Manhattan Associates, Inc. (MANH) Q4 2013 Earnings Report, Transcript and Summary

Good afternoon. My name is Mike, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this call is being recorded today, February 4, 2014. I would now like to introduce Chief Financial Officer, Dennis Story, of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, Mike, and good afternoon, everyone. Welcome to Manhattan Associates 2013 fourth quarter earnings call. I'll review our cautionary language and then turn the call over to Eddie Capel, our Chief Executive Officer. 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 risk 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. And finally, as you all are aware, on December 19, 2013, our Board of Directors approved a 4-for-1 stock split effective January 10, 2014. Unless indicated otherwise, our references to earnings per share and diluted shares during this call, including historical results, have been adjusted for the stock split. For reference, you'll find 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, everyone. Overall, 2013 was a very successful year for Manhattan Associates. Financial results were solid. Our competitive position improved considerably. Customer satisfaction increased. We continued to innovate at a rapid pace and extend our distribution management in omni-channel market leadership. All positioning us very well for 2014. We set new Q4 and full year revenue and earnings per share records. Q4 total revenue of $107.6 million increased 13% and adjusted earnings per share, on a split-adjusted basis, of $0.24, increased 33% over Q4 2012. For the full year 2013, total revenue of $414.5 million increased 10%, and adjusted earnings per share, again on a split-adjusted basis, of $0.92, increased 30% over 2012. The combination of strong revenue growth and prudent expense discipline led to our most successful year in the company's history. And Dennis will take you through all the details in just a moment. Importantly, we posted software license revenue of $17.3 million in Q4, up 20% versus Q4 2012. We closed 5 $1 million-plus license deals in the quarter, 3 with new customers and 2 with existing customers. One of the large deals was in Europe and 4 were in the U.S. The European deal and 2 of the U.S. deals were led by omni-channel initiatives. And 4 of the 5 deals included our platform-based Warehouse Management system. Also, in 4 of the 5 deals, we were successful head-to-head against very strong competition. Our sales teams across the globe executed well, and our competitive win rates remained strong. In the quarter and for all of 2013 in head-to-head sales cycles against our major competitors, we're winning about 75% of the time. For the quarter, about 60% of our license revenue was from net new customers. And for the year, we finished at about 35% of total license revenue in that category. We continue to acquire world-class new brands with 7 of the $14 million-plus license deals closed in 2013 coming from net new customers. Although the ratio of net new customers can fluctuate somewhat from quarter-to-quarter, we're quite pleased with our new customer acquisition performance. Our ability to win net new global brands continues to be a validation of our organic investment growth strategy, particularly in a sluggish macro environment. Whilst our competition is focused on acquiring legacy supply chain technology with little investment and innovation, digital commerce has forever changed supply chain. The intersection between the consumer and supply chain has evolved, and Manhattan continues to focus on being the leading pure-play technology innovator in the supply chain commerce market, leveraging our platform strategy and investments in research and development to activate supply chain commerce for our customers and industry leaders in the new omni-channel world. Our consulting services business continue to post solid results with Q4 revenue up 12% in a seasonally low quarter due to the retail holiday season. And for the year, the business surpassed the $200 million threshold, posting $211 million in revenue on 14% growth. With strong demand, we added about 50 people to our staff in Q4, and we continued the search for about 100 more professional services people to add to our staff in order to meet the needs of our customers. As we look forward, we're very well positioned for 2014 and beyond. We're not expecting the global economy to improve significantly in 2014. And while we're certainly not immune, we continue to be optimistic but also a little cautious about our future. Our pipeline is solid. Services business demand is strong. Customer satisfaction is good. Implementations of our solutions continue to go very well. And we're very excited about the innovation in the next releases of our software solutions that will be released in 2014. I'll provide a little more color in my business update following Dennis's review of our financial results.

Thanks, Eddie. I'll cover our Q4 and 2013 results followed by our 2014 annual guidance, and then I'll turn the call back to Eddie. As Eddie mentioned, we posted Q4 total revenue of $107.6 million, up 13% from last year and adjusted earnings per share of $0.24, increased 33% over Q4 2012. Apples-to-apples, adjusted earnings per share was $0.22, growing 22% excluding about $0.02 of favorable FX currency impact driven by rupee depreciation and a lower effective tax rate driven by state R&D and jobs tax credits. Strong revenue growth in license services and hardware combined with solid operating expense leverage and a lower effective tax rate led to the strong performance in the quarter. Our Q4 2013 GAAP earnings per share was $0.22, increasing 38% over Q4 of 2012. Full year total revenue totaled $414.5 million, growing 10% over 2012. Total revenue by region was solid with Americas up 10%, EMEA up 7%, and APAC growth was 20%. Full year adjusted earnings per share was $0.92, growing 30%, and GAAP earnings per share was $0.86, growing 34% over 2012 on strong services revenue growth and operating expense leverage. Apples-to-apples, adjusted earnings per share grew 25%, excluding $0.03, or $4.1 million, pretax of favorable FX currency impact, which totaled $2.5 million, and a onetime sales tax reversal benefit of $1.6 million in the year. As you may recall, the release of the sales tax reserve occurred in Q2 2013, positively impacting G&A expense and operating income. This reserve was originally established in 2008 and was released due to expiring tax statutes. Regarding currency, for your reference as part of our supplemental information disclosure in today's earnings release, Item #5 provides a breakout detailing the currency impacts for both total company and the Indian rupee. Q4 license revenue increased 20% to $17.3 million over Q4 2012, and full year license revenue was $62.4 million, increasing 1% over 2012. Despite a sluggish macro environment, we continue to experience solid activity in our target markets, and the demand environment remains quite positive. Overall, our license performance continues to depend heavily on the number and relative value of large deals we close in any quarter. Given license growth has essentially been flat over the past 2 years and estimating sales cycles for large deals remains challenging, our goal for 2014 is to achieve about a 6% to 7% license growth rate over 2013. Q4 services revenue was $77.8 million, growing 8% over Q4 2012. For the year, services revenue totaled $315.9 million, an increase of 11% over 2012. As a reminder, total services revenue includes both consulting and maintenance revenue. As Eddie mentioned, we achieved new milestones surpassing $200 million in consulting revenue and $100 million in maintenance revenue. While holiday seasonality was a bit more pronounced this year, strong demand in Q4 consulting services continued as we posted revenue of $51.5 million on 12% growth and full year revenue of $210.8 million on 14% growth. For the year, we increased our global services headcount by another 9%, or about 130 heads, to meet customer demand. We added 20 new associates in Q4, and our Q1 2014 hiring plan is to add 100 more new associates. And we're off to a good start with 30 already in the door. Q4 2013 maintenance revenue of $26.3 million was flat compared to Q4 2012 due to strong collections pull-through we noted in our Q3 earnings call. Full year maintenance revenue grew 7% to $105.1 million over 2012. Solid license revenue performance, cash collections and retention rates of 90-plus percent contributed to the year-over-year growth. And as a reminder, we recognized maintenance renewal revenue on a cash basis, so the timing of cash collections can cause inter-period revenue lumpiness from quarter-to-quarter. As for consolidated services margins in the quarter, we posted 53.8% compared to 58.2% in Q3 2013 and 53.4% in Q4 2012. As typical, Q4 margins were down sequentially from Q3 2013 due to the usual Q4 seasonal holidays impact and the addition of 70 new billable professional services associates in Q3 and Q4 combined with the previously mentioned timing of maintenance cash collections. For Q1 2014, we expect services margins to be in the 53.5% to 54% range reflecting the Q4 2013 new hires and the Q1 2014 hiring plan aimed at adding about 100 billable heads. The investment of onboarding new staff in Q1 2014 combined with annual salary increases, which apply to all global employees on a January 1 cycle, and seasonally high payroll tax expense, will raise our cost of services sequentially from Q4 2013 to Q1 2014 by about 5% to 6%. For the full year 2014, we're estimating margins to be in the 55.5%, that's 55.5%, to 56.0% range. We expect Q2 and Q3 services margins to obviously increase as billability and utilization ramp for our Q1 hires then drop off again in Q4 due to the usual holiday seasonality. Our operating expenses, which includes sales and marketing, R&D, G&A and depreciation, were $32.2 million for the quarter, up 5% from Q4 2012 and $126 million for the year, a 1% year-over-year decline. Apples-to-apples, our full year underlying operating expense increased by 2% over 2012 excluding the year-over-year currency benefit of $1.4 million driven by rupee depreciation and the sales tax reserve release of $1.6 million, which is in the G&A expense line. For 2014, we are forecasting about an 8% increase in operating expenses driven by increased headcount investment primarily in R&D and sales, variable sales comp increases on higher license revenue, and investments in facilities and IT to support company growth. Excluding the 2013 sales tax reserve release, the year-over-year underlying operating expense growth is about 7%. Turning to operating income. Through strong revenue growth and operating expense discipline, we delivered record Q4 operating income of $26.7 million, growing 23% over Q4 2012. Q4 operating margin was 24.9%, up 220 basis points. Full year operating income totaled $108.6 million, increasing 23% over 2012 with operating margin of 26.2%, up 270 basis points. Apples-to-apples, operating income growth for the year was 19% with operating margin of 25.3%, improving 180 basis points over 2012, excluding $3.5 million of favorable FX currency impact and the sales tax reserve impact. So for 2014, we are currently estimating operating profit to grow 13% to 15%, and we are raising our operating margin expansion objective from 50 basis points discussed in our previous earnings call to 100 to 120 basis points, or 27.2% to 27.4%, for full year 2014. Below the operating profit line, other income, which primarily includes interest income and foreign exchange gains or losses, was a negative $118,000 in Q4 and a positive $1.8 million for the full year 2013. Consistent with prior years, we do not attempt to budget for FX gains and losses in other income, so we're forecasting quarterly interest income of about $250,000, totaling $1 million for 2014. Income taxes. Hold on to your belts and suspenders. Our adjusted effective income tax rate for 2013 was 34.8%, which benefited from 2 years of R&D tax credits recognized in 2013. This compares favorably to our 2012 effective rate of 36%, which included no R&D tax credit. So you may remember, last year in January of 2013, Congress approved both a retroactive R&D tax credit for 2012 and the full year 2013 credit. The 2012 R&D credit was recognized in Q1 2013, lowering the Q1 2013 effective tax rate to 32.8%. That's because you had a full year's recognition in Q1. During our last earnings call, we expected Congress would approve the 2014 R&D tax credit before December 31. But unfortunately, a number of widely relevant U.S. tax law provisions affecting business, including the 2014 R&D credit, expired on December 31, 2013. With 2014 midterm elections and overall gridlock in Washington, a 2014 approval is uncertain. This has negatively impacted our forecast effective tax rate for 2014, which has now increased to 37% versus the 36% we discussed on our last call. This is notable for Q1 2014 and full year 2014 comps. Now turning to cash. Strong earnings growth drove record operating cash flow of $89 million in 2013, up 19% from $75 million in 2012. 2013's operating cash flow performance was especially impressive when you consider global income taxes paid more than tripled, representing a $15 million incremental increase over 2012. Capital expenditures for 2013 totaled $4.7 million. For 2014, driven by company growth and legacy IT systems replacements, we estimate capital expenditures to be in the range of $8 million to $10 million. We closed the year with $133 million in cash and investments compared to $126 million in Q3 of 2013 and $103 million in Q4 of 2012. We continue to carry zero debt on our balance sheet, self-funding our investments in innovation, growth and capital structure management from operating cash flows. Our Q4 DSOs were 61 days versus 58 days in Q3 of 2013 and 60 days in Q4 2012. Regarding capital structure, we reduced our common shares outstanding 3% in 2013 buying back 708,000 shares before the split, 2.8 million shares on a post-split basis, totaling $59.2 million offsetting option exercises of about 254,000 shares before the split and 1 million shares on a post-split basis. With our repurchase activity, last week, our board approved raising our repurchase authority limit to a total of $50 million, 5-0, $50 million. Regarding diluted shares for 2014, our weighted average share estimate for the quarters and full year is 77.1 million shares. Consistent with prior years, our diluted share estimate and EPS guidance does not assume any common stock repurchases in 2014. Now this closes the chapter on a fantastic 2013 year in terms of financial results. Now I'm going to move to our 2014 guidance. Overall, we continue to be committed to achieving steady organic revenue growth and earnings leverage through investment and technical innovation while efficiently managing our capital structure to drive shareholder returns. For 2014, our growth thesis is similar to what we put forth at the start of 2013. While there are modest signs of improvement, the global recovery cycle continues to be weak and slow, so we are going to remain cautious. For 2014 revenue, we are forecasting to grow total revenue at roughly 1.5x the market growth rate of 5% to 7%. Our current annual guidance for 2014 revenue is to deliver $450 million to $455 million of total revenue representing 9% to 10% growth. As I mentioned previously, coming off of 2 consecutive years of essentially flat license revenue growth, our goal for 2014 is to achieve a 6% to 7% license growth rate. From a revenue mix perspective given the unusually strong Q4 2013 hardware revenue result, we believe 2014 hardware and billed travel will decline over 2013 and will represent about 7% of total revenue. Overall, we expect our full year total revenue split to be about 49% in the first half, 51% in the second half. For license revenue, we are modeling a pure 50-50 split for first and second half with a normalized seasonal pattern of Q1 and Q3 license revenue lower than Q2 and Q4. And for services, as usual, Q4 revenue will be down sequentially from Q3 due to the seasonal holiday impact. For 2014 adjusted diluted earnings per share, our guidance range is $1.01 to $1.03 representing 10% to 12% growth over 2013 adjusted EPS of $0.92. Apples-to-apples, our underlying EPS guidance growth is 12% to 14% excluding the previously mentioned impacts of currency, the Q2 2013 sales tax reserve release and 2014's effective tax rate increase due to expired U.S. R&D tax credit provisions. With the beginning of the year salary increases worldwide, headcount additions to support services demand and a higher effective tax rate, we expect Q1 2014 EPS to decline sequentially from Q4 by about 10% while posting low double-digit growth over Q1 2013. And somewhat similar to revenue, we expect EPS to have a first half/second half split of about 45% in the first half to 55% in the second half. We expect our 3 remaining quarters of the year to average adjusted EPS of about $0.27, plus or minus, reflecting typically quarterly seasonal patterns for license and services revenue. For 2014 GAAP diluted earnings per share, we expect to deliver $0.94 to $0.96, representing 10% to 12% growth over 2013 GAAP EPS of $0.86. The $0.07 full year EPS difference between GAAP and non-GAAP diluted adjusted EPS is the impact of equity-based compensation, which we expect to be spread evenly across the year at approximately $0.0175 per quarter. That concludes my commentary on the financial results. Now I'll turn the call back to Eddie for the business update.

Thanks, Dennis. First, let me provide a little more detail in the deals we closed in Q4. As I discussed at the beginning of the call, we recognized 5 large deals in the quarter, 3 in retail, 1 in grocery and 1 in consumer goods. All 5 deals were driven by strategic technology modernization programs with 3 of the deals specifically driven by omni-channel initiatives. The other 2 large deals were driven by distribution management legacy system replacement programs leveraging our platform-based Warehouse Management system. Maybe not surprisingly, we're starting to see some additional omni-channel interest in the grocery vertical following the announcement that Amazon.com will be entering that space, initially in the NFL cities. And we believe that we some unique capabilities to help the leaders in this market develop new and differentiated offerings. For Q4 and full year, about 60% of our license fees were associated with Warehouse Management solutions and 40% representing our other solutions with retail, consumer goods and grocery being our strongest license fee contributors, making up more than half of the license revenue for Q4 and 2013. We continued to see solid momentum in our core verticals, led by retail. As we all know, it's being fueled by the digital commerce revolution and the way in which retailers wish to engage and service their customers. We believe supply chain commerce is the emerging model for growth and profit in today's omni-channel consumer-centered landscape. For companies to create this balance, they need a wealth of new capabilities and technologies. Leading companies are seeing our solutions, such as Enterprise Order Management, store inventory and fulfillment, distributed selling, and our omni-channel customer service solution that we released late last year, as a key to their supply chain commerce infrastructures of the future. They're critical elements in enabling seamless customer experiences in driving top line growth by converging front-end sales with back-end supply chain execution and efficiency. Our software, platform technology and experience help our customers adapt to the challenges of the omni-channel marketplace. And our efforts are clearly bearing fruit as shown by our win rates and the loyalty rewarded to us by our existing customer base. As I think we all know, Q4 2013 certainly put the spotlight on retailers. The importance of customer service placed their supply chains under new levels of stress. And while parcel [ph] delays may have made the late-season headlines, it certainly wasn't the only story. And the shift from walk-in commerce to e-commerce continues. In today's retail supply chains, you need to be commerce-ready. So over the past few quarters, we've been focused on the development of an offering we call flexible fulfillment. Consumers now expect unlimited choices. Choices of selection, of location and of convenience, hence the market need for flexible fulfillment. It's about helping retailers enable every point of inventory -- a distribution center, a store, a supplier, a fulfillment hub -- become a point of direct customer order fulfillment working to maximize supply chain and inventory investments to deliver both for the consumer and the retailer. Certainly, distribution centers still play a very critical role, for sure. And we continue to enhance our WMS solutions to achieve unmatched performance. This peak season, we saw our WMS customers achieve record shipping volumes while meeting very demanding customer service levels. But as omni-channel drives innovation and new options for consumers, stores play a brand-new role. You may remember, last year, we announced our store inventory and fulfillment solutions with over 1,700 deployments already completed at that time. And to further support our retail customers and their omni-channel ambitions, we released the latest version of this solution in Q4 2013. And its latest release features a purpose-built mobile application allowing store associates to stay right in front of the customer while performing important inventory lookup, selling and order fulfillment paths quickly and securely. Our Distributed Order Management system also supports flexible fulfillment in ways that no other supply chain commerce platform can. As marketing and consumer engagement strategies change season-to-season throughout the year, Distributed Order Management help retail -- helps retail supply chains respond, whether it's to minimizing fulfillment costs, managing distressed inventory or maximizing fulfillment capacity during peak season. This flexible fulfillment solution was actually launched by the National Retail Federation Conference in mid January and has garnered a great deal of interest already. And you'll 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 2013 WMS and non-WMS license and services revenue activity was driven by existing and new customer omni-channel initiatives. And we're certainly very pleased with the successes we've achieved over the past year or so in this area given that it validates our go-forward strategy. Software license wins with new customers that have permitted us to share their names included Arcadia Group, Body Central Stores, Desigual, Kintetsu World Express South Africa, Orchestra, National DCP, Santens Service, Woodcraft Supply, Zhejiang Geely Automobile and Zohoor Alreef. Expanding customer relationships with existing customers included AcuSport, Assuramed, Belk, Cornerstone Brands, Devanlay (Lacoste), DOME, Dubois Chemical, eStore Logistics, Express Scripts, Heineken Enterprise, GENCO Holdings, Gopher Sport, HEB Grocery, The Lehigh Group, Monoprice, Movianto, Nestlé Nespresso, Northern Safety, Phillips-Van Heusen, Simplehuman, Speed Commerce, Super Retail Group, True Religion Brand Jeans, Toys"R"Us and Uhrenholt. Our professional services businesses around the world continue to perform very well and receive high marks for customer satisfaction. As you might expect, we haven't been quite as busy bringing our solutions live in the retail vertical during Q4, but demand across other verticals remains high across the globe with preparations for Q1 and Q2 retail go-lives in full swing. There's been a particular focus on in-store execution solutions and multiproduct platform-based implementations over the past few quarters, and we don't expect that -- we do expect that trend to continue. Year to date, our global services team have helped customers go live with our solutions in more than 350 operational locations plus hundreds of retail stores. As mentioned earlier, we have a solid demand for our services and are looking to add additional staff for growth and driving customer satisfaction. For the year, we invested about $45 million in research and development, and we continue to be the leading innovator in supply chain commerce technology with a global team of over 650 people dedicated to research and development. At the core of our success is our strategy to grow through investment in forward-thinking intrinsic innovation, developing a supply chain process platform base suite of solutions that distinguishes us from all other competitors. Our R&D team continues to do an excellent job of driving innovation in all product areas with 26 new product releases in 2013. And we continue to deliver more robust and more efficient solutions to the markets we serve. For 2014, we plan to once again invest in R&D at about the 2013 level as we push to further distance ourselves from other solution providers. Regarding global associates, we ended the year with 2,530 employees around the globe, up nearly 130 over Q4 2012. Essentially all of our headcount growth over the past year is in our professional services group on strong demand to support top line growth and customer satisfaction. We finished the quarter with 67 people in sales and sales management with 58 quota-carrying sales reps, no change from the last quarter. We continue to look at -- to add about half a dozen additional sales professionals, the majority of them in the Americas. So let me close our prepared remarks with a brief summary. We're very pleased with both our fourth quarter and full year operating performance and financial results. As we did in 2013, we remain focused on our customers, seizing every opportunity and never settling. We work hard to make today better than yesterday and tomorrow better than today. Our relative competitive position continues to be strong and improving. We're investing in such a way that we can continue to be the leading innovator in supply chain commerce, delivering solutions to extend our market leadership and differentiation. We have the world's most talented supply chain employees, the best software solutions with great market momentum, and we expect 2014 to be another solid financial year for Manhattan Associates. Mike, we'd now be happy to take any questions.

[Operator Instructions] Your first question is from Mark Schappel with Benchmark.

Eddie, a question for you. Last quarter, I believe you mentioned that there were a handful of deals. I think they're principally midsized deals that got pushed off into December or even beyond. And is it fair to say that, given the results this quarter, that a good percentage of those were closed in the quarter?

A decent percentage, Mark. Certainly not all of them. We will see some pushing out here and there, but I think our sales teams around the globe did a terrific job of closing those deals, and our customers are looking forward to deriving value from the solutions.

Okay, great. And on the new product front, maybe you just give us a little glimpse of what we can expect this year.

So investment across all of our solutions, Mark, no question about that. The 22 products that we have in our portfolio, I think you should expect us to see -- you should expect to see us make more weighted investments toward the retail vertical, particularly in the area of distributed order management, call center applications, our store execution solutions and really the entire portfolio centered around the supply chain commerce initiatives. The Momentum will be -- Momentum, I used at conference in early May, we'll be showcasing some of our new releases for sure.

Okay. And the 6% to 7% license growth rate for 2014. Surprised a little bit how well that is, given the other comps from last year. Is there something out there you're saying that just -- that gives you a little bit of a pause on putting a higher license growth number out there?

Yes, Mark, it's called still a pretty stagnant currency sluggish global macro. And as you know, our propensity is, is to under-promise and attempt over-deliver. And given the fact that we've had 2 consecutive years of flat license revenue growth, our intention is to be conservative.

Okay. That's fair. And then, Dennis, one last kind of housekeeping type of item here. Did I hear you correctly, foreign exchange at about $0.02 of earnings?

$0.02 in the -- yes, the full year and roughly $0.01 in Q4.

Your next question is from Terry Tillman with Raymond James. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Just the first question, just relates to -- it was impressive to hear about the percentage of business from new customers. I guess, maybe, any comparison on new customer ASP or deal sizes versus existing customer deal sizes that you may be following in the quarter versus maybe a year earlier. Any changes there?

Yes. Hey, Terry, let me just interject. The actual new customer ratio in the license was 40% this quarter. That was my error, not 60%. On the number of $1 million-plus deals, it was 50-50. So still very strong. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Okay. And well, I guess, just maybe I could ask another question on just average selling prices. I mean, I know, historically, you've given a wide range, like, I don't know, 200, 350 to 700 -- it is really a wide range. Any trend you're seeing differently in terms of either number of modules folks are buying initially or anything that's related to some of these newer dynamics around omni-channel, or is it still about the same kind of ASP trend?

It's about the same ASP trend still in that 250 to 750 range. We're seeing some nice volume in the midsized deals as well. But overall, about the same trend.

But I think, as the percentage you show, particularly in Q4, we saw a little more slant toward non-WMS solutions and saw some terrific momentum in store order and fulfillment and Order Lifecycle Management, for sure.

And we continue to quote our WM, non-WM ratios, but omni-channel is driving some WM implementations as well. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Okay, okay. And I guess, on the confidence of omni-channel, I mean, how -- I'm just trying to get a sense on the sophistication of retailers for consumer product companies in terms of, do they actually craft RFPs more and more now that it's all about omni-channel, or does it start off, "We got an order problem. We want to be able to order at home, pick up in the store, or we want to enhance our WMS." So it really doesn't start as an omni-channel theme, per se, but it ends up there, or how often are you starting to see working very formal, "Hey, we're going omni-channel in a big way," and stick RFP around that from Day 1."

Yes. So, Eddie here, Terry. So the answer to that is, certainly, the leading retailers around the globe have an omni-channel vision, for sure, and it starts -- the conversation starts there. We are not actually seeing formal, written RFPs asking for omni-channel solutions. Frankly and to be perfectly honest with you, I think it's, firstly, an evolving space but also a very complicated one. And in the WMS, in the transportation space, in the labor-management space, it's pretty mature. There are templates out there that you can get from the consulting strategy companies and so forth. But in the omni-channel space, it's complicated and still emerging. So generally speaking, we engage with the client, and it's more of a -- a much more consultative sell. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Well -- and, Eddie, on the omni-channel front, when they reach -- it's based with dynamics around omni-channel, do you actually see nontraditional competitors somehow vying for something that maybe they're not even in the right place at the right time, or is it actually still the standard point solution providers in some of those categories you just mentioned?

Yes, so in a number of cases, what you see, Terry, is nontraditional competitors in the early stages of the sales cycle. When, really, the scope is still being defined, and at this point, the marketplace is still, in some cases, a little uncertain as to who the best solution provider is. So they may well call in some nontraditional providers. But by the time you get down to the shortlist, then the folks that we normally compete with are generally there. Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division: Okay. And I guess, Dennis, just one last question on, you gave us a lot of detail on the guidance. I appreciate that. The OpEx side, I have here in my notes 8% increase in OpEx for 2014. I think at some point, Eddie, you talked about R&D being relatively flat in '14. Am I interpreting this right that if we look at the 3 OpEx line items, I mean, R&D is more of a point of leverage than sales and marketing in G&A, or am I thinking about that the wrong way?

No, I think that R&D is going to continue to be a point of leverage, but we are making some strategic investment in R&D given omni-channel and e-commerce. And then, we're looking at strategic investment in sales. Obviously, you get the variable performance comp that's going to drive that up. And then, just through sheer growth, we need to make some facilities investments as well as we get some legacy IT systems that, for us to continue to scale and support the growth of the company, we need to invest there as well. Now all of this investment, Terry, we've got a long rich tradition of being very disciplined about managing our expense. So you got to invest to grow, but we got to see the growth to invest. So...

There are no further questions. I will turn the call back over to the presenters.

Terrific, okay. Thank you, Mike. Well, thanks, everybody, for joining us this afternoon. As I mentioned in my closing comments, we are very pleased with our 2013 results. I am looking forward to a very exciting 2014. So we look forward to talking to you, all, in about 90 days from now.

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