Good afternoon. My name is Courtney, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates Fourth 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, February 03, 2015. I would now like to introduce Dennis Story of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, Courtney, and good afternoon, everyone. Welcome to Manhattan Associates’ 2014 fourth 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 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 our 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. 2014 was certainly a very successful year for Manhattan Associates. We posted record results across essentially all financial metrics marking our third consecutive year of record revenue and record earnings per share performance. Our competitive position continues to improve and customer satisfaction has increased across the globe. We continue to invest significantly in innovation to drive competitive differentiation enabling Manhattan to increase market share and continue to successfully expand beyond our core business and into the retail store. While the global macro headwinds persist into 2015, we remain very encouraged by a near term and long term growth prospects. We set new Q4 and full year revenue and earnings per share records. Q4 total revenue of $130.4 million increased 21% and adjusted earnings per share of $0.30 increased 25% over Q4 2013. For the full year 2014, total revenue of $492.1 million increased 19% and adjusted earnings per share of $1.16 increased 26% over 2013. The combination of strong revenue growth, prudent expense discipline led to our most successful year in the company’s history. We posted software license revenue of $19.5 million in Q4, up 13% versus Q4 2013. We closed four $1 million plus license deals in the quarter, one with a new customer and three with existing customers, all U.S. based. Two of the deals were led by omni-channel initiatives and two of the four deals included our platform based warehouse management system. In all of the four deals, we were successful head-to-head against very strong competition. In fact, our sales team across the globe executed very well and our competitive win rates remained strong. In the quarter and actually for all of 2014 in head-to-head cycles against our major competitors, we are winning about 75% of the time. For the quarter, about 35% of…

Thanks, Eddie. As Eddie said, three consecutive years of record revenue and earnings that record growth profitability and cash flow over those three consecutive years. So clearly Manhattan is taking care of business and our goal is a 4P. So as Eddie mentioned, we posted Q4 total revenue of $130.4 million, up 21% from last year and adjusted earnings per share of $0.30 increased 25% over prior year. Our Q4 2014 GAAP earnings per share was $0.27 increasing 23%. Strong revenue growth in license, services and hardware combined with a lower effective tax rate led to the strong performance. Currency rate volatility mainly in the Euro, British Pound, and the Australian dollar negatively impacted revenue 1% or $1.4 million in the quarter and pressured operating margin and profit with a $300,000 negative impact to operating profit. Full year total revenue was $492.1 million growing 19% over 2013. Total revenue by region was solid with Americas up 19%, EMEA up 21%, and APAC up 14%. Full year adjusted earnings per share was $1.16 growing 26% and GAAP earnings per share was $1.08 also growing 26% on record operating results. Q4 license revenue increased 13% to $19.5 million over prior year and full year license revenue was $71.6 million, increasing 15% over 2013. Despite the global macroeconomic 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 closed in any quarter. Allowing for the foreign exchange headwinds, our goal for 2015 is to achieve a 6% to 8% license growth rate. Q4 services revenue was $97.1 million growing 25% over prior year. For the year, our services revenue totaled $376 million, an increase of 19% over…

Thanks, Dennis. Before I get started on the details of Q4, 2014 was a very successful year for Manhattan Associates on many fronts. As you’ve heard, we delivered record financial results, revenue, operating profit, earnings per share and cash flow. We continue to take market share and expand our adjustable market. Our competitive position grew stronger. We remain the leading technology innovator in supply chain investing significantly in our core solutions, our retail store solutions and cloud enablement. We focused on our customers and continue to improve customer satisfaction and solution quality. Our domain expertise is growing as we continue to hire and retain the most talented supply chain professionals growing our global workforce 10% overall and 15% in our professional services team. Clearly, we exited 2014 stronger than we entered and we are excited about our prospect for 2015 and beyond. So back to Q4, let me provide a little more color on the deals. As I discussed at the beginning of the call, we recognized four large deals in the quarter, three in retail and one in automotive. All four deals were driven by strategic, technology modernization programs with two of the four deals specifically driven by omni-channel initiatives. And while we are in the early innings, digital commerce continues to drive omni-channel interest across retail, manufacturing and wholesale. We continue to see solid progress in our core verticals led by the retail segment that is fueled by the digital commerce revolution. In Q4, our license fee mix was weighted about 55%, 45% between our warehouse management and our other solutions. A meaningful portion of our WMS and non-WMS licenses and services revenue activity continues to be driven by existing and new customer omni-channel initiatives and legacy supply chain modernization. The retail, consumer goods and third party logistic…

Certainly. [Operator Instructions] Your first question comes from the line of Terry Tillman with Raymond James. Your line is open.

Hey, guys, good afternoon. Nice job on this quarter.

Thank you, Terry. Good afternoon.

I guess the first question, Eddie, is for you. Just as I watched this business evolve over time in scale, there is an evolution here in terms of – obviously, omni-channel and now you all having – making inroads into the store.

Yeah.

So I'm just curious – and some of this probably relates to conversations you directly had with some of these key decision makers, but can you talk about is this a notably different ROI when you are talking about in-store compared to what you usually were trying to solve in terms of WMS and modernization of supply chain, so I'd like to know is it a different ROI store you have to sell? Is it a different decision-maker you have to talk to? And what about competitors? Are you looking at a different set of competitors now because of this in-store side of your business?

Yeah, that's a yes, yes and yes, Terry. So, in terms of ROI, it is a different story. Fundamentally – and we've built, as you know, a very successful business doing this, but we spent about the last 23 years of that 25 years as a cost saving set of tools, all right, and we did very well, but we increased productivity, we lowered inventory, we reduced miles, all of those kinds of things, but we were a real cost saver. So we had to find that champion and sign the business and we would build a business case and they would go often and sell it internally. Today, in addition to that, we are on the revenue generation side of the business and it creates a whole different set of strategic advantages for us, of course, and for our customers and, frankly, those conversations are very frequently with the CEO of the organization talking about their growth plans, not talking to the operational guys about how we can save the money. Both are important, of course. But growth is certainly upper most in most CEOs minds. And as we switch to competitors, certainly we are beginning to see some additional competitors. But I do have to tell you, as we put forth our solution strategy and our portfolio of solutions, we do believe that our offering is unique and will be unique in the marketplace. So no doubt we will see new competitors emerge and we’ll see new competitors getting in the game. But we'd feel like if we can continue to invest in innovation at a rapid pace, we can be first to the spot and first to the solutions that the marketplace is looking for.

Look, Eddie, on this idea of the in-store and being able to talk about being on the revenue side of the ledger.

Yes.

You got 62 sales reps.

Yes.

Is there transition risk in terms of them being able to change their messaging or evolve their messaging to be able to sell high to the C-level executives and be able to talk about revenue generation because some of these folks probably made their whole life off of just selling WMS and cost cutting?

Yes. Very seasoned, very talented sales organization, Terry, to begin with. Terry, you will notice that we added three heads to our sales organization kind of really in the past quarter. They are focused exclusively on the retail store, the global-based solutions and selling revenue for sure. And as you know, this is not an overnight phenomenon for us. We’ve been at this transition from pure cost saving into DOM and order management for the last five years or six years. So it’s not an overnight transition for us.

Okay. And I guess there was some news within the fourth quarter about some partnership announcements out of IBM and JDA. Have you noticed any change in the – I mean, I know you talked about your strong win rates, but anything in the market as it relates to dynamics competitively with those two talking about at least partnering in some instances?

Frankly, nothing yet, Terry. Obviously, we are keeping our eye on that. We feel pretty good about our position. I think there is – frankly, they are two great companies, two established companies, but there were always challenges, when partners come together to integrate solutions, who sells, who supports, who implements, version control, all of those kinds of challenges will come to the surface. So we feel confident in our strategy being able to provide holistic solutions and, if you will, that one throat to choke for our customers, but we’ll certainly keep our eye on it and monitor progress there.

Okay. And I guess my last question, I don’t know if this will be for you Eddie or Dennis. But I think I heard correctly, license growth expected to be 6% to 8%. Clearly, you all did much better than that in 2014. Should I assume this is just the traditional conservatism or is there anything to read in that? And then I would love to know is it relates to your assumptions for license growth? Maybe you could talk about the size of your pipeline heading into 2015 versus heading into 2014? Thank you.

Yes, sure. Well, Dennis may have some color to add, but I would say that pipelines going into 2015 are solid. We are very pleased with where they are and that gives us the sense of optimism that we’ve articulated for the year. With regard to the license growth, there are a number of factors that give us a little cause for caution. We are very pleased with the growth that we’ve seen in 2014. There is certainly an opportunity for us to exceed expectations and, as you know, we strive for that every single quarter and every single year.

Yes. So, Terry, we like to under promise and over deliver. And I would say – or I would hope we have some conservatism and we can move it up through the year.

All right, guys. Thanks a lot.

Thanks, Terry. See you.

[Operator Instructions] Your next question from the line of Mark Schappel with Benchmark. Your line is open.

Hi, good evening, and very nice job on the quarter. Eddie, your North American business was off the chart this quarter, but it looks like growth in Europe slowed pretty considerably in the quarter. I just wondering if this is just more just of a leveling out because the first three quarters were so strong in your business or are you noticing some meaningful slowdown in your European business from a macro standpoint?

Yes. Good evening, Mark. Actually, I don’t think we should read too much into that Q4 performance from EMEA. As you pointed out, we had a very good first three quarters and we had a very, very good year, up, I think, 21% in Europe for the year. It’s important, but a little bit smaller market for us. So you see a little bit of choppiness and a little bit of volatility. In reality, we are actually seeing a little more light on the horizon frankly in EMEA than we’ve seen for the past couple of three years. So we are actually encouraged and optimistic about the growth opportunities in EMEA. So I don’t think there is anything much to read into a little bit softer performance in Q4.

Okay, great. Thank you. And then with respect to your large deal business, I mean it was good in the quarter, but it certainly wasn’t off the chart suggesting that the bread and butter of six-figure deal business held up pretty well in the quarter. Just wondering if you could just – is there any comments with respect to that?

Yes. I mean you’re right. We’ve sort of created this situation where we articulate $1 million plus deals and we are very strict about it, right. So, frankly, if we close a deal that’s $955,000, we are not going to report it as $1 million deal. So sometimes we do quite well in that arena and they don’t quite make the mark for $1 million deals. But you are right, the six figure deals, those sweet spot deals for us, we had a very, very strong quarter. And that’s good for us in a lot of ways not least of which because it creates and drags through quite a bit of services revenue for us, so we like it.

And then as a follow-up to that, what's the likelihood to allow these six-figure deals eventually key themselves off down the road for, you know, to get seven-plus-figure dollar deal?

Yes, yes, and I mean certainly that’s our business, right. So I think it was 69% of our deal – of our new license revenue for the year came from existing customers. And we’re thrilled that we continue to add 30%, 35%, 40% new logos every quarter, but we are very focused on customer satisfaction and being able to sell additional solutions and new innovation into our existing customer base for sure.

Yes, Mark, we continue to invest in innovation really to differentiate ourselves. The quickest way to commoditize your products is not to invest in innovation and we see pricing leverage as an opportunity down the road.

Okay, great. That’s helpful. And then one final question and then I'll get off, let somebody else on. But, Eddie, you addressed the mobility part of your business in your prepared remarks earlier, I think, it was specifically around your labor management offering. I was wondering if you just kind of go into a little bit more detail what we can expect in the mobile front with respect to your product offering in the coming year?

Yes, quite a bit, Mark. So you will see more mobile offerings from us in just about every one of our solutions. The highest concentration of mobility for us clearly is in the retail store, okay, where retailers want to – their associates to be able to engage personally with us as the consumer. So you will see kind of the most creativity and likely the most innovation in that particular area, but we are innovating across the board and you will see all of our solutions continue to get increased mobility throughout the year.

Okay, great. Thank you.

Sure. Thank you.

There are no further audio questions at this time. I’ll turn the call back over to the presenters.

Okay, terrific. Well, thank you, Courtney, and thank you everybody for all of your support during 2014. We’ve been much appreciated. We’ve enjoyed it and again very pleased with 2014. We’ll look forward to getting back with you in about 90 days from now and reporting out on the first quarter of 2015. Thanks a lot. Bye-bye.