire these businesses, we're going to take on their client fund balances. And then we've talked about it in the past, but one of our key growth areas is on the tax certainly providing that also comes with it from a lot of client funds. And it's actually one of the things that we do with pricing, we might forego some some fee revenue just to get the client balances.
So it's definitely part of our model in terms of that side of the business. So I would say, in general, I think it's pretty consistent with the overall growth trend. So if you think about what we've guided to 25% growth directionally from the core business. I would say that that we expect kind of between the acquisition between those initiatives. We think that we'll probably have that kind of same growth rate for flow next year.
Bryan Bergin
Great. Thank you.
Pat Goepel
Thanks for the questions.
Operator
Eric Martinuzzi, Lake Street Capital.
Eric Martinuzzi
Your line is Alan, if you wanted to focus on the acquisitions, not just for Q4, how much revenue was from acquisitions?
Pat Goepel
Yes, roughly half.
Eric Martinuzzi
All right. And then you talked about the $7 million of ARR under contract? When are you expecting those deals to close? And how much are you?
Pat Goepel
I'd say roughly we're buying at that seven by it's 75% of it this year. Some of that's going to hit beginning in March. Some of that will kind of hit beginning in April. So I think of that seven, maybe five 5.5. We'll come in this year in terms, I think where you're going next as to what we're paying for it. We think we've been pretty judicious. I'll give I'll let Pat kind of give a blended rate for that $7 million purchase.
Eric Martinuzzi
Yes, and you know, I would say roughly in that area of two times our revenue, we did have in our subsequent note in the 10 K, some we had a little over a $5 billion acquisition from a revenue perspective that we closed on a couple of days ago. And then what I would say is the pipeline is very active number of March-April. It kind of starts as well. As we remind you, we have about 200 million or so of acquisition targets within the reseller community, probably a pipeline right now, about 20 million or $25 million are actionable. So we're kind of the pipeline is strong. We're executing on that plan and real confident that that will get the revenue associated with that.
John Pence
Again, I think we've been pretty pretty transparent on this is definitely part of the model we were happy to see the equity raise in the third quarter to pay down. That also give us the dry powder to start really prosecuting that part of the model is really important to us and they see the adjusted EBITDA margins. That's really important to get the scale. So if we have to replace and what's about $18 million, we are TC. in 2020 or that's an important part of that strategy. And I think that again, if we can get it executed will deliver the same margins.
Pat Goepel
Yes, Johnny, I want to say, Eric, Eric, the one thing I would add to John's $0.5 billion is when we do acquire, especially the resellers as well as other payroll assets. We layer on the marketplace. We layer on tax filing dollars, that money move. But you know, that's not in that 0.5 billion. And clearly, we've you've instituted that as well. So that's part of our model. And traditionally, we've talked about acquisition economics from a cost reduction perspective. What we're pleased to be seeing is that we also get those benefits from a revenue perspective.
Eric Martinuzzi
Right, but I'm just trying to get at a true organic. And if it's only you acquired somebody with two days ago for that's going to be 5 million of revs in 2024, then we'll have over 400,000 of revenue in Q1 is from acquisitions. That's I just want to make sure I'm right with the math there. Is that correct?
Pat Goepel
Yes, theory, people ask for different reasons, but if you're trying going from an organic perspective, we didn't have a lot of acquisitions prior to the fourth quarter so that number is pretty pure and then you you got our answers from that.
Eric Martinuzzi
Got it. Thanks for taking my questions.
Pat Goepel
Thanks, Eric.
Operator
(Operator Instructions) Richard Baldry, ROTH Capital Partners.
Richard Baldry
Thanks, your OpEx from 3Q to 4Q is pretty flattish and to get to sort of the profitability we see or that you're guiding for next year, it looks like it will be com well controlled on the OpEx side, yet at all concerned that given the organic growth you're seeing underlying the business that maybe you should be accelerating your hiring or spending on internal a little more than what seems to be implied in the results?
Pat Goepel
Thanks. And I'll give you my perspective and I'll let Pat go. I think that as we've talked about Q4, even as we were giving the guidance, we felt it was a pretty sharp pivot as we were planning ahead for the end of the year. We were trying to invest heavily in terms of our sales and ops to get ready for the next year?
I would say that. So you want to weigh up a pressure on the fourth quarter, but we don't see a lot of incremental cost going into 2024 from the fourth quarter? It's kind of my perspective, I think on we have to deliver the revenue. But I think the cost structure is pretty stable?
John Pence
Yes. Then Rich, I think it's a good point. And one we talk about quite a bit at the management level as well as the Board level in our investor deck we did pop out more and more of the model. And I think what you're seeing in 2021, we had roughly 10% adjusted EBITDA as a percentage of revenue this past year in 2023, we were fortunate to go to 20% at that in all kind of, call it one 19 level, you know our model in for illustrative purposes at 200 million, we think it's a 30%. So it's a very much a scale business, and that's what we're focused on. What ERTC. allowed us to do is invest in kind of technology and payroll, and we are running at increased kind of levels for that.
Now with ERTC. was onetime revenue and you're kind of one and done here. We're it's allowing us to invest in it in a repetitive business model. So while this year roughly $18 million or so with ZRTC. onetime revenue next year as we get a model with guidance, most of that revenue is repetitive revenue. So you're going to see us really build a platform of growth that's repetitive revenue and it's only accelerated in the last couple of years.
From a cost perspective, what we've done is we've been able to really rightsize the scalability model primarily we invested in our infrastructure with Com and service tools, sales force that suite AWS. Now we're starting to invest in AI, and we think we have some pretty good winners in that area. And then just the simplification of the business around bank accounts, money movement and the marketplace allows us to move where we can invest in our important asset around people but also invest in efficiency and scale outcome. So we think we're well on our way and really pleased with the outlook here. So I appreciate the question, but that's how we're looking at it today.
Richard Baldry
And in terms of revenue, seasonality from Q1 to Q2 is usually a dip because of the W-2 type upswing in Q1. Do you think at all different in terms of magnitude this year given further the mix changing in the business.
Pat Goepel
Yes, I don't think it'll be as dramatic also just because some of the acquisitions to the rest of it, you're going to have some of that muted by the fact some of these acquisitions and the revenue is going to start coming on. So I'd say probably not as dramatic as the south lateral.
John Pence
And last for me would be more about the M&A pipeline for against the macro backdrop. It sounds like the ones we've done recently hit your targets really well, the do you feel like the targets you're going after in terms of valuation, cash flow capabilities, et cetera? Are those sort of well within grasp of the pipeline, you're looking at a has that changed at all recently? And just how are you feeling about that?
Pat Goepel
And thanks.
Patrick McKillop
But I think my perspective on it, I think they're Yes, Goldilocks like everything has gone from one of the model. And as Pat mentioned, there's a it's a unique time for the small providers. I mean, the cost of doing business and with the regulations that the various states are putting in place with the banking system. It's really having an effect on some of the smaller providers, whether they want to continue to stay in business and take the risk or do they think this is a better time to exit?
So I think it's a unique time in the space now we've embraced it in terms of trying to get our house in order in terms of being very compliant and we take it very seriously. It's hard if you're a small provider to afford some of that cost structure.
Richard Baldry
Great.
Jeff Van Rhee
Thanks.
Eric Martinuzzi
Thanks, Rich.
Richard Baldry
Back.
Operator
Jeff Van Rhee, Craig-Hallum.
Eric Martinuzzi
Great. Hey, guys.
Jeff Van Rhee
Thanks for taking the questions. A few from me on sales. What do you see in terms of the time line for the reps to ramp to productivity? How has that changed in the last call it six months, 12 months?
Eric Martinuzzi
You know, Jeff, I think if anything, it's probably gone up a bit. Productivity and quality of hire has gone up for us. So we've been really pleased with that. I think some of it is the pace of change is quick. So in other words, you know, if you think about kind of where we are at, you know, we've had a lot of really good success in the marketplace and in tax filing as well as on your TC., we now are you don't kind of introducing for one k., we have a medical benefits kind of product. And so now you have new reps and new products. And in those times the sale of a concept and then delivering that to a newer person sometimes takes a while to get to the area.
The other thing I would say is on and again, we're really, really happy with the quality of sales reps, but the area of tax filing when you start to go up market with SAP and Workday, now you're talking about a sale or a process or even a book-to-bill around implementation. That takes a little bit longer. And the only reason for that is those customers have higher dollar revenue numbers and they take a little bit longer to implement. But on bookings, we had another really, really strong year of XCRTC. or bookings were up 40%, which gives us confidence to go to 130 reps so we think we have the really good onboarding training. We have a lot of them the right mix to get productivity up. I would just say we're zone more at the reps from a product perspective, part of our Charm is that we give a lot of products in the bag that some of the other companies don't where they isolate or go to one product category as sale. We give of our business people, our salespeople, the opportunity to sell all the products in the bag. Sometimes it does take a little bit longer than if you were only selling one product, but we think it makes them more consultative and more value added in the future. And I'll tell you what I couldn't be more pleased with our sales folks.
Joshua REilly
Good.
Greg Gibas
Good to hear.
Jeff Van Rhee
So on payroll tax management, you just referenced a minute ago about these deals being larger and potentially taking longer. When does when do those deals start to show up and move the needle from a revenue standpoint? Would we should we start to think of kind of low to mid seven figure run rates by the end of the year or just down or help us size when do those deals start to move the needle?
Pat Goepel
Yes.
Eric Martinuzzi
I mean, I'll give you one example. I have a company with 22,000 employees and they'll start between March first and April first. And that process has been going on about six months or so. We went live with a 100,000 employee company last year. And that process took it took us almost a year from start to finish but went live over six months. And we have some pipelines of some were they all call is, you know, kind of a two comp deals. And we think that that'll they'll start layering in towards the second half of the year. But we're in sales processes right now. So yes, no, I think you'll just see a consolidated ramp. And then we've introduced what we call banking in a box and and our treasury management solution that in some cases, we'll partner with some of these deals as well. That will increase the the total addressable market as well as the deal size. So we think we're positioned really nicely on and you'll see that throughout the year.
Jeff Van Rhee
Yes, it's great to hear on the marketplace product as well. I think you referenced obviously Equifax off to a strong start a little bit of contribution from HRB. and Zoom. How do you think about a goal for marketplace by the end of the year and outside of Equifax, which had maybe some different contracting structure. How are the time lines of the other deals ramping relative to expectations, so time line of ramp relative to expectations? And then just goals for the year for that segment?
Eric Martinuzzi
Yes, I think the Rogers from our perspective, you know, we we kind of look at the business three ways. We have our core kind of business and growth that we're going to get momentum coming off that business. We have some enhanced initiatives. That's the second vehicle and whether that's the treasury management, the floral one case some of those newer products, but we're working and then we have acquisitions, which we layer some of our product offerings to from a goal perspective of the the 125 to 129 yet imply a 25% growth in that kind of initiative. Probably around 10 ish or so is momentum that we've had over the past year, the growth rate of acquisitions we've kind of published and some more in only in that 10% to 12%. And then some of these enhanced initiatives, whether you look at four oh one K, we pulled for one k. Adam marketplace and made its own separate products. So you won't see, you know, to some extent we probably took a little bit away from the marketplace, but certainly we'll grow the marketplace well into the double digits. And then it all from our perspective, it's probably to a little bit too early to call a target number just because we have a number of initiatives. You know whether you know it was the health care initiative. Recently, we did an acquisition which expanded our capability and receiving commissions. So we're kind of in the middle of the movie.
Jeff, I think I'll give you a little bit more color here at the end of the first quarter and we did one acquisition, you know, two days ago. So I don't want to put targets that would limit us right now. I would say at the end of first quarter, we'll come out with a clear number.
Fair enough.
Richard Baldry
Thank you.
Operator
Vincent Colicchio, Barrington Research.
Pat Goepel
Yes, Pat, do you have a booking growth number for Q4.
Eric Martinuzzi
If we exclude ERTC., if we exclude the well it for the year, if excluding ERTC. is 40% for arm and the fourth quarter, specifically, if we exclude ERTC. middle were closer to 50% at 56%. I think it was in the fourth quarter so that, you know, good strong bookings, a lot going on in the business and that in I think you'll see more bundling and bundling initiatives starting to pay off and as far as client companies, did they grow their employee base in the quarter?
Joshua REilly
And what are your expectations for that in 24?
Eric Martinuzzi
Onfi and we modeled rough roughly flat. We didn't get into it because, you know, if you think about the backdrop, you had the macroenvironment with either interest rates and and, you know, people were modeling it or some people depending on what your belief was, was either going to be a recession or growth, et cetera. We just model the flat area and then a six I have five basis point cut in the second half funds flow. So we don't get too worked up on the quarters or what I'll call same store sales growth. And if we do get some of those hiring initiatives are growing. That's that's kind of a benefit to the model.
Joshua REilly
And then do you have your bookings breakdown in the quarter between new and existing clients?
Eric Martinuzzi
You know, one of the things you said on, we're working hard and we just had our sales kickoff this year and we do about 65% to 70% new logos. What we want to do is even that out over time, we believe that we have an opportunity to continue to drive our base business, and we're having a lot of success with bundling we want to make sure that we have that same bundling success. And one of the things that we're doing is making it easier to do business across the bundles with us some of the things that we're doing from a technology rollout strategy will augment that. And then we'll get into more product driven sales and kind of check the box sales. We're excited about those initiatives, but we're still early days. So when I look at bookings and nail, who's our Chief Revenue Officer and President, he's done a fantastic job. One of the initiatives that we're trying to do is we think that there's base sales growth that while we've achieved a lot of success in the model, we think we can even do better and that's where we're going to work those percentages. We also have hired a couple of groups, our people to really work on those bundling and those product driven sales to continue to grow.
Joshua REilly
Thanks, Fred.
Eric Martinuzzi
Thank you, Brent.
Thank you.
Operator
Greg Gibas, Northland Capital Markets.
Pat Goepel
Do you think that?
Eric Martinuzzi
John?
Pat Goepel
Thanks for the questions on just to clarify, I think you were saying growth from acquisitions was and 12% organically inorganically.
John Pence
Is that right?
Joshua REilly
Yes, I think what we said, even with the when we were talking about the guidance for the full year last quarter, we were implying roughly 25% growth or higher with cannabis split evenly between both organic and inorganic so I don't think that's changed. And again, it's never going to be perfectly linear, especially with acquisitions. They're going to kind of come in as they get closed. But we still think that's the right way to think about the overall view of the year. Is it kind of that relative contributor?
Eric Martinuzzi
Great.
Richard Baldry
Yes.
Pat Goepel
I just wanted to see if anything changed there and I appreciate it. And then regarding the head count and CRC count trends on wondering if you're seeing anything there. And I think you said that you model 2024 guidance just off of roughly flat. Is that has anything changed in terms of customer headcount or seat count growth or decline?
Joshua REilly
I know I have we've not seen again from my perspective, a significant change one way or the other in the last year or so in terms of the per employee or account of employees.
Bryan Bergin
Got it.
Pat Goepel
And I guess lastly, just as I think about on quarterly trends or the seasonal yield without ERTC., I know that was kind of big on Q2, um, you know, how would you advise us in terms of what 2024 forward look like Cadence wise versus 2020?
Joshua REilly
So I think, again, our guidance is 1.5 to 1 29 for the full year that has no ERTC. component in it. And that if you think about 23 for 19, we just delivered as approximately 18 million ERTC. in it, right? So you're growing a base of one oh one, approximately one 25 to 1 29. So that's kind of the way we're looking at ERTC. measure vis a vis 24.
Eric Martinuzzi
And the only thing I'd say of that 1.1 last year or 2023 with 18 million of BRTCERTC. was mainly onetime revenue, right? Because you had the nine 41 X and you had that process and it was one-time revenue. When you think about the bookings and sales of a repetitive revenue business, they build on each other. So the one 25 to 1 29, what we're pretty excited is to grow that base and then when you think about fourth quarter, you start to grow that base and we think we could exit some E&O in close to 30% growth. And when you have that kind of growth from a repetitive revenue perspective.
Now that leads into a multiyear growth strategy. And then just remind you, we're in a scale business and in 2021, we had 10% adjusted EBITDA margins, 2023. We finished the year here. We had 20%. I'll pick the number at close to 200. You'll see 30% so we think we're really set up well for long term crews and employees and clients alike. And so I feel really good about the momentum that we currently have.
Joshua REilly
And I would just again, I think we made this point a couple of times, but just to reemphasize 22 to 23 growth, XERTC. was 19%. So it's just something to keep focused on. I mean, the ERTC. creates a lot of noise in terms of numbers and the compares. But the core business, when you start to exclude it. Field is performing just fine. And again, it's going to core great this year, we think so.
Richard Baldry
Great.
Eric Martinuzzi
Thank you, Greg.
Thank you.
Vincent Colicchio
We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.
Eric Martinuzzi
So I'd tell you I'm really excited about 2020 for our team off some really good events around our sales kickoff event, and we had a group of high performers together. They see the momentum. They see the future of the business, some more very pleased with our position for 2024. And you know, stay with us from Patrick mentioned, we're at the Roth Conference here in March. We're going to do some non-deal roadshows. So we're going to get out to community. We have a bunch coming up in May, so we hope to see you soon. And I really appreciate your interest as an investor Have a great day, and thank you.
Thank you.
Vincent Colicchio
That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
