Good afternoon. My name is Kyle, and I'll be your conference facilitator today. At this time, I'd like to welcome everyone to the Manhattan Associates Second Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, July 23, 2013. I'd now like to introduce Dennis Story, CFO of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, Kyle, and good afternoon, everyone. Welcome to Manhattan Associates 2013 second quarter earnings call. I will review our cautionary language and then turn the call over to Eddie Capel, our CEO. During this call, including the question-and-answer session, we may make forward-looking statements regarding future events or future financial performance of Manhattan Associates. You are cautioned that these forward-looking statements involve risks and uncertainties are not guarantees of future performance and that actual results may differ materially from projections contained in our forward-looking statements. I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections, particularly our annual report on Form 10-K for fiscal 2012 and the risk factor discussion in that report. We are under no obligation to update these statements. In addition, our comments include certain non-GAAP financial measures in an effort to provide additional information to investors. All non-GAAP measures have been reconciled to the related GAAP measures in accordance with SEC rules. You'll find the reconciliation schedules in the Form 8-K we submitted to the SEC earlier today and on our website at manh.com. Now I'll turn the call over to Eddie.

Good afternoon, everybody. Our second quarter performance was solid in the Americas and in our international theaters. We posted strong results essentially across all financial metrics. Our competitive position continues to improve and customer satisfaction continues to increase across the globe. Q2 total revenue of $102.5 million increased 10%, and adjusted earnings per share of $0.96 increased 26% over Q2 2012. We executed well in the quarter, and I'm very pleased with the financial performance in a macro environment where subdued global growth continues to create some headwinds for enterprise software buying cycles. License revenue for the quarter of $16.1 million grew 5% over prior year. We recognized 4 $1 million-plus deals in the quarter, 1 with a new customer and 3 with existing customers. Three of the deals were sold in the Americas and one in APAC led by our Warehouse Management product. In the new customer deal, we were successful head-to-head against strong competition, but continuing to validate our distribution management and omni-channel market leadership. Omni-channel enablement was also a key theme in our installed base license results with multiple competitive wins in the quarter. Our sales team across the globe executed well and our competitive win rate remained strong. In head-to-head sales cycles against our major competitors, we won about 75% of the time in Q2. We were also successful driving improvements in customer satisfaction and continue to be the leading innovator in that space, delivering exciting new solutions from our research and development investments. As we look forward, I believe we are very well positioned for 2013 and beyond. And we're not expecting the global economy to improve a great deal in 2013. And while we're certainly not immune, we continue to be optimistic, but cautious about our 2013 financial outlook. Our services business is strong, customer satisfaction is good, implementations of our solutions continue to go well, and we're excited about the next releases of our software solutions. Overall, we're performing very well. And I'll provide more color in my business update following Dennis' review of our financial results. Dennis?

Thanks, Eddie. Now we'll review our Q2 2013 non-GAAP results and GAAP EPS performance and close out with our 2013 full year guidance. As Eddie noted, our 2013 performance continues to be solid, posting record total revenue of $102.5 million in the quarter, an increase of 10% over Q2 2012. License revenue grew 5% and services, 13% over the prior year. By region, Americas grew 8%, EMEA declined 3% against a very tough Q2 license comp last year, and APAC was up 68% on a weak comp. Negative FX impact to revenue growth was not meaningful at 0.1%. Adjusted earnings per share for the quarter was $0.96, increasing 26% over prior year, fueled by solid revenue growth, continued expense management and our buyback program. Our Q2 results, due to the expiration of a tax audit statutes, includes a $0.05 EPS benefit for the release of a $1.6 million sales tax reserve previously accrued in Q4 of 2008. In addition, below the operating profit line and other income, we have an FX gain totaling $1 million or $0.03 from foreign currency exchange rate fluctuations, primarily in the Indian rupee. Excluding the benefit of the sales tax reserve release, EPS grew 20% over Q2 2012. License revenue for the quarter totaled $16.1 million and from a regional perspective, Americas posted license revenue of $13.5 million; EMEA, $1.1 million; and APAC, $1.5 million. In the backdrop of anemic global growth, our license performance continues to depend heavily on the number in relative value of large deals we closed in a given quarter. Shifting to services, demand remained solid. Q2 services revenue totaled $78.2 million, increasing 13% year-over-year. Our services revenue is comprised of 2 revenue streams: consulting and maintenance. Our consulting revenue for quarter totaled $52.5 million, growing 15% over Q2 last year.…

Thanks, Dennis. Well first, let me provide a little more detail on the deals we closed in Q2. As I discussed at the beginning of the call, we recognized 4 large deals in the quarter, 3 in retail and 1 with an existing large 3PL customer. All 4 deals were principally driven by growing demand in e-commerce. The new customer is a large retailer that needed to augment their ERP system with a sophisticated supply chain solution and we were able to beat that incumbent ERP and other best-of-breed solution providers on the strength of our technology platform, fulfillment capabilities and omni-channel enablement. Overall, about 30% of our Q2 license revenue was generated from new customers and 70% from existing customer partnerships. We continue to be quite pleased and to be able to capture 30% of our license fees from new customers, which is most higher than most of the other participants in the application software space and an important validation of our platform-based strategy on organic investment in innovation. For Q2, about 55% of our license fees were associated with Warehouse Management solutions and 45% representing our other solutions. As is customary for us, the retail, consumer goods and logistics service provider verticals were our strongest license fee contributors and made up more than half of our license revenue for Q2. Now, as I mentioned in our last call, we continue to see solid momentum in our core verticals, led by the retail vertical being fueled by the digital commerce revolution and the way in which consumers are engaging with retailers, wholesalers and manufacturers. Consumers have been empowered with tremendous access to information on-hand at any time via smartphones and tablets. And the cost for their loyalty is the centerpiece challenge for our clients and prospects' ability to offer…

[Operator Instructions] Your first question comes from the line of Terry Tillman from Raymond James. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: I just had a couple of questions for both of you guys. First question is, Dennis, you talked about the updated revenue guidance. Can you just repeat again the delta in terms of the lower end now at $407 million? Is that just the hardware or did you do anything around the shifting or changing any of your assumptions for the license revenue and services? And in particular, license, is there any change you're making there based on what you've seen in the first half of the year?

It's primarily hardware revenue, Terry. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Okay. And I guess, for Eddie or Dennis, either of you, in terms of the sales cycles themselves, it seems like you have 2 types of business. You have just the meat and potatoes, kind of that midsized Tier 2, maybe Tier 3 business, how are the sales cycles with that business? Has there been any change? And then the larger, high 6-figure, low 7-figure deals, are the close rates for sales cycles lengthening? So maybe you could just tackle both types of business?

Yes. I think it's pretty consistent, frankly, Terry, across all tiers of business. So the close rates are pretty strong. We're doing -- we're comfortable and I think we're doing pretty well on the close rate percentage. But the sales cycles are, no question, they are longer than we've seen them in the past. Frankly, I'm not sure that I would say that they are any longer this year than the last, but in the last 10 quarters or so, we've certainly seen the sales cycles elongate, fewer compelling events to, as they say, pull the trigger, and just elongated due diligence. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Got it. And the service revenue is really strong and I congratulate you guys on that. I mean, is some of that being driven by new customers or existing -- or new customers actually, are they starting to do omni-channel work with you on, it's actually, services engagement. Because what I'm wondering about it, I mean, could that actually be a leading indicator of future software sales and maybe you can just talk about what the pipeline is for services? Could it be something that continues to meaningfully outperform the rest of the revenue lines?

Yes. Certainly, there are a lot of omni-channel initiatives that are being driven both by existing customers and new customers coming into the Manhattan family, Terry. The services revenue is not particularly being driven upward by new services initiatives with existing products in the existing customer base. But we are seeing continued rollouts, which is a very positive thing. So sales that we might have seen over, frankly, even the last 24 months, we're seeing customers continuing to roll those solutions out across the country and across the globe and some of the additional and newer solutions that we're offering into the marketplace, particularly the Order Management Solutions and so forth are driving a nice services business for us. With regard to the services pipeline and so forth, I'll let Dennis take a crack at that one.

Terry, we don't give detailed specifics on the pipeline, but I would tell you the best indicator is just our hiring. We continue to hire and add staff. We've always felt like we had the best domain in the industry and we have pretty good visibility with our services. So I talked about hiring potentially another 50 to 100 heads in the back half of the year and I think that's a good leading indicator.

Your next question comes from the line of Yun Kim from Janney Capital.

Eddie, can you talk about how much of your business is driven by omni-channel enablement products versus WMS? I know that those are related in that you can't really have omni-channel marketing without an upgraded WMS solution or a solution in place. But can omni-channel product directly lead to 7-figure deals? Or are 7-figure deals still driven by WMS products even though they are ultimately driven by omni-channel initiative?

Yes, yes. So a great question. You answered a good piece of it yourself, so great knowledge there. It is very difficult for us to dissect and separate specifically the omni-channel business from others. It's becoming very, very intertwined now. You see some of our customers, frankly, our retail customers suggesting that they can even no longer report e-commerce or omni-channel revenues separate from their bricks-and-mortar revenue. It's -- we're following along in that vein. But the answer to your specific question around "Can omni-channel based products drive 7-figure license revenue?" The answer to that is yes. I don't think there's any doubt in our mind about that. With regard to specifically how much of our in-quarter license revenue was -- I think that was your question -- was driven by omni-channel based products, so we were about 55%, WMS and about 45%, other. I'm not going to break that out specifically for you, but I would tell you is a significant portion of the 45% non-WMS.

Yun, let me piggyback on that. Yes, the WMS revenue, some of that was omni-channel pull-through as you discussed. So we don't give a percentage, but we're going to continue to break out the product mix between WMS and non-WMS.

Okay, great. So I mean it's been -- this whole omni-channel revolution or the e-commerce-driven type of implementation out there, that's been going on for like 1 year or 2 at least longer than that. Where do you think we are in the omni-channel cycle here in terms of your target market?

Yes, yes, that's a terrific question, Yun. I think there's plenty of runway there. I think that the way we look at it, there are really kind of 3 phases of the retail and omni-channel revolution that we're in. Phase 1 is really attracting the customers and making the promises, which really means a focus on that front end, the websites, the web stores and so forth. The second phase is meeting those promises, so the sophisticated solutions, some of which we provide to enable to get products in the hands of the customers. And we're only -- in our view, only the market leaders are entering into Phase 2. And then there is a Phase 3 that really we're not seeing anybody yet embark on, but we are preparing for with our research and development investments. And that is bringing together an optimizing inventory labor forces and all of the other assets in the business across channels. The other piece that is not yet matured out, as much as it will in our view, is both manufacturers and wholesalers are beginning to participate in this omni-channel revolution. As the retail -- as the wings of the retail butterfly flap, so are the other industries and verticals impact it. And I think there's still a good healthy amount of work to be done there. And the final piece of that is we're starting to see manufacturers and wholesalers essentially conduct business directly with consumers and they have typically not been terribly well equipped to do that from a IT infrastructure and supply chain perspective. So the summary of that, we feel like there's plenty of runway ahead here.

Great. So that kind of leads to my question on acquisitions. Obviously, you guys have not done much there for some time. And obviously, omni-channel business -- as the omni-channel opportunity driving your business, can we expect maybe some change in your acquisition strategy going forward to better capture this opportunity?

I don't think you should expect any change. That change is being that we would like to be acquisitive, but we have 3 principal tenets to our acquisition strategy. One is we don't buy more of what we've already got. B, there must be terrific technology alignment and it must be strategic from a product footprint perspective. That's obviously also assuming it will be accretive to our earnings and those kinds of things as well. So we are always on the lookout. We're anxious to do acquisitions, but we will not be overly anxious and do anything reactionary.

Yun, the other thing I would add to that is, we believe that we're leading innovation in the space and platform is a key differentiator for us.

Got it, great. And then, Dennis, can you just talk about the sequential decline in deferred revenue balance? Is that simply a timing of cash collection and I'm assuming also the fact that Q1 level was pretty high as well?

Yes. It's timing of cash collection, but it's also recognition of annual renewals driving down in the quarter. So prior quarters, Q4 -- Q2 through Q1 annual renewals.

[Operator Instructions] Your next question comes from the line of Mark Schappel from Benchmark.

Dennis, starting with you tonight. Operating cash flows, a little bit lower than I expected, lower than last year. Could you just run through that real quick? Was there a onetime event that kind of spiked up last year's number?

No, no onetime event. We've got -- we've had record revenues on the first half of the year so we put a little more powder on the balance sheet with trade receivables, and that's also driven up our deferred revenue as well with maintenance. And then on top of that, our cash tax payments are up substantially year-over-year because we're making more money. So it's more of a timing thing. If you look at last year, we had a strong first quarter -- or I'm sorry, a weak first quarter, strong second quarter. This year, we had a very strong first quarter on global collections and our collections pace is very solid in Q2. We just had some pretty significant tax payments in the quarter, as well as record revenues in the quarter.

Okay, great. And then with respect to the rupee gains in the quarter, are they reflected in the other income line?

Absolutely. It was all in the other income line. We had about $112,000 total FX benefit to operating profit, period. Other income is below the operating profit line.

And then, Eddie, moving on to you here. I'm just wondering if you could just talk about some of the general demand drivers you're seeing, especially in your core Warehouse Management market. We've talked a lot about omni-channel, but maybe talk about some of the other things you're seeing out there?

Yes. I mean, I think the biggest single driver is certainly the retail revolution, as we call it, Mark, an omni-channel. I would say that was certainly the -- certainly be the biggest. Our competitive position is strong so we're seeing a healthy amount of legacy replacement still, and also, frankly, replacement of older package software that's been around for 7, 8 or 9 years. So I would say the 2 primary drivers for WMS implementations and new business are omni-channel and legacy replacement.

And then I can't get off the call here without asking a question about your favorite competitor here. RedPrairie announced their new product roadmap here recently. I was just wondering if you could address any changes or maybe comment on the roadmap and your thoughts?

Yes. I'm not overly familiar with -- I think it's JDA now, really, is the company name. I'm not overly familiar with their strategy. I believe that they plan on bringing all of their -- I think it's around about 220 products together on a common platform and that's a commendable strategy, I think. We know because we've been at it. We spent a healthy amount of time and a healthy amount of R&D investment getting to that point. So embarking upon that journey is not one for the light of heart and one for the light of wallet. So we certainly commend them for going down that path. I think it's admirable. We'll certainly keep our eye on their strategy, but in the meantime, we will keep investing heavily in research and development and in innovation based upon the platform that we've built already over the last 4 or 5 years.

Your next question comes from the line of Terry Tillman from Raymond James. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Maybe just one more question, and I apologize, Eddie, if you already talked about this. But it has been an important initiative for the WMS platform initiative, and did you provide an update on where you are in terms of how many customers [indiscernible] -- and I assume, are we starting to get in the mainstream adoption of that or is that still more in the offing?

Yes. So actually, this is the first quarter that we haven't given an update on the number of customers or the number of installs. And you called it, Terry. It's really become so mainstream now. We're well over 100 sites installed and we just feel like we're past that point where it's worthy of reporting. Once you get over 100 sites live, we're pretty mainstream at that point. And just about every -- with maybe an exception of an existing customer rolling out, every new sale and every new implementation is now based upon WMS on the platform, number one. And number two, we talked about briefly the position that it's risen to, in the Gartner Magic Quadrant, top right and best and brightest in the group.

Plus our competitive win rates continue to validate our strategy.

There are no further questions at this time.

Good. Okay, well, thank you, Kyle, and thank you, everybody, for taking the time to join us this afternoon. We certainly appreciate your interest and look forward to speaking to you again a little bit later in September. Thanks, and have a great afternoon.

This concludes today's conference call. You may now disconnect.