Manhattan Associates Inc (MANH) 2014 Q4 法說會逐字稿

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.

(Operator Instructions)

As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, February 3, 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'll 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 FY13 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'll 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.

Well, 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 our 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 US-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're winning about 75% of the time. For the quarter, about 35% of license revenue was from net new customers. And for the year, we finished at 31% of total license revenue in that category.

Our Consulting Services business posted record revenue results, with Q4 revenue up 27%. Demand and visibility continues to be quite strong, as we added 30 associates to our global team in Q4. And plans for 2015 call for adding about 250 net new associates, to meet the needs of our customers.

As we look forward, we're very well-positioned for 2015 and beyond. With our strong quarter and full-year performance, we're very optimistic. And the global economy is off to an inauspicious start this year, with significant currency volatility and an IMF downgrade on global growth. But despite this, our outlook is positive. Our pipeline is solid. Services demand is strong. Customer satisfaction is good, and the implementation of our solutions continues to go 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 in research and development to deliver solutions, to help our customers get commerce-ready in the new digital world.

And I'll provide some more color in my business update, following Dennis's review of our financial results.

Thanks, Eddie.

As Eddie said, three consecutive years of record revenue and earnings, but record growth profitability and cash flow over those three consecutive years. So clearly, Manhattan is taking care of business, and our goal is a four-peat.

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 close 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, services revenue totaled $376 million, an increase of 19% over 2013. As a reminder, total services revenue includes both consulting and maintenance. On the consulting side, strong demand in Q4 continued, with revenue growth of 27%, totaling $65.5 million. And full-year revenue of $260.1 million, increasing 23% over 2013.

For the year, we increased our global services headcount by another 15%, or about 230 heads, to meet customer demand. We added about 25 new associates in Q4. And our Q1 2015 hiring plan is to add another 100 associates globally, which we are off to a good start, with 31 already in the barn. As Eddie mentioned, based on our current demand outlook, for full year, we are looking to add about 250 net new hires to our services franchise.

Q4 2014 maintenance revenue of $31.5 million grew 20% over the prior year on license growth and stronger-than-forecast collections. Full-year maintenance revenue grew 10% to $116 million over 2013. Solid license revenue performance, cash collections and retention rates of 90%-plus contributed to the year-over-year growth. As a reminder we recognize maintenance renewal revenue on a cash basis. So the timing of cash collections can cause inter-period revenue lumpiness from quarter to quarter.

Consolidated services margins for the quarter were 53.7%, compared to 56.1% in Q3 2014, and 53.8% in Q4 2013. Consistent with prior years, Q4 margins were down sequentially from Q3 2014, due to the Q4 seasonal holidays impact and the addition of 60 new billable professional services associates in Q3 and Q4.

For the first half of 2015, we expect services margins to be in the 55.6% to 55.8% range. And for full-year 2015, we are estimating margins to be in the 55.4% to 55.6% range. Margins in the first half reflect our front-loaded hiring plan, so down slightly year over year, while second-half margins increased over prior-year, reflecting increased billability and utilization ramp for the new hires. As a reminder, Q4 services margins do decline sequentially from Q3, due to the usual holiday seasonality.

Our operating expenses, which include sales and marketing, R&D, G&A and depreciation, were $40.5 million for the quarter, up 26% over prior-year, and $144.4 million for full-year 2014, up 15% over 2013. The increases were driven by variable performance-based compensation, which is employee bonuses, commissions and related taxes, our investment in Global Bay, and early-stage global investments in facilities expansion and enterprise IT systems supporting Company growth.

Turning to operating income, we delivered record Q4 operating income of $31.9 million, growing 19% over prior-year. Q4 operating margin was 24.4%, down 50 basis points on higher performance-based compensation, our investment in Global Bay and negative currency impact. Full-year operating income of $137 million increased 26% over 2013, with operating margins of 27.8%, up 160 basis points.

So for 2015, we are currently estimating operating profit to grow 10% to 12%, with a 60-basis point improvement, and operating margin increasing to 28.4%. We are targeting 28.7% for Q1, for Q2 and Q3 to be about 10-basis points above 2014, and Q4 to be about 200 basis points above Q4 2014.

Below the operating profit line, other income -- which primarily includes interest, income and foreign exchange gains or losses -- was a positive $850,000 in Q4, and a positive $874,000 for full-year 2014. Consistent with prior years, we do not attempt to budget for FX gains and losses, and other incomes. So we are forecasting quarterly interest income of about $250,000, totaling $1 million in 2015.

Income taxes -- our adjusted effective income tax rate for 2014 was 36%, as Congress retroactively approved the 2014 R&D tax credit in Q4 2014. This compares negatively to our 2013 effective rate of 34.8%, due primarily to two factors. First, higher state tax rates. And second, the fact that 2013 effective rate included two years of R&D tax benefit. As in prior years, Congress did not proactively approve an extension of the R&D credit for 2015. Therefore, we expect our 2015 effective rate to be about 37.2% for the year.

Now, turning to cash, we closed out 2014 strong, with Q4 cash flow from operations of $40.4 million, and full-year operating cash flow of $94.2 million, compared to $89.4 million last year. As a reminder, embedded in our 2014 operating cash flow is a significant step-up in cash-paid income taxes, paying $38 million in 2014, up $17 million over 2013. So we rocked it on the cash-flow front, considering the large step-up in tax payments.

Capital expenditures for 2014 totaled $9.4 million. For 2015, driven by Company growth and legacy IT systems replacements, we estimate CapEx to be in the range of $9 million to $11 million.

We closed the year with $124 million in cash and investments, compared to $112 million in Q3 2014, and $133 million in Q4 2013. We continued to carry zero debt on our balance sheet, self-funding our investments in innovation, operations and share buybacks from operating cash flow. Our Q4 DSOs were 61 days versus 64 days in Q3 2014, and 61 days in Q4 2013.

Regarding capital structure, we reduced our common shares outstanding 3% in 2014, buying back 2.6 million shares totaling $91 million, offsetting option exercises of about 286,000 shares. With our Q4 repurchase activity last week, our Board approved raising our repurchase authority limit to a total of $50 million.

Regarding diluted shares, for 2015, our weighted average share estimate for the quarters and full year is at 74.8 million shares. Consistent with prior years, our diluted share estimate and EPS guidance does not assume any common stock repurchases in 2015.

So this closes the chapter on 2014 financial results: outstanding.

Let's move to 2015 guidance. Overall, we continue to be committed to achieving steady, organic revenue growth and earnings expansion. Our 2015 growth continues to be very similar to previous years post-2009 recession. We are very upbeat about our growth prospects, but remain cautious given the continuing global macroeconomic uncertainty. Outside of the US, world economies are in a slump. In addition, while early, falling oil prices could have a ripple impact in unpredictable ways. So overall, we continue to be cautious, and have factored this into our guidance.

For 2015 total revenue, our current annual guidance is to deliver $531 million to $541 million, representing 8% to 10% growth. The strong dollar and potential risk of currency volatility shaved about 2 percentage points off of our growth forecast over 2014. Our goal for 2015 is to achieve 6% to 8% of the license growth, as I mentioned previously. From a revenue mix perspective, we believe 2015 hardware and billed travel will grow about 4% over 2014, and will represent about 9% of total revenue.

Overall, we expect our full-year total revenue split to be about 48% first half, 52% second half. For license revenue, we're modeling a 49%/51% split, first over second, with a normalized seasonal pattern of Q1 and Q3 license revenue lower than Q2 and Q4. For services as usual, Q4 revenue will be down sequentially from Q3, due to the seasonal holiday impact. That covers revenue.

For 2015 adjusted diluted earnings per share, our guidance range is $1.28 to $1.30, representing 10% to 12% growth over 2014 adjusted EPS of $1.16. Similar to revenue, negative currency impacts and a higher effective tax rate is placing about a 2 percentage point drag on our growth range.

With the beginning-of-the-year salary increases worldwide, headcount additions to support services demand, and a higher effective tax rate, we expect Q1 2015 EPS to be flat with Q4 2014 -- that's sequential -- while posting 14% to 16% growth over Q1 2014. Somewhat similar to revenue, we expect EPS to have a first-half/second-half spread of about 48% to 52%, using the $1.29 midpoint of our guidance range.

For GAAP diluted earnings per share, we expect to deliver $1.18 to $1.20 in 2015, representing 9% to 11% growth over 2014 GAAP EPS of $1.08. The $0.10 full-year EPS difference between GAAP and non-GAAP diluted adjusted earnings per share is primarily the impact of equity-based compensation, which we expect to spread evenly across the year at approximately $0.025 per quarter.

That completes the financial review. Thank you very much. Now I'll turn the call back to Eddie for the business update.

Thanks, Dennis.

Well, 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've 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 and supply chain, investing significantly in our core solutions, our retail store solutions and cloud enablement.

We focused on our customers, and continued to improve customer satisfaction and solution quality. Our domain expertise is growing as we've continued 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're excited about our prospects 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're 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 proportion 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 logistics verticals were our strongest license fee contributors, making up more than half of our license revenue for Q4 and for the full-year 2014.

We're certainly very pleased with the successes that we've achieved over the past three years, as our software, platform technology and domain expertise of core differentiators, when it comes to helping new and existing customers adapt to the challenges of the omni-channel marketplace, as is reflected by our win rates. Q4 software license wins with new customers that have permitted us to share their names, include BNS Group, Fedway Associates, Gwynnie Bee, Lackmond, Shenzhen Pure Cotton Technology, STD Petrovich, The Children's Place, Vinidex and Wilton Brands.

Q4 expanding relationships with existing customers included Alliance Healthcare, Amscan, A-6 America, [glackavore], Blue Star Operations Services, eStore Logistics, Xcel, Forever Direct, GENCo, Harvard Drug, Innotrack, Caine Warehousing, Kuehne & Nagel, LeSaint Logistics, Northern Safety Company, PT Multitrend Indo, RedMart, Southern Wines & Spirits, Stella & Dot, Sturm Foods, T&T Logistics, Toys R Us, Tractor Supply, Ulta, the Santa Group, Wineworks and the Winning Group.

Our professional services business around the world continues to perform very well and receive high marks from our customer -- for customer satisfaction. As you might expect, our global services team are in full swing, with core supply chain and retail omni-channel supply chain commerce enabling initiatives. We had more than 350 system go-lives this year, focused on store execution solutions and multi-product, platform-based implementations. They continue to be strong, and we expect this trend to continue.

We continue to be the leading innovator in supply chain technology. For the year, we invested about $50 million in research and development, with 650 people dedicated to R&D. At the core of our success is our strategy to grow through investment in forward-thinking innovation. We're investing in innovation at a rapid pace to expand our addressable market and deliver market-leading core supply chain and retail store solutions that enable omni-channel commerce, providing leading retailers with a sophisticated customer platform.

Our 2015 plans call for an increased R&D investment beyond our core supply chain solutions on, really, two fronts. First, developing the industry's leading retail store platform focused on the customer. And secondly, a progressive approach to cloud enablement.

Turning to our products, Q4 and 2014 in its entirety were both very successful. In 2014, we had more than 20 product releases. And customer demand for these new product versions has been very high. For example, in 2014, we introduced our first mobile application for the warehouse, Labor Management mobile. This solution is designed to help supervisors move out from behind their desks and spend more time on the floor engaging and coaching their teams. The response from our clients has been great. Our first customer went live in December, with another 13 in the works.

Speaking of the warehouse, 2014 was a record year in terms of implementations. More than 220 distribution centers began running or upgrading their operations, using Warehouse Management solutions for Manhattan Associates. This represents all three of our solutions, including Warehouse Management for Open Systems, SCALE, which runs on Microsoft technologies, and our Warehouse Management for IBMI. These 220 sites span six continents, as well as a wide array of industries -- everything from fashion retail to food distribution to third-party logistics.

Despite low fuel prices, macro industry conditions, particularly, driver shortages, and new hours of service regulations, we're seeing an increased focus on transportation solutions. Our TLM solution had a great quarter and a great year. We had a record number of go-lives and upgrades, and we firmly believe that the number of upgrades is due to our ongoing commitment to innovation.

One such example is the transportation modeling module that we introduced in 2014. This component of our TLM solution enables companies to model their network policies, defining static routes, store sourcing, day-of-the-week shipping, and all of those kinds of attributes. One customer through distribution has run multiple engagements with us, actually for various modeling initiatives. Each engagement reduced round trip miles for their private fleet between 4% and 7%, enabling them to service more stores with fewer vehicles and fewer drivers.

Lastly, the omni-channel revolution in retail continues unabated. Among our solutions in this space, both our patent pending Enterprise Order Management and Store Inventory Fulfillment modules were tremendous successes. During 2014, the combination of Order Management and Store Fulfillment powered more than 1,300 new stores, with over 10,000 additional stores waiting on the doorstep to be implemented. These stores are now fulfilling ship-from-store orders, offering buy-online/pick-up-in-store orders, and in some cases, managing the perpetual store inventory, using our solutions.

The positive sales lift attributable to fulfilling orders from stores is simply massive, with a number of our customers indicating a 25% e-commerce sales lift when leveraging store inventory to fulfill demand. We were the first to provide an end-to-end solution for this business process. And our strong win rate in omni-channel in Q4 can be traced back to the early mover advantage in this arena and the work we started back in 2008.

Speaking of early movement in new innovation, the additions of Global Bay point of sale, clienteling, and tablet retailing applications are receiving a very positive reception from our customers, and from the marketplace as a whole. The advantage to our customers are numerous, when we combine the personalized sales and service capabilities from Global Bay with the enterprise fulfillment capabilities from our pre-existing omni-channel applications.

We debuted our first iteration of this combined offering at the National Retail Federation in New York just a couple weeks ago, and the feedback was terrific. We'll continue to build on this momentum, as we advance our mission to build unparalleled sales and service capabilities for both store and call center associates.

The role of the store and the store associate are changing rapidly, and we're in a great position to help our retail customers make that transition and provide great customer service, regardless of the selling channel. Our investment strategy is driven by market demand for net new capabilities that simply don't exist in the market today. Digital selling and omni-channel commerce have transformed the way customers shop, and raised the bar for retailers in how they engage with their customers.

Store associates today are expected to deliver customer experience that is as engaging, as informative and profitable, as it is accurate and efficient. To do this, they must have the ability to see a complete omni-channel view of the customer, sell any unit of inventory across the entire retail network, and effortlessly handle cross-channel transactions, such as returns and exchanges.

The combination of Manhattan's enterprise inventory visibility, order management and store solutions, with global-based, point-of-sale and clienteling applications, will deliver the industry's only true omni-channel sales and fulfillment platform. We believe that this new offering represents a notable competitive differentiating capability for both Manhattan Associates and our customers, while at the same time, expanding our addressable market. While early, we believe the high interest in our unique approach further validates this strategy.

As I stated before, investment and innovation is the core of our success. Our supply chain process platform-based suite of solutions, including our omni-channel solution, distinguishes us from all other competitors. Our R&D team continues to do an excellent job of driving innovation in all product areas. And we continue to deliver more robust and more efficient solutions to the markets we serve.

Turning to our associates for a moment, we ended the quarter with about 2,800 employees around the globe, up 10% over the prior year, with 95%, actually more than 95% of our headcount growth, focused 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 62 quota-carrying reps, up 3 heads from last quarter. We intend to continue to be opportunistic, and look to add about a half a dozen additional talented sales professionals to the Company.

So let me close my prepared remarks with a brief summary. We're very pleased with our 2014 performance, and we remain focused on our customers and getting them commerce-ready. As we turn our sights to 2015, whilst the global macroeconomic conditions certainly give us reason to be cautious, we're very optimistic about our future. While the challenging times persist globally, we remain focused on steady growth. And I'm very optimistic about Manhattan's long-term growth prospects and our ability to continue to grow market share in all of our target markets.

Retail commerce and supply chain complexity in our target markets continue to increase, driven by digitalization and e-commerce, which are fueling multi-year investment cycles. Our relative competitive position continues to be strong and improving. And we continue to invest in innovation to extend our market leadership and differentiation. With the world's most talented supply chain employees, the best software solutions, and with great market momentum, we're well-positioned for the balance of 2015 and beyond.

Courtney, we'd be happy to take any questions now.

(Operator Instructions)

Terry Tillman with Raymond James. Your line is open.

Hi, guys. Good afternoon. Nice job on this quarter.

Thank you, Terry. Good afternoon.

The first question, Eddie, is for you. I've watched this business evolve over time and scale. There is an evolution here in terms of obviously omni-channel, and now you all having -- making inroads into the store.

Yes.

I am just curious -- and some of this probably relates to conversations you directly have 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? 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?

That's a yes, yes and yes, Terry. So in terms of ROI, it is a different story. Fundamentally -- and we built, as you know, a very successful business doing this. But we spent about the last 23 of our 25 years as a cost-saving set of tools. We did it 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, you know, find that champion inside the business. We would build a business case, and they would go off and sell it internally.

Today, in addition to that, we're 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 them money. Both are important, of course. But growth is certainly uppermost in most CEOs' minds.

And then 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. No doubt, we will see new competitors emerge, and we'll see new competitors getting in the game. But we 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 to the marketplace you're looking for.

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

Yes.

You've got 62 sales reps. 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.

Very seasoned, very talented sales organization, Terry, to begin with. You will notice that we added three heads to our sales organization, really in the past quarter. They are focused exclusively on the retail store, the global-based solutions and selling revenue, for sure. 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 or six years. So it's not an overnight transition for us.

Okay. And 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 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're keeping our eye on that. We feel pretty good about our position. I think there is -- frankly there are two great companies, two established companies. But there are 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 my last question. I don't know if this would 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, as 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.

Sure. Dennis may have some color to add, but I would say, pipelines going into 2015 are solid. We're 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 there that give us a little cause for caution. We're very pleased with the growth that we've seen in 2014. There's 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'd 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.

Your next question comes 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 charts this quarter, but it looks like growth in Europe slowed pretty considerably in the quarter. I was just wondering if this is more 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?

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 an 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're actually seeing a little more light on the horizon, frankly, in EMEA, than we've seen for the past couple of three years. We're actually encouraged and optimistic about the growth opportunities in EMEA. So I don't think there's much of 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, it was good in the quarter, but it certainly wasn't off the charts, suggesting that the bread and butter sticks to your deal business held up pretty well in the quarter. I was just wondering if you had any comments with respect to that?

Yes, you're right. We've created this situation where we articulate our million-dollar-plus deals, and we're very strict about it. So frankly, if we close a deal that's $965,000, we're not going to report it as a $1 million deal. Sometimes we do quite well in that arena, and we don't quite make the mark for million-dollar deals.

But you're right, the six-figure deals, those sweet spot deals for us, we had a very strong quarter. 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 that a lot of these six figure deals eventually tee themselves up down the road to be a seven-plus figure dollar deals?

Certainly, that's our business, right? So I think it was 69% 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.

You know, 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. One final question, and then I'll get off and let somebody else on. Eddie, you addressed the mobility part of your business in your prepared remarks earlier. I believe it was specifically around your labor management offering. I was wondering if you could just go into a little more detail on what we can expect in the mobile front, with respect to your product offering, in the coming year?

Quite a bit, Mark. So you'll see more mobile offerings from us in just about every one of our solutions. You know, the highest concentration of mobility for us clearly is in the retail store, where retailers want their associates to be able to engage personally with us as the consumer. You'll see the most creativity, and likely, the most innovation in that particular area. But we're innovating across the board. And you'll 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 will 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. It's 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.

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