Good day, ladies and gentlemen, and welcome to the SPS Commerce Fourth Quarter and Full Year 2013 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Nicole Gunderson. You may begin.

Good afternoon, everyone, and thank you for joining us on SPS Commerce's Fourth Quarter and Full Year 2013 Conference Call. Joining me on the call today is CEO and President, Archie Black; and CFO, Kim Nelson. Before turning the call over to the company, I'll read our Safe Harbor statement. We will make certain statements today, including with respect to our expected financial results, go-to-market strategy and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our filings -- our SEC filings, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, and at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on our Investor Relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP and adjusted EBITDA measures, including reconciliations of these measures with comparable GAAP measures. And with that, I'll turn the call over to Archie.

Thanks, Nicole, and welcome, everyone. We are very happy to share with you today our 2013 results. We experienced momentum in all areas of our business, capping another great year for SPS Commerce. For the full year, revenue grew 35% to $104.4 million, and adjusted EBITDA grew 53% to $13.8 million. Recurring revenue grew 37% in 2013, customer account grew 10% and wallet share with our customers grew 24%. This year, we focused our efforts on growing our channel, developing our platform and expanding our analytics offerings. First and foremost, we continue to add scale to our network. Our vast network enables a powerful lead generation engine that we've been taking advantage of for years. This allows us to work as trusted advisers to both retailers and suppliers and places us at the center of the retail ecosystem, sharing our extensive knowledge and best practices to guide them through the rapidly changing industry. This year, we received leads from approximately 600 retailers and 100 channel partners, and we now have over 55,000 customers. We also increased wallet share by adding new trading partners to our existing customers and upselling customers with additional functionality, such as our robust analytics solutions. Additionally, we continue to move upmarket as we saw an increase in larger customers, which is our testament to our leadership position in the retail ecosystem. We now have over 1,000 customers that pay us more than 3x our average selling price, which is more than double from 2 years ago. Our channel sales strategy has been key to our success in moving upmarket, as ERP systems, value-added resellers and systems integrators are increasingly recognizing the value of connecting their customers to our network. This year, new revenue from channel sales increased 50% over last year and contributed 16% of all…

Thanks, Archie. We had a great fourth quarter. Revenue for the quarter was $28 million, a 24% increase over Q4 of last year and represented our 52nd consecutive quarter of revenue growth. Recurring revenue this quarter grew 24% year-over-year. The total number of recurring revenue customers increased 10% year-over-year to 19,690. For Q4, wallet share increased 13% year-over-year to $5,101. As you look at these 2 metrics, it's important to remember that they work in concert with each other, and it's really the mix of the 2 that we focus on. Total operating expenses for the quarter were $18.7 million and represented 67% of revenue. For the quarter, adjusted EBITDA was $3.8 million compared to $2.6 million in Q4 of last year. Before turning to guidance, I'll... [Technical Difficulty] Sorry about that technical difficulty. Before turning to guidance, I'll recap the year. Revenue in 2013 was $104.4 million, a 35% increase year-over-year, and adjusted EBITDA grew 53% to $13.8 million. Recurring revenue grew 37% for the year. Now turning to guidance. For the first quarter of 2014, we expect the revenue to be in a range of $28.4 million to $28.9 million. We expect adjusted EBITDA to be in the range of $3.6 million to $3.8 million. We expect fully diluted earnings per share to be approximately $0.01, with fully diluted weighted average shares outstanding of approximately 16.9 million shares. We expect non-GAAP diluted earnings per share to be approximately $0.13, with stock-based compensation expense of approximately $1.3 million and amortization expense of approximately $720,000. For the full year, we expect revenues to be in the range of $125 million to $126.5 million. We expect adjusted EBITDA to be in the range of $16.75 million to $17.5 million. We expect fully diluted earnings per share to be in the range of $0.13 to $0.15. We expect fully diluted weighted average shares outstanding of approximately 17 million shares. We expect non-GAAP diluted earnings per share to be in the range of $0.61 to $0.64, with stock-based compensation expense of approximately $5.6 million. We expect amortization expense for the year to be approximately $2.7 million. For the year, you should model approximately 40% effective tax rate calculated on GAAP pretax net earnings. We expect to pay nominal cash taxes in 2014 due to our NOLs. In summary, we had a strong 2013, with recurring revenue increasing 37%. As we enter 2014, we'll continue to execute against our growth strategy to take advantage of the large market opportunity we see in front of us. With that, I'd like to open the call up to questions.

[Operator Instructions] And the first question is from Tom Roderick of Stifel. Gur Talpaz - Stifel, Nicolaus & Co., Inc., Research Division: Archie and Kim, it's Gur in for Tom. So we see organic recurring revenue for customer accelerate this year versus the last 2 years. I was hoping you can dig in a little bit on that, kind of what's been driving that and sort of the sustainability of that improvement.

Sure, Gur. I'll answer that. So as it relates to that recurring revenue, for recurring revenue customer what we refer to as wallet share, this year, that's been anywhere between sort of 13% to 15%. And that's just one component that ultimately drives to our organic recurring revenue, which is sort of in that 20-plus percent range. Just as a reminder, we really focus people on the combined between the 2, but I do appreciate your question was specific on the wallet share. So some of the drivers within the wallet share specifically will be product upsell, so think about the analytics offering as an example of product upsell. Also the size of customer tends to have a larger impact on the wallet share versus number of customers when we're moving more upstream through channel sales to our larger customers. And then, anytime we have an existing customer and that customer adds trading partners from our network, that also is additional revenue that we get per customer. Gur Talpaz - Stifel, Nicolaus & Co., Inc., Research Division: Got it, got it. Very helpful. And then with the recently completed follow-on offering. Maybe you can expound a bit on how you're thinking about future M&A spending over since [ph] you acquired Edifice and before that Direct EDI, how you're thinking about kind of the use of cash going forward?

Our M&A strategy has been fairly consistent since we went public. We're focused, first and foremost, on the very large organic growth opportunity that we have in front of us, and we do believe we can achieve our long-term objectives organically. Having said that, we've obviously made acquisitions and are very interested in making acquisitions. We look at acquisitions as long as it is in our sweet spot and it's doing -- in our strategy of what we want to do as a business, as long as it does not deter us from our organic growth objectives and we can pay right, we'll make those acquisitions. So consistent since they went public, we're always actively looking but are not willing to just settle to make acquisitions. We don't feel like we have any major product holes, we don't feel like we have any major threat that we need to shore up to make acquisitions. So I think we're in a pretty enviable spot. Gur Talpaz - Stifel, Nicolaus & Co., Inc., Research Division: Got it. And then, Kim, one last question for me. Can you give us the sales headcount for the end of the year? And then also, if you could, maybe talk about your sales hiring plans for next year?

Sure. We exited the year with 109 quota-carrying sales people. That's up about 22% year-over-year. Our expectation going into 2014 is we will continue to add salespeople. And the pace in which we add salespeople ultimately depends on also ensuring that we hit our profitability expectations that we've set out. So really, our philosophy in 2014 as it relates to continuing to higher sales heads to go after the opportunity is very similar to what you saw the past few years from us.

And the next question is from Scott Berg of Northland Capital.

First of all, Archie, on your -- on the metrics around channel partners, which is impressive given where that contribution was a couple of years ago. But can you compare from a year-over-year perspective, say, on the amount of leads you're given from channel partners? And then where would you expect the contribution of net new revenues to come from channel partners, maybe over the next 2 to 3 years?

So again, that was over 100 different partners. Obviously, we're getting more partners than we had a year ago, and we're getting more repeat partners as well. I think we're getting stronger partners today than we were a year ago. It's very broad base and it continues -- to have 50% acceleration, you need a lot of different things to go right and you need to be attacking the market from all angles, because we're not a big elephant company where 1 or 2 deals make that number. I would anticipate that channel will play a bigger and bigger part in the business. We're not moving away from the retail enablement machine that has made us so successful. I would assume that's going to continue to grow as well. But I think the channel strategy is put into place, and I think that's the leader. And as our scale grows, it becomes easier and easier to attract good, solid channel partners.

Great. And then last question for me at the moment is on the point-of-sale data that you're getting from retailers. Obviously, that's -- the amount of debt or the number retailers providing that has improved substantially over the last 12 to 18 months. But how do you see that progressing maybe in the next 12 to 18 months? What's the real driver for them to provide that data? Because I believe that's still a key to help driving even further adoption of your integrator, or excuse me, your BI products, the more that they can provide?

Yes. I think there is becoming a more compelling argument for retailers to share the data. Obviously, retailers are going to do what's going to be best in their best interest. And I think there's a couple of things. We have a number of key suppliers that have been able to show increased sales when they are able to obtain the point-of-sale data and truly be a partner with that retailer. I think that we also have the very large retailers who -- retail suppliers, who are willing to be very aggressive with smaller and mid-sized retailers on the data. I think there's just a general acceptance that's happening. It'll move slowly, I think it'll continue to accelerate, the pace will continue to accelerate. But this isn't going to be, in my opinion, an overnight 100%. But we will get there.

And the next question is from Matt Pfau of William Blair.

First one's on the customers added in the quarter. Archie, I believe you said you continue to add larger customers. Are these still primarily coming from channel partners, or have your internal sales force been adding any larger customers as well?

It is actually becoming more and more of a combination. The channel sales group is out there and bring some of the leads. But the sales development wraps our name, and the fact that we run enablement campaigns and we may test and certify a supplier 4 or 5x, maybe 10, 20x, so they're seeing our name, is becoming more powerful as well. So it is both.

Got it. And GXS was acquired by OpenText a while back. Are you guys seeing any additional leads from that, and has there been any churn in that base there, or has that led to any additional large customer signings?

Most customers will end up with long-term contracts, 1 to 3 years. These are not decisions that larger customers are going to overnight because our vendor got sold, make a change. If they're contemplating making a change, I think when there's uncertainty within a competitor, I think that's always a positive. But I think long-term, we're set up competitively extremely well against the entire industry.

Got it. And last one for me. There's been a lot of talk about the target creation that it was suspected to be perpetrated through a supplier portal, not yours. But have you seen any impact on the business from this? Have customers been asking questions about it?

We have not. We have not seen any increased interest from -- a number of customers are already -- are doing security audits and the like, but we have not seen any increased interest in that.

The next question is from Michael Huang of Needham & Company. Michael Huang - Needham & Company, LLC, Research Division: A few questions for you guys. First of all, as you guys are having success personal [ph] market, I was wondering what you're seeing with respect to length of sales cycle. I mean, does it take longer to close these larger opportunities on the margin and maybe kind of drill them into cost of acquisitions? And how does the cost of acquisition compare with these larger customers versus your average ones?

Well, couple of things. One, we're not just chasing people that aren't making -- in a decision mode and we're not going above the $500 million to $1 billion line unless there's truly an event. So we're not just chasing. We have so much opportunity in our sweet spot. We're trying to remain very focused. So they are, obviously, longer sales cycles. But usually they're in a die [ph] mode. And so the sales cycle may be longer, but they're not -- these are not typically multiple year sales cycle. These are, typically, an impending date, decisions to be made. And quite often, when we're invited in, they've already made the decision that they want a cost base [ph] solution which bodes very well for SPS Commerce. Michael Huang - Needham & Company, LLC, Research Division: Got you. And so with respect to kind of cost of the acquisition, is it fairly comparable, but obviously the possibility might be higher on the larger ones?

I would say it's relatively comparable. I think that we work with smaller businesses, we work with larger businesses. They have different needs, they have different price points. So the larger customers have larger price points, but they also typically have higher needs. So in general context, it's comparable. Michael Huang - Needham & Company, LLC, Research Division: Okay, got you. So now that Edifice is fully integrated into the SPS platform, I was wondering, I mean, from your standpoint, does that benefit this adoption around the analyst product areas more generally? I mean, would you expect to see accelerated adoption as a result of completing the integration itself?

Well, I think a couple of things. One, we now know how to sell analytics and talk about them extremely well. We're also helping drive the innovation in the industry around collaboration. So those 2 things together will and should help sales cycles. Again, data is an important part of it and acceptance of what's happening. But we can now truly solution sell. What is the right solution? What is it that you need as a company? As opposed to here's what we have, we hope you want to buy that. We can truly become much more that trusted advisor which is the position, as a business, we've always wanted to be in.

And the next question is from Richard Davis of Cannacord.

Archie, if you had to prioritize kind of 3 strategic initiatives for 2014, what would they be and, I guess, in what order?

Well, you have different groups within the company, and I'd hate to ever hear any of our employees listening say their priority is 1, 2 or 3, because they all have big priority. I think, when I look back at 2013, it was an extremely big year for SPS Commerce. There's a lot of change anywhere from really honing in on business analytics to driving channel, to defining our exact standard, to moving upstream. As I look to 2014, we need to make sure that we continue on the momentum we built in 2013. So the priorities are somewhat aligned with where they were in 2013, channel analytics, larger customers, platform and making sure that we're the industry-leader.

Yes, I mean, the one thing I think you touched on was maybe geographic expansion. Is that, a, beyond '14? Is there too much greenfield still in what you're doing domestically that's maybe not a forefront of the strategic priorities and maybe we see that in '15, '16? How do you think about that?

Well, so we think about the international opportunities at 2 different areas. In Asia, where we have a pretty decent presence in both Beijing and Hong Kong, and that's, today, the part of the marketplace that's playing in that is the part of the North America supply chain; and then Europe are the 2 primary focuses. We had nice success in both of those 2 areas in 2013. It's obviously off a small base, but both of those regions did outperform North America as far as revenue growth, again, off a small base. But I think we're continuing to make momentum. In Europe, where we're starting to see more momentum, is really around the point-of-sales data sharing, and I think that's going to become more and more important. So '14, you should see us continue to have nice momentum in Europe and in Asia, spend on those areas, but not -- within reasonable parameters.

Yes, that makes sense. And then, Kim, maybe you could talk about what you're seeing from enablement campaign perspective kind of at the end of the year? And any implications on kind of Q1 in the pipeline as you start 2014?

Sure. So enabling campaigns are very important way for us to get new customers, and that is something that we've done for many years, and each year, we continue to do more and more of those with retailers. So what you saw in 2013, our expectations in 2014, very similar as it relates to doing multiple campaigns for retailers. Q4 tends to be a little bit less, just from a seasonal during holiday season type. This Q4, we did do more than last Q4, however. And so we expect 2014, again, to have a very nice pipeline of enabling campaigns that you'll see throughout the year 2014.

The next question is from Jeff Van Rhee of Craig-Hallum.

A couple of questions. Maybe, Archie, well, let me start with price increases. You've obviously been able to drive the ARPU up through deeper penetration. But for a while, price increases, in and of themselves, haven't been a primary tool. How do think about price increases at this point?

Yes. I think our thought process is similar where it was a year ago or 2 years ago. I mean, we'll adjust, do some small price adjustment in some areas. But it's not a primary focus yet. We think we have such a large opportunity. We do want to be, as a business, a game changer. We want to be radically different from a software solution, from a homegrown solution. So we think there's long-term potential there, but that's not what where we're primarily focused on at this time.

Okay, fair enough. And on the sales side, could you just touch on sort of starting the new year, as you look at the sales team, just a broader [ph] review of kind of where we are from a structure, recruiting comp, quotas, anything materially shifting and changing that's even out of character from 6, 12 months ago?

As we start the year, we'll continue to recruit, continue to promote people from within, continue to promote recruit talent from outside. And I believe every single area of the business quotas went up as we'd expect them to continue to over time.

And you feel like within that the sales work, you've got the right mix of talent at the high end to close the larger deals and potentially working with channel partners and sort of right on down, feels like the balance is there and no areas where you need to put emphasis in terms of hiring?

Well, I think we have the talent throughout the sales organization. Again, I think consistent, I'd love to clone every single one of them and double it tomorrow. And I think we have a lot of opportunity we're chasing. So do we have enough? No. Do we have the quality? I believe so.

Yes. Okay. And then last one, just in terms of -- once you've brought a customer user on board and they go to build out their network of connections, if you will, again, any pattern -- any change in the pattern, pace, the way they go about building up their networks or just same that it's been for the last how many quarters?

Yes, I would say that's very, very similar.

Okay. And last one for me. The channel -- I don't have it in front of me, the channel as a percent last year?

In 2013, 16% of all of our new business came from channel.

Okay. And what was that a year before?

14%.

14%. Okay, great.

The next question is from Brad Sills of Maxim Group.

Really, just one on where you see this going. Obviously, EDI connectivity is a natural platform for other applications in the supply chain, and analytics is kind of the first add-on here. Do you see this evolving where you can add other categories of supply chain applications, things like demand and planning, longer term?

When we look at our business, there's a couple of fundamentals. One, we're in the retail ecosystem. And then two, SPS Commerce is typically involved when there's multiple parties involved in the process. So something should be functionality within SAP or Oracle or NetSuite or Sage or any other ERP system. I don't think that's the right place for SPS Commerce. If, however, as a company, you need to work with either a third-party logistics provider, a warehouse management system, you need to work with other parties, that's where we belong, and I think there's significant opportunities as we move forward for us to expand our footprint.

Great. And then, one on just the channel. You guys are having some good momentum there in terms of contribution. Where are you in terms of channel development? You feel like you've got the right set of partners? You've kind of hit the right mix of ERP, vendor ecosystems to kind of go after, and is it just kind of going deeper within those ecosystems? Or are there others that you think you can recruit?

In my mind, we're just starting. I think we have the larger ERP systems covered, but coverage is not where it needs to be for long-term. I mean, in other words, we can add significantly from a capacity and a number of channel sales executives. And I think we'll continue to add more partners. I think there's continued interest. And usually, within channel sales momentum builds on momentum, as long as you deliver excellence, which is what we plan on doing.

[Operator Instructions] The next question is from Allen Dilallo of Barrington Research.

This is Allen Dilallo in for Jeff Houston. To begin with, what percentage of your revenue is international? And do you see any unique opportunities abroad?

Sure. As it relates to our GAAP revenue, approximately 2% is international. We do, however, have a fair bit of our revenue that we have because of our Asia operations. However, that's really there to support the supply chain, the North American supply chain, so it shows up as revenue for North America. And then, Allen, what was your second question?

Do you see any unique opportunities abroad?

Well, I think there are significant opportunities internationally, and we're very conscious of it. We're trying to make sure we're setting a foundation for the future and building out to more retailers and making sure we're in the game. So long-term, I see it as a pretty meaningful part of SPS Commerce.

Okay. And do you foresee any changes in your competitive landscape within the next 1 or 2 years?

Don't see anything on the forefront. Having said that, always paranoid about what's out there and making sure that we're out, just making sure as the leader that we're the best company we can be, and that makes it -- make it as challenging as we can for any new competitors.

There are no further questions in queue at this time. I'll turn the call back over for closing remarks.

Thank you very much for participating today, and your support of SPS Commerce.

Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.