Greetings, and welcome to the Blackbaud First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tony Boor, Chief Financial Officer. Thank you. Sir, you may now begin.

Good morning, everyone. Thank you for joining us today to review our first quarter 2013 results. With me on the call is Marc Chardon, our President and Chief Executive Officer. We both have prepared remarks, and then we'll open up the call for your questions. Please note that our remarks today contain forward-looking statements. These statements are based solely on present information and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recent annual report on Form 10-K and the risk factors contained therein, as well as our periodic reports under the Securities Act of 1934, for more information on these risks and uncertainties and on the limitations that apply to our forward-looking statements. Also, please note that a webcast of today's call will be available on our Investor Relations section of our website. With that, let me turn it over to Marc to review our high-level financial performance and business highlights, then I'll come back at the end to provide a great -- greater details on the first quarter results, as well as guidance for the second quarter. Marc?

Thank you, Tony, and thanks to all of you for joining us today to review our first quarter results, which represented a solid start for 2013. We're pleased to have delivered non-GAAP revenue and profitability that were above the high end of our guidance ranges. In the first quarter, we began to benefit from the significant actions we've undertaken in recent months to realize cost synergies as we integrated the Convio acquisition. This includes the initial cost synergies that we achieved in 2012, plus an additional $9 million to $10 million of annualized cost savings that we initiated during the first quarter of 2013. With our improving operational efficiency, Blackbaud is now better positioned to deliver both higher profitability and make important investments in our business that will help our much-larger company to scale more effectively and efficiently for many years ahead. We believe that our ability to improve the efficiency of Blackbaud, following the integration of Convio, will drive increased shareholder value. In addition, we're focused on taking the steps necessary to ultimately realize the revenue synergy potential of our combined company as another important lever in shareholder value creation. We're still in the early stages of implementing our integrated product strategy and we're encouraged by the customer feedback and our differentiated ability to deliver best-of-both-worlds online fundraising and CRM offering. Now let me provide a brief overview of our first quarter financial performance. We delivered non-GAAP revenue of $116.2 million, which exceeded the high end of our guidance. We generated non-GAAP operating income of $20.9 million, which was well above the high end of our guidance range. Due to a combination of solid revenue performance, greater-than-expected cost savings from the actions we undertook in January and the timing of certain investments that we plan to make in our…

Thanks, Marc. We are pleased to have started 2013 with a solid performance that reflects non-GAAP revenue and profitability that exceeded the high end of our guidance ranges. We are pleased to see the benefits from our focus on positioning Blackbaud for improved profitability, while we also remain focused on taking the steps to drive improved revenue growth over time. Let me begin with a review of our first quarter results starting with the P&L. GAAP revenue was $115.6 million, and non-GAAP revenue was $116.2 million, which exceeded the high end of our $113 million to $115 million guidance range, and compared to the $94.7 million in the first quarter of 2012. Non-GAAP subscription revenue was $47.9 million, compared to $28.1 million in the first quarter of 2012, and down from $49.1 million last quarter. Subscription revenue represented 41% of our first quarter revenue, up from 30% a year ago. As we noted last quarter, our transaction revenue is seasonally weakest in the first quarter. We anticipate delivering sequential growth in subscription revenue throughout the rest of 2013. Maintenance revenue was $34.1 million for the first quarter, and up 2% on a year-over-year basis. As we continue to benefit from our best-in-class renewal rates. When combined with our subscription revenue, our total recurring revenue was $82.1 million for the first quarter, an annualized run rate of over $328 million. License revenue in the first quarter was $3 million compared to $7.2 million a year ago. As a reminder, our first quarter of 2012 license revenue benefited from timing of revenue recognition related to certain Blackbaud CRM transactions. While license revenue can be volatile on a quarter-to-quarter basis, our license revenue continues to become a smaller part of our overall revenue mix due to the growth in our subscription business. Services…

[Operator Instructions] Our first question comes from the line of Tom Roderick with Stifel. Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division: So Marc, you talked briefly about some new product developments that sounds pretty interesting here as you get into the first half and -- first half of the year. In particular, you highlighted an integrated Luminate Online-Raiser's Edge offering. So I'm just wondering if you could just provide some more detail as to what that might that look like, how you plan to sort of migrate existing customers on both sides of the table, and how you go forward there? And then second part of the product development question is, the analytics offering and the move to bring Wendy Fox back in to run that division sounds pretty intriguing. How much work needs to be done to get sort of an evolved product at the door, how much have you done? Just kind of curious as to additive investments needed to be made there?

Hi, Tom. I think saying that it's an integrated Luminate Raiser's-Edge offering is probably one step-- too much like one product. It -- the current roadmap is to provide an integration interface between the Luminate Online offering and the Raiser's Edge. There are obviously thousands of Raiser's Edge customers, who could benefit from the industry-leading e-mail and online marketing tools and so that's what we will be delivering in Q2. We have early adopters testing the Luminate-RE interface at this point. So don't think of it today as an integrated single product, think of it as 2 products that work together in a way that's much better, very similar, if you will, reminiscent to the level of integration with the BBNC product. That said, the Luminate product continues to have its own independent database, so it can run independently of the Raiser's Edge. And one of the key attributes of Luminate is it's a door opener, it's a wedge product, and it can get us into quite a few mid-market and upper-end market customers who would be leading with a marketing product as opposed to leading with a CRM purchase. On the product development front for Wendy's business, there's a lot of intellectual property that we have both in our internal and our analytics organization and in the acquisition of Strategy 1 that we came -- came with the Convio acquisition. And so the first step here is to put better data warehouse, I mentioned some of that in the infinity platform release that we just had. So the first steps are reporting data warehouse, and then the strategic partnership with customers to get the most out of your data that are in those. We'll see later whether there are sort of more self-service products that need to be done, but those aren't on the roadmap yet. Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division: Okay. No, it's good detail. So, Tony, in the cost side, admirable job of cost containment. When I look at the sales and marketing line, you're down a couple of million per quarter from where we were at in the third quarter here. So that's good cost containment. I guess, I'm curious as to how you feel about the sales coverage on a -- well, just call it, on a global basis? How do you feel your sales coverage is? Do have enough firepower in the sales organization? Or do you need to expand that more meaningfully as you go on throughout the year?

Thanks, Tom. So we are certainly down -- we were very successful in the integration efforts and the synergy efforts post-Convio, and so we saw some significant reductions as a result. We had, obviously, some additional reductions with the actions we took in January. That being said, we still have 60-plus open positions that we're recruiting for in sales, marketing and products, all of which will be focused, obviously, on driving top line growth. So I would tell you we're in good shape, but are hiring to add some additional resources in those 3 spots.

The next question comes from the line of Ross MacMillan with Jefferies. Ross MacMillan - Jefferies & Company, Inc., Research Division: Tony, can you just start on the cost side? I noticed -- I think, I'm right in saying that you're restructuring charges in the quarter, I think, were quite -- they were quite a lot lower than I think you had planned for. Can you just sort of touch on that? I think you've made some comments around resource requirements as you were making some of these changes?

Ross, I don't know on any specific guidance we gave respective to the anticipated restructuring charges. But I would tell you, they were largely in line with our expectations. Now we had a couple of different pieces and parts there with the work we did in January and still some carryover, I think, from some of the efforts related to our San Diego facility and move to Austin for our [indiscernible]. But outside of that, I think, we are largely in line. And then, I think, from a resource perspective, maybe what you heard in my script, we did benefit in the quarter just from a lot of the actions we've taken in 2012 regarding the back office and the automation and simplification and standardization of process, we did have a benefit in Q1 where we just didn't need as many resources to meet the demands of the business in the quarter. So we did see some positive benefits from those things that we did in 2012. Ross MacMillan - Jefferies & Company, Inc., Research Division: Great. And maybe just as a follow-on to that. The cost savings that you've outlined for 2013 above and beyond the action taken last year and this sort of tradeoff, if you will, from an investment standpoint, is there a particular point in the year where you think that we'll have, basically, worked through these investments such that we could start to see line of sight to sort of improving margins? Not on a year-on-year basis, but I guess sequentially. I'm trying to understand the shape of the cost structure this year?

I think with -- all I can give you is the guidance that we've provided because we've got, obviously, Q1 actions and Q2. The investments we're making are going to be spread throughout the year. So some more investments, obviously, we had planned on making in Q1. And just with all the actions and disruptions that we've put in to the system in Q1, we wanted to make sure the businesses was stabilized and that we felt comfortable with where we were as an overall business before we took further actions. And so, we did have some delayed investments and spending from Q1 that will push out. But we're also, as Marc alluded to, going to accelerate some investments and some products like Everyday Hero to bring it to some other markets more quickly than we anticipated. We're making some fairly significant investments and are looking to accelerate a few of those on getting off disparate systems for our sales and marketing team, as well as professional services. And then we are also making some investments in best practices and solutions for the back office, still, with travel and entertainment and commission systems and some other things. So I would say that, that incremental investment in the business is going to be spread largely through 2013. Some of those investments will carry into '14 because some of them are rather large back-office systems that will take more than the year to fully implement. Ross MacMillan - Jefferies & Company, Inc., Research Division: And then just on the gross margin, specifically. I think the subscription gross margin, I think, is self-explanatory. You did see a nice improvement in services' gross margins, and we're starting this year, obviously, at a pretty high level. Did you make any comments around -- I think you said something around gradual improvement in profitability? I'm just curious as to how you would have to think about the gross margin structure on services this year.

I think gross margin in services have 2 countervailing factors that work when you look at Q1, and then throughout the year. The one is that, as you may recall from the past, Ross, Q1 has sequentially had 600 to 700 basis points lower margins sequentially than Q4. So that was sort of masked by the opposite effect of the fact that the Convio services margins was very, very low. And so you sort of have the drop. You have a year-over-year improvement in a couple of dimensions, counteracting things that were historically sort of down ticks in the past, that sort of camouflages some of the services improvement. So what you've seen, basically, going forward is that you'll see slow improving in the services margins sequentially. You'll see it based on the implementation of quality assurance processes, but those take time to play out because they sort of get -- they're more impactful on new deals as you sign them than they are on old deals as you're partway through. And you'll continue to see reductions of non-billable work throughout the year. I mean, we've made huge progress compared to last year. And we don't talk about problem CRM deals anymore. In fact, a couple of those CRM customers were additional cost -- added additional branches to their -- to the CRM offering this last quarter. So it shows you the improved satisfaction level has gone up. So that's sort of an overall picture, slow improvements throughout the year. But I think the level of improvement that we see is better than you might estimate just based on the combination of those 2 factors in Q1. Ross MacMillan - Jefferies & Company, Inc., Research Division: Great. And maybe one last one for you, Marc, if I could. As you think about CRM and bringing to that downmarket, can you just help us to understand how you balance that between the general markets' opportunity and the traditional Raiser's Edge business? How do you balance. If you will, the -- that bringing to downmarket of CRM with the traditional general markets business?

Anytime you take an RE opportunity at the high end of the mid-market or at the low end of the enterprise and you turn an RE customer or an RE prospect into a CRM prospect, you're increasing the average revenue stream, because what the customer is buying is so much more. So that's part of the RE next strategy, is to take the top end of the RE market and convert it into one of the 2 CRM products. In fact, one of the Luminate CRM product sales in the past quarter was an RE conversion. That might not have happened under the old regime had we not been one company. But it's certainly is an improvement in both the customer -- the customer's ability to spread the product and the benefit of the product across a lot of users in the organization. And it produces an ongoing recurring revenue stream that's higher than the maintenance would've been. Bottom line, I'll take as many RE to CRM conversions as I can get.

The next question comes from the line of Matthew Kempler from Sidoti & Company. Matthew J. Kempler - Sidoti & Company, LLC: So in 2012, on the CRM side, one of the challenges we talked about is that we had a pipeline of larger and lumpy deals, and you're hoping to balance it out with smaller deals, but the product wasn't quite there yet. So I'm wondering if you can update us on your thoughts on the CRM product being more readily available for the midmarket or the lower end of the enterprise? And how that pipeline is starting to fill up?

Thank you for the question. So we're beginning to see some good progress there. I'd say, there are a couple of proof points and then a couple of sort of updates on the progress itself. We just went live with a non-English language under $500,000 CRM implementation that was very prescriptive and very packaged. What that depends on is your ability to be able to do the data conversion in a very prescriptive, very automated way and to be able to have tools for configuration management that will allow you to deploy the application with much less professional services intervention. And tools for both of those things have made quite a bit of progress in the last 2 to 3 quarters. So right now, the prescriptive packaging, the data conversion and the ability to have the deployment tools are the areas of progress. I'd also say that some sales discipline is critical. If you sell -- if you tell the customer this is what you need, and we often know better than the customer in some ways what the right best practice is to apply, and they're looking for that expertise. If you -- if you're selling a solution that is bounded and prescriptive, that helps us also go downmarket. The final point is that the Luminate CRM product was designed to go to the bottom end of the Blackbaud CRM product space. And so it has been effectively going downmarket. And there are, in addition to the CRM sales that you'd see in the enterprise space, there's opportunity in the upper end of the general market space already. Matthew J. Kempler - Sidoti & Company, LLC: Okay. And then you've talked about, in the past, lead ratio of license to subscription deals. I'm wondering if you could just give us an update on that?

I don't know the number off the top of my head. It's a huge majority of units are -- a huge majority of units are subscription. But Tony, do you?

I don't know that we'd given that. And I don't have that available. Matthew J. Kempler - Sidoti & Company, LLC: Okay. Then the last thing to me is just on the service revenue side, can you just give us your thoughts, as the year progresses, do you expect service revenues to continue to climb sequentially as we reallocate resources from low billable work? Or will the shift to subscriptions keep services kind of in this type of a range that we saw in the first quarter?

So we expect our license revenue to grow throughout the rest of year. So we think we were certainly at the low point as far as license revenue and the large Blackbaud CRM deals closed in the quarter. And with that, as you know, Matt, comes a fairly good size amount of services business. So I would expect, as we continue to grow on those CRM deals throughout the year and license revenues grow, we'd also have services revenue growth.

Thank you. It appears there are no further questions at this time. I would like to give the floor back over to management for any concluding remarks.

Well, thanks, everybody, for joining us on the call today. We had a good start, good solid start to 2013 in Q1 with revenue and profitability exceeding the high end of our guidance. We've really begun to benefit from these significant cost savings that we generated both during the integration of Convio and also what we undertook in the first quarter that's helping to drive improve profitability and efficiency, but also gives us an opportunity to invest in areas which will really have impact over time in terms of revenue generation. We've seen continued improvement in the Luminate pipeline. I have to say, we executed probably a little bit better than I expected. And I had some reasonably good expectations there, so we're optimistic that this business will continue to improve throughout 2013. And finally, I remain optimistic about the overall market opportunity for the company. Our enhanced market position, after the acquisition of Convio, and our more efficient cost structure really position us very well for 2013 and beyond. So I look forward to updating you again on the progress at our next earnings call in August. Thank you very much. Goodbye.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.