Manhattan Associates, Inc. (MANH) Q2 2013 Earnings Report, Transcript and Summary

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. With solid demand, we hired another 50 associates across the globe in the quarter. Year-over-year, we have grown our services practice by nearly 200 associates, up 13%, as we continue to support growth for demand and focus on customer satisfaction. Maintenance revenue for the quarter totaled $25.7 million, increasing 8% over last year. Solid license revenue performance, cash collections and retention rates of 90-plus percent contributed to year-over-year growth. As a reminder, we recognize maintenance renewal revenue on a cash basis so the timing of cash collections can cause inter-period lumpiness from quarter-to-quarter. Consolidated services margins for the quarter were 55.6%, exceeding our expectations. We expected our first half 2013 services margins to be in the range of 53.5% to 53.8%, and we achieved 54.6% due to our strong Q2 results. With the recent hires I mentioned earlier, second half projected hires of 50 to 100 associates, combined with lower utilization in Q3 and Q4 due to summer and seasonal holidays, we continue to expect our full year 2013 services margins to be in the range of 53.75% to 54.25%. Turning to operating income and margins. With solid revenue growth and expense management, we delivered record Q2 adjusted operating income of $28.3 million with an operating margin of 27.6%, up 270 basis points over Q2 2012. On apples-to-apples, excluding the impact of the sales tax reserve totaling $1.6 million, Q2 operating margins were 26.1%. The reserve release contributed 150 basis points of onetime benefit to our operating margin for the quarter and 80 basis points year-to-date. The benefit of the sales tax reserve release is reflected in the G&A line and operating expenses. Also, in the quarter, we had a nonmeaningful, positive FX impact to operating profit totaling $112,000. For the full year, we are now targeting a 130-basis-point expansion in 2013 operating margin, including the sales tax reserve reversal. Excluding the sales tax benefit, the underlying operating profit improvement or margin represents an 80- to 100-basis-point improvement compared to our previous target of 50 basis points. We expect Q3 and Q4 operating margins to run at about 24.5%, adjusted for quarterly license and services revenue mix due to seasonality. Below the line, other income was $1.2 million in Q2, which included an FX gain of about $1 million in the quarter or $0.03 benefit to Q2 results, and a $0.01 incremental benefit over Q2 2012, which had an FX gain of about $600,000 last year. Regarding taxes, our adjusted effective income tax rate for Q2 was 36.4%. We are projecting a second half effective rate of 36% and we should close out the full year with an overall effective tax rate of about 35.5%. Transitioning to diluted shares. For the quarter, diluted shares totaled 19.5 million shares, down from Q1 2013 shares of 19.7 million. We repurchased 196,000 shares of Manhattan common stock in the quarter, totaling $14.4 million against option exercises of 48,000 shares. For the balance of 2013, we estimate Q3 and Q4 diluted shares to be about 19.5 million and the full year weighted average diluted shares to be 19.6 million. Our estimates do not assume additional common stock repurchases. And lastly on shares, last week, our board approved raising our share repurchase authority limit to a total of $50 million. That covers the adjusted results. Our Q2 2013 GAAP diluted earnings per share was $0.89, increasing 27% over the $0.70 we posted in Q2 2012. Our GAAP performance was driven by adjusted operating results. A detailed reconciliation of GAAP to non-GAAP adjustments is included in our earnings release today. Turning to cash flow. For the quarter, cash flow from operations was $13.6 million, down from $20.9 million generated in Q2 2012. Year-to-date cash flow from operations versus 2012 is flat at $34 million due primarily to working capital growth on record first half revenues and increased estimated income tax payments on higher taxable earnings. Our DSOs were 61 days versus 56 days in Q1 2013 and 60 days in Q4 2012. Capital expenditures were $1 million in the quarter and we continue to estimate full year 2013 CapEx to be about $6 million to $8 million. Our balance sheet continues to support long-term strategic flexibility and stability with 0 debt and cash and investments totaling $106.5 million at June 30, 2013, compared to $108.5 million at March 31, 2013, and $103 million at the end of Q4 2012. That covers our results. Now I'll update our 2013 guidance and then hand off to Eddie for the business update. Overall, while we continue to remain cautious given stagnant global growth, we are expanding our existing revenue guidance range and are increasing our EPS guidance to include the impact of favorable Q2 results. Our caution regarding the global macro picture is that with business uncertainty comes buying hesitation with respect to IT capital spend. Unfortunately, these headwinds for software companies continued to persist. That said, for full year 2013 revenue, we are adjusting our guidance range from $410 million to $415 million to $407 million to $415 million, representing 8% to 10% growth over 2012. Our hardware and other revenue was down 8% in Q2 so we're holding the top end of the range to our original guidance and lowering the bottom end of the range to primarily contend with lower hardware sales as a percent of our overall total revenue mix. We expect our full year total revenue percentage split to be about 48% to 52%, first half versus second half. We expect Q3 license revenue to be slightly lower than Q4 license revenue due to typical seasonal summer holidays, impacting buying, and services revenue down sequentially from Q3 to Q4 due to traditional seasonal holidays. For 2013 adjusted diluted earnings per share, we are raising our range to $3.37 to $3.45, representing 20% to 22% growth over 2012 adjusted EPS of $2.82. With the combined $0.08 Q2 EPS benefit from the sales tax release and the $0.03 FX gain in other income, we now expect full year EPS to have about a 50-50 first half versus second half split for the year. The $3.37 bottom end of our range excludes the $0.03 impact of our Q2 FX gain in other income. Our revised 2013 GAAP diluted earnings per share guidance range is $3.07 to $3.15, representing 20% to 23% growth over 2012 GAAP EPS of $2.56. The $0.30 full year EPS difference between GAAP and non-GAAP adjusted EPS represents the impact of stock-based compensation expense. Regarding adjusted operating margins, due to strong operating results combined with the onetime benefit of the Q2 sales tax reserve, we now expect our full year 2013 adjusted operating margin to improve by about 130 basis points over 2012. Excluding the Q2 sales tax benefit, as I mentioned earlier, we expect our full year underlying operating margin expansion to improve by 80 to 100 basis points versus our previous forecast of 50 basis points. And we expect Q3 and Q4 operating margins to run at about 24.5%. That covers our 2013 guidance. Now I'll turn the call back to Eddie for the business update.

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 flexible shopping choices and timely service. We believe that supply chain commerce is an emerging model for growth and profit in today's omni-channel customer-centric landscape. For companies to do this, they need a wealth of new capabilities. Leading companies see our solutions such as Enterprise Order Management, store order fulfillment and inventory management and distributed selling as key to omni-channel selling infrastructures of the future. They're critical elements in enabling seamless customer experiences and increasing revenue. And we're helping companies put their customers at the center of the enterprise and our efforts are bearing fruit in our win rate and our loyal customer base. The push many retailers are making to integrate stores into their fulfillment network, use the web more than ever and bring these experiences to the customer on their mobile devices plays well with both our heritage and our future. Manhattan has the world's leading solution for managing and optimizing inventory, ensuring products are in the right place at the right time and to enable the fulfillment of customer demand. To this end, we're seeing our customers and prospects seek solutions to expand their execution capabilities from the traditional distribution center across the supply chain and, ultimately, into their retail stores. And you should expect to see us continuing to invest in innovation across our solutions in order to provide the best tools available to support businesses in the modern age of commerce. A meaningful portion of our second quarter WMS and non-WMS license activity was driven by existing and new customer omni-channel initiatives. And we're pleased with the successes we have achieved over the past year or so, thus validating our product strategy. On the customer front, we had a successful quarter adding new clients and expanding relationships with existing clients. Software license wins with new customers permitting us to share their names included ERAM, Lilly Pulitzer, MSC Industrial Direct, PriceSmart, Queensland Health and Team Hardinger. Expanding relationships with existing customers such as Alliant Techsystems, American Eagle Outfitters, Bed Bath & Beyond, Belk, B & R Enclosures, Cabela's, Celadon, Cotton On Group, DHL Supply Chain, Exel, Guess?, Holiday Classic, Michael Kors, May's Zona Libra, Northern Safety Company, Panalpina, Pearson Education, Pro Silver, PUMA, Shanghai Pharmaceutical, The Harvard Drug Group, The Jones Group, Tory Burch and United Distributors. Our professional services business around the world continues to perform very well and certainly received very high marks for customer satisfaction. Year-to-date, our global services team have helped customers go live with solutions in more than 150 locations. A key achievement is our growth in successful implementations of our platform solutions, along with solid demand. We continue to be the leading innovator in supply chain commerce technology with a global team of about 650 people dedicated to research and development. At the core of our success is our strategy to grow through investment and innovation. Developing a supply chain process platform-based suite of solutions distinguishes us from all other competitors. Our research and development team continues to do an excellent job of deriving -- driving innovation in all product areas and we continue to deliver more robust and more efficient solutions to the markets we serve. In May, Gartner released their Magic Quadrant for Warehouse Management systems, naming Manhattan's WMS on the platform as the category leader. This marks the ninth consecutive year in the leadership position based upon completeness of vision and ability to execute, while validating our $300 million investment in research and development since 2006 to develop our supply chain commerce solution, architected to anticipate, align and adapt in a new omni-channel world. Regarding our global associates, we ended the quarter with 2,450 associates around the globe, nearly 200 more than Q2 2012. Essentially, all of the headcount growth over the past years in our Professional Services group based upon strong demand to support top line growth, we finished the quarter with 66 people in sales and sales management with 59 quota-carrying sales reps. That's up 1 rep from Q1 and 9 from Q2 2012. We are looking to add about half a dozen additional sales professionals during the balance of 2013 with the majority of those in the Americas. Finally, as I mentioned on the last call in May -- on our last call, in May, we hosted our annual Momentum 2013 customer conference in Las Vegas. We had record attendance and an upbeat focus on our solutions offerings. The conference theme was Supply Chain Commerce: Where Supply Chain and the Market Meet. And the content was all about the benefits of utilizing our suite of solutions on a common supply chain process platform and omni-channel world to maximize revenue, while lowering total ownership costs and extend market advantage. So let me close our prepared remarks with a brief summary. We're very pleased with our second quarter financial results. Our relative competitive position continues to be strong and improving. We continue to be the leading innovator in supply chain commerce delivering solutions to extend our market leadership. We have the world's most talented supply chain employees, the best software solutions with good market momentum, and we're looking forward to a solid second half of 2013. Kyle, we'd be happy now to take any questions.

[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.