Good afternoon. My name is Stephanie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates Second Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions) As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, July 22. I would now like to introduce Dennis Story, CFO of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, Stephanie, and good afternoon, everyone. Welcome to Manhattan Associates’ 2014 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 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 2013 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 will 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 will turn the call over to Eddie.

Well, good afternoon everyone. We are quite pleased with our second quarter and first half financial results. We continue to be encouraged by our near-term and long-term prospects. We posted record results across essentially all financial metrics. Our competitive position continues to improve and customer satisfaction continues to increase across the globe. Total revenue for the quarter was a record $122.5 million, up 20% versus Q2 of last year and adjusted earnings per share were also a record of $0.29, increasing 21%. So, with these strong results, we are raising our revenue and earnings per share guidance for the year and Dennis will take you through those details in just a moment. License revenue for the quarter was $18 million, up 11% over Q2 last year. We closed three $1 million plus license deals in the quarter, one, with a new customer and two, with existing. Two of the large deals were in the U.S. and one was in Latin America. Two of the three deals were led by omni-channel initiatives and one of the three deals included our platform-based warehouse management system. In all three of these three large deals, we were successful against head-to-head against very strong competition. Our sales teams across the globe executed very well and our competitive win rates head-to-head in sales cycles against our major competitors remain strong at about 75% for the quarter. And overall for the quarter, about a third of our license revenue was from net new customers. And whilst the ratio of net new customers can fluctuate somewhat from quarter-to-quarter, we are quite pleased with our new customer acquisition performance all led by our commerce suite of omni-channel ready solutions. Our consulting services business posted record revenue results in Q2, up 25%. Demand and visibility continues to be quite strong as we added 130 associates to our global team in Q2 and we continue to search for about a 100 more professional services people to meet the needs of our customers. Overall, with the strong quarter and first half performance, we are optimistic, but we still remain somewhat cautious as the global economy continues to exhibit sluggish growth. But our outlook is positive, our pipeline is solid, services business demand is strong, customer satisfaction is good, and implementations of our solutions are going very well. Our focus remains on being the leading pure-play technology innovator in the supply chain commerce market, leveraging our platform strategy in investments and research and development to deliver solutions to help our customers get commerce ready for the new omni-channel world. And I will provide more color in my business update following Dennis’ review of our financial results.

Thanks Eddie. I will review our Q2 2014 non-GAAP results which we call adjusted results and GAAP EPS performance and close with our 2014 full year guidance. Yet we continue to knock the cover off the ball with a solid 2014 performance posting total revenue of $122.5 million, an increase of 20% over Q2 2013. By region, Americas grew 18%, EMEA grew 33% and APAC grew 15% compared to Q2 last year. Adjusted earnings per share for the quarter was $0.29 increasing 21% over the prior year fueled by solid revenue growth, continued expense management and our buyback program. On an apples-to-apples basis EPS grew 25%. This excludes the current year currency impact and the $1.6 million sales tax reserve reversal we have recognized in Q2 of 2013. As previously discussed the $1.6 million reserve was booked in Q4 of 2008 and reversed in Q2 of 2013 due to expiring tax audit statutes. The net result is strong organic revenue growth continues to drive quality earnings leverage. Our Q2 2014 GAAP diluted earning per share was a record $0.27 increasing 23% over the $0.22 we posted in Q2 2013. Our GAAP performance was driven by the strength of adjusted operating results. A detailed reconciliation of GAAP and non-GAAP adjustments is included in our earnings release today. The remainder of my P&L discussion represents our adjusted results. License revenue for the quarter totaled $18 million. From a regional perspective Americas posted license revenue of $14.5 million, EMEA $1.6 million and APAC $1.9 million. In the backdrop of global macro sluggishness, our license performance continues to depend heavily on the number and relative value of large deals we close in any given quarter. While we continue to remain cautious regarding the macro environment with three consecutive quarters of $17 million to $18…

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 have recognized three large deals in the quarter one in retail, one in CPG and one in grocery. All three deals were driven by strategic technology modernization programs, with two of the three deals specifically driven by omni-channel initiatives. The other large deal was driven by distribution management legacy system replacement program leveraging our platform based warehouse management system. And as we previously mentioned digital commerce continues to drive omni-channel interest across all retail sub-verticals including grocery. We continue to see solid progress in our core verticals led by the retail segment that’s fueled by the digital commerce revolution and the way in which retailers wish to engage and service their customers. In Q2 our license fee mix was equally weighted with warehouse management solutions making up 50% and 50% representing our other solutions. A meaningful portion of our WMS and non-WMS license and services revenue activity continues to be driven by existing and new customer omni-channel initiatives and the reinvention of their supply chains. The retail, consumer goods and grocery verticals were our strongest license fees contributors making up more than half of the license revenue for Q2 2014. As software platform technology and experience help our customers adapt to the challenges of the omni-channel marketplace and our efforts are certainly bearing fruit in our net new customer win rate and the loyalty rewarded to us by our existing customer base. And we are certainly very pleased with the successes we have achieved over the past 18 months or so. Software license wins with new customers that have permitted us to share their names included the Country Road Group, Grupo Bimbo,…

(Operator Instructions) Your first question comes from the line of Mark Schappel with Benchmark.

Hi, good evening and nice job on the quarter, especially in the top line. Dennis, question for you – I will start with you here. Despite the revenue upside in the quarter, cash flow from operations was much lower than anticipated and I believe you addressed that a little bit in your prepared remarks with taxes. I was wondering if you would just kind of go over that metric one more time?

Yes. Just two – is two primary drivers, Mark. Our cash – global cash taxes paid, we paid about $16 million in Q2, okay, which is $12 million delta over the prior year. Of that $16 million, $6.5 million of that included 2013 final year estimated taxes. It’s all based on higher taxable earnings. That’s a good thing. I guess when you are paying taxes it’s a good thing, right. But more importantly, it’s the record revenue growth. So, if you look at record revenue for the quarter, total receivables was up $20 million over end of quarter Q1 2014 or 30%. And a lot of that has to do with the amount of license revenue linearity that’s recognized in the quarter itself. So, our overall global collections, is very strong. Year-to-date, our global collections are exceeding our revenue and I expect the second half is going to turn out just fine.

Okay, thanks. And then another question for you, Dennis, are you raising the license revenue guidance for the year, if I recall correctly, it was formerly like 7% to 8% for the year, is that being raised?

Yes. Technically we are not giving guidance, but I did say we expect high single to low double-digit growth in the license line.

Okay. Then, Eddie, moving over to you, when it comes to the topic of new adjacent areas to move into in the supply chain space, whether it be through internal R&D efforts or go through M&A. I was wondering if you could just kind of whet our appetite a little bit as to some of the areas or capabilities that seem a little – that seem interesting to you?

Mark, it’s a terrific question. Obviously, we continue to invest heavily in our platform solutions. We still believe there is plenty of runway for enhancement of the solutions that we have. The omni-channel and the retail revolution clearly is creating opportunity, creating expansion possibilities for us. You have heard me talk a little bit about the success that we have had moving into the store. We have talked about that a little bit before, but certainly even since our last earnings call, we have seen the store enablement solutions go live in hundreds of more stores and thousands more have been licensed. So, you should expect to see us do more in that general area. Mobility is certainly another area that’s we are heavily focusing on in all of our existing solutions and creating new capabilities based upon mobile technology. So, I would say continuing to invest in our platform, look for us to continue to enhance our store capabilities and certainly drive mobile capabilities in the near-term.

Hey, Mark, if I can piggyback on that too, Eddie mentioned that and yes, this can move from quarter-to-quarter depending on license revenue, but one of the encouraging signs was 50% of the license revenue was WM, 50% was non-WM and a big catalyst for that is our success in the omni-channel related initiatives.

Okay, great. And then one final question here with respect to order deal pipeline, Eddie would you characterize it as being bigger or larger than it was last year at this time, if I recall quickly you have done seven $1 million plus deals this year so far and I think that’s about the same as we did last year, I was wondering if you just give us an idea of how you see the pipeline shaping up in that respect?

Yes. Sure, I mean I will obviously not going get into specifics Mark, but we are excited and enthused about the pipeline, the big deal pipeline for our license revenue. We are also enthused about our services demand for the balance of the year and going into 2015, so overall, just encouraged by both of those aspects of our business.

Okay. Thanks for talking to me.

Certainly. Thank you, Mark.

(Operator Instructions) Your next question comes from the line of Terry Tillman with Raymond James.

Hi, good afternoon gentlemen. Thanks for taking my questions. Nice job on the quarter. I have got a series of easy questions for you all. Dennis I guess the first one for you is for the services gross margin, as we start to think about over the next couple of years could we start to see that expand again I mean you already have a great gross margin in that combined maintenance and pro-services gross margin, but you are adding a lot of resources, is there some efficiency gain that we should appreciate in the model as we kind of move more into the out years though as a lot of these younger folks that you bring on board start to become productive and off the bench so to speak?

Absolutely, but it’s we do have world-class margins, so it’s not episodic but absolutely there is leverage in the model.

Okay. And I guess Eddie in terms of I mean this quarter the license I mean now we are at $18 million, so we have had three quarters of – it feels like there has been the boats are raising in terms of the business and activity level, it’s not like you have a major increase in seven-figure deals, so I guess in those kind of six figure deals call it $300,000 to $700,000 give or take $100K here or there that kind of mid-size deal activity, are you actually seeing kind of improvement in demand broadening of activity in that kind of (indiscernible) business?

Yes. I think that would be a fair characterization Terry that mid-size or mid to upper size deal there has been a healthy pipeline a healthy close rate for us there and anyhow that pipeline continues to be pretty robust for us.

Great, it’s good to hear. And I guess my last question is I mean talking about inventory optimization or replenishment I mean that’s like old schools talking about old Evant business, as you talk about kind of integrating with order management and this part of omni-channel, are you seeing improved activity around your replenishment solutions or is it too early to tell if you could start to see some healthy pull-through of that product set?

Yes. We are seeing good activity Terry. I do think that and we have talked about this a little bit before at our user conference with our customers and so forth. I think that in the continuum of this omni-channel revolution, most retailers and they are beginning to really be challenged by the inventory attributes of this revolution meaning that it is not uncommon for our customers today to be operating with safety start frankly in every single channel in which they operate versus being able to look across all of those channels, pool inventory, manage one level of safety stock and obviously drive capital advantage in that regard. And by integrating our solutions together in a differentiating and a creative way, we think that we can really help them to get the most out of their working capital and their inventory and of course create some differentiation for us.

That’s it for me. Thanks guys.

Okay. Thanks Terry.

(Operator Instructions) There are no additional questions at this time.

Okay, very good Stephanie. Thank you very much. Well, thank you everybody for joining us on the Q2 earnings call. Enjoy the rest of your summer. And we will look forward to talking to you in about three months from now. Bye-bye.

Thank you. This concludes today’s conference. You may now disconnect.