Good day, ladies and gentlemen, and welcome to the Pegasystems third quarter earnings call. [Operator Instructions] I would like to turn the call over to your host, Beth Kurth. Please go ahead.

Thank you. Certain statements contained in this presentation may be construed as forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The words anticipates, projects, expects, plans, intends believes, estimates, targets, forecasts, incurred and other similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Because such statements deal with future events that are subject to various risks and uncertainties. Actual results for the fiscal year 2013 and beyond could differ materially from the company's current expectations. Factors that could cause the company's results to differ materially from those expressed in the forward-looking statements are contained in the company's press release announcing its Q3 2013 earnings and in the company's filings with the SEC, including its report on Form 10-K for the year ended December 31, 2012, and other recent filings with the SEC. The company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely. And with that, I will turn the floor over to Alan Trefler.

Yes. Thank you, and good evening. Q3 was a terrific quarter for Pega. Year-to-date, we've grown license revenue materially, are quite an achievement in these challenging times. For much of the last several weeks, I've spent considerable time visiting customers, prospects and partners in North America, Europe and India. There is tremendous excitement about our Pega 7 release. This is the latest major version upgrade of our unified model-driven platform and a significant step in our goals of both improving power and ease-of-use. One recent example of the excitement was from the attendance and reaction to our first Pega developer conference held October 27 and 28 in Hyderabad, India. Responding to demand by our customers and partners in India, we decided to hold this conference with only 8 weeks advance notice. Yet, the conference was way oversold, with over 1,700 attendees from 52 organizations all there to learn about the powerful market-leading Pega 7 software. Here are 2 telling quotes from conference attendees. The head of a partner's global BPM practice said, "everyone here, their eyes are lighting up when they see what they're able to do with the new technology." And from a customer Vice President, he said, "Pega 7 is going beyond boundaries. It's giving a different perspective to the development and building of applications." These are representative of the comments we now hear about Pega 7, which brings speed and simplicity to the building of serious build business apps. Key among new capabilities in Pega 7 are a so-called responsive UI, a user interface, which allows you to have your business application respond automatically to whatever device you run it on. For example, shrinking from a desktop to an iPad or resizing itself for a smartphone, this dramatically reduces the time and skills needed to build world-class…

Thank you, Alan. I'm thrilled to become part of the Pegasystems team, given the company's best-in-class technology, leading customers and track record of growth. This is truly a fantastic opportunity. With a little more than a month behind me, I want to thank the entire Pega team for the warm welcome and for their hard work these past few months. I especially want to acknowledge Max Mayer for his leadership and dedication these last few months, in particular, for covering our most recent earnings calls. Q3 was another great quarter for Pegasystems in terms of license revenue growth, bookings, earnings and cash flow. Our pipeline is robust. And though we have a tremendous amount of work to do to close 2013, we are looking forward to a strong finish to the year. Let me begin by taking you through our third quarter results, starting with revenue. Q3 revenue was $122 million, up 20% from the year prior. Within that number, Q3 license revenue was $45 million. That's up 57% over Q3 of last year. On a year-to-date basis, which normalizes quarter-to-quarter volatility in our business, license revenue was up an impressive 34% over the prior year with total revenue up 12% over the same period last year. Year-to-date, we continue to see a higher mix of license and maintenance revenue relative to Professional Services revenue versus the same period last year. This change in our mix of revenue is consistent with the company's strategy to focus on growing the number of implementations performed by our partners and clients, with Pega providing expert services. Looking at year-over-year growth on a regional basis, year-to-date revenue in the United States grew 9% to $189 million. Revenue from the European continent has improved nicely, growing at 47% to $66 million on a year-to-date basis,…

[Operator Instructions] Our first question comes from Richard Davis with Canaccord.

Quick question. Do you -- I mean, you kind of talked about it at high level, but each of the last couple of years, Q4, you guys have made like retailers look like pikers [ph] because you do 50% to 60% of your bookings in 1 quarter. Does that feel like it'll be similarly back-end loaded or just order of magnitude or were just trying to kind of triangulate around that? And then the second kind of tactical question is, is on Antenna. The purchase price looked pretty darn low. I mean, it's was great buy because I remember, they were trying to go public at one point. But is there any earnouts at all in that figure, at all? Or is it the straight-up, kind of a mid-20s purchase price?

So on the Antenna, it was a straight-up purchase. I think we're pretty careful acquirers, and we really liked some of the work they had been done -- doing in the last particularly, I would say, 12 to 18 months. But the business has struggled for a little bit, but we were very, very impressed, and we think it's both an excellent team. And obviously, really, really important for us to be investing in. So we feel pretty good about that. In terms of the back-end loading, yes, I think we did get some nice business closed in Q3, that in past years might have drifted off to Q4. But we're still expecting and looking to do a strong Q4. And as Rafe said, you got a couple of whales in there, We've had sort of a whale for a year which -- it's not a bad thing, to tell you the truth. But we are working, and we think we might be able to get a couple of big deals in the quarter as well.

And then lastly, with regard to Antenna, expectations' wise, should we just figure, 50-50 license service split or is that roughly about right? You know, when we're trying to model it out?

I think there might be a touch more in service than in license, it's service and maintenance there. So I think it will be a little more heavily weighted towards that.

Our next question comes from Raghavan Sarathy with Dougherty & Company. Raghavan Sarathy - Dougherty & Company LLC, Research Division: Sorry, if you already talked about this. Can you give us some sense for the revenue run rate of Antenna Software? I know you've talked about expenses. Can you give us some sense about the revenue run rate of this business? And then, are you going to be continuing to sell the development platform or is it going to be assumed in your platform?

Yes, the revenue run rate for antenna is around $5 million on a quarterly basis. So we don't think it's going to have a big impact on Q4 as noted.

And in terms of what we're doing, so if they've got a pretty, pretty interesting set of mobile first development platform capabilities, they call AMPchroma, and we are continuing to sell that, and we are in the process of also integrating their capabilities in what we are already did in mobile, which I think is going to make our mobile offerings even stronger. So it's a combination of continuing to let them to what they've been doing. And also, as we look, probably towards the PegaWORLD's timeframe. Middle of next year, we think we could do have some really very great exciting things to be able to put forward. Raghavan Sarathy - Dougherty & Company LLC, Research Division: Okay. And then my second question is around bookings. If you look at the fourth quarter, I think, you know Alan, you just talked about couple of big deals, but when I look at the license comparison, you do have tough comparison for the fourth quarter, how should we think about the license revenue growth of the quarter? Because I think the perpetual license is a big swing factor.

Yes, it is. And as you well know, we live in a world of high adventure. When It comes to figuring out exactly what's going to come in term and what's going to come in perpetual. I will tell you that what we call the working set, which is the collection of deals that have either closed or that we're working looks quite good. However, there's still a lot of work to do between now and the end of the -- between now and the end of the year, and I guarantee you, we're all highly focused on it. I wish I could give you some better guidance, but in reality, you know what we know. Raghavan Sarathy - Dougherty & Company LLC, Research Division: And so this is my one final question, whether -- I mean, you talked about center[ph] across the board. Are you -- was it driven by sort of -- I mean, is it Pega 7 product you talked about? Or is it too early for customers to migrate to Pega 7? How does the upgrade work? Do they -- is the product get covered by the maintenance? And what would that mean in terms of revenue for you going forward?

Sure. So Pega 7 would be available to existing maintenance paying customers under the arrangement. And so it's just not the movement to Pega 7, it's not going to lead to massive springs of new revenue. But we see having Pega 7 available, and being able to really get customers excited about the product as being a very, very good harbinger, especially for next year. Anything we did in Q3 though, was not materially driven by Pega 7, maybe a little.

[Operator Instructions] Our next question comes from Kevin Ikeda with Wedbush Securities.

Just wanted to get a little more color on the Antenna acquisition. What's the initial target for cross-selling? Will you be selling Pega into the Antenna base or selling Antenna into the Pega base?

We think it can go both ways. And part of what's interesting is that I think one of the challenges that mobile apps have had historically is they've been great for like displaying a little bit of data. But in terms of actually doing real work, the great majority of them don't actually do that. And that's part of that industry analyst quote that I read that said, "boy, companies have been doing them, but they're not sure exactly, necessarily what they're getting". We obviously have an absolutely terrific, terrific platform for being able to sit behind a mobile app, and there's this is whole concept of what's called "mobile back-end as a service" where you actually put up a system on the cloud and use that as an intermediary for people to be able to build and deploy mobile apps. We see that system on the cloud being a Pega system as offering the Antenna customer base, and actually new clients, some Really, really terrific opportunities to have a model-driven architecture there where everybody else is writing code. So I think there's going to be some great opportunities into the Antenna customer base, and I think it's going to be really appealing as a next year sort of thing, across the board.

Okay, and just one more. Given that many other software vendors are adopting a mixed model or transition into pay-as-you-go model, do you expect to see any sort of mixed shift towards term or perpetuals or away from the other?

Well, I think that Rafe pointed out that our perpetual mix had ticked up somewhat this quarter, obviously good for short-term revenue. The reality is, we like term. When the company was started actually, we only offered term licenses. That was it. And so the fact that there's been a push by some companies to really, really want to buy perpetuals, frankly driven in a material way, I think, by the acquisitive nature of companies like Oracle and IBM and them not wanting to be in a situation where they've got a term license with one of those firms. They feel better that they have a perpetual license though that's obviously not something that we're looking to happen to us. The predilection of the clients can be very strong. And you know we made the decision that a businesses is good business, we would be prepared to offer perpetual as well as a term. But you should be aware that we do favor terms and we really try to encourage the sale, when there's really a choice.

Our next question comes from Raghavan Sarathy from Dougherty & Company. Raghavan Sarathy - Dougherty & Company LLC, Research Division: Quick follow-up on this expense that you talked about related to the Antenna software. So you said on a non-GAAP basis, it's going to be diluted $0.03 to $0.05. Do you -- will there be any -- you think that minimal revenue, but I want to make sure that's actually on a non-GAAP basis, you're not going to -- there's not going to be much revenue. And it seems to me that it if it's about $0.03 to $0.05. Is the expense rate is roughly $2.5 million for this business on a quarterly basis? I want to make sure I'm looking at this right there.

No. So their expense run rate for the quarter is probably around $7.5 million a quarter. And keep in mind, so the revenue numbers, as I just mentioned, will be around $5 million. As they're just coming into the company, we're still getting our arms around the business and making sure we're investing to see them off to a good start. On a GAAP basis, it, of course, gets quite a bit more complicated because there's the haircut to GAAP revenue that will be determined as the valuation work is completed. Raghavan Sarathy - Dougherty & Company LLC, Research Division: But you will recognize roughly 5 million on a non-GAAP basis?

Correct.

[Operator Instructions] We don't show any other questions in queue. I'll turn it back to Alan Trefler for closing remarks.

Well, thank you to everyone who joined the call. We're obviously very pleased about how we've done year-to-date. 34% year-on-year license revenue, I think, has been quite an accomplishment for the team, and we feel quite excited, and we know we have a lot of work to do between now and the end of the year, and we're going to get back to it. So with that, thank you very much, everyone.

Ladies and gentlemen, thank you for participating in today's program. This concludes the program. You may all disconnect.