Mark P. Sullivan - Chief Financial officer, Principal Accounting officer and Executive Vice President Mark E. Fusco - Chief Executive Officer, President and Director

Stan Zlotsky - Deutsche Bank AG, Research Division Peter L. Goldmacher - Cowen and Company, LLC, Research Division Sterling P. Auty - JP Morgan Chase & Co, Research Division Richard T. Williams - Cross Research LLC Brendan Barnicle - Pacific Crest Securities, Inc., Research Division Mark W. Schappel - The Benchmark Company, LLC, Research Division

Ladies and gentlemen, thank you for standing by, and welcome to the Aspen Technology's Second Quarter 2013 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Mr. Mark Sullivan, Aspen Technology's Chief Financial Officer. Sir, you may begin your conference. Mark P. Sullivan: Okay. Thank you, operator. Good afternoon, everyone, and thank you for joining us to review our second quarter fiscal 2013 for the period ended December 31, 2012. I'm Mark Sullivan, CFO of AspenTech, and with me on the call today is Mark Fusco, President and CEO. Before we begin, I will make the usual Safe Harbor statement, that during the course of this call, we may make projections or other forward-looking statements about the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from such projections or statements. Factors that might cause such differences include, but are not limited to those discussed in today's call and in our Form 10-Q for the second quarter of fiscal year 2013, which is now on file with the SEC. Also please note that the following information is related to our current business conditions and our outlook as of today, January 29, 2013. Consistent with our prior practice, we expressly disclaim any obligation to update this information. The structure for today's call will be as follows. I'll begin with a review of our financial results for the second quarter, and then Mark will discuss some additional business highlights before we open up the call for Q&A. Let me begin by reviewing the supplemental metrics that we provide, starting with the annual spend, which is the proxy for the value of our recurring term license business at the end of each period, specifically, the annualized value of our term license and maintenance revenue. Annual spend was approximately $320 million at the end of the quarter, which is an increase of approximately 12.7% on a year-over-year basis, and 2.6% sequentially. Growing annual spend is a key focus for us, and we increase the value of the metric by adding new customers, expanding product usage and increasing prices across our customer base. Turning to our term contract value or TCV metric, which measures the renewal value of our multiyear term contracts. Our license-only TCV was $1.54 billion at the end of the quarter, which is up 13.5% compared to the second fiscal quarter of 2012, and up 2.9% on a sequential basis. As a reminder, beginning in fiscal 2010, maintenance is generally included as part of our subscription and term contracts. Including the value of bundled maintenance, total term contract value was $1.78 billion at the end of the quarter, which was up 15.5% on a year-over-year basis, and up 3.3% sequentially. As a reminder, the growth of our annual spend metric should be slightly lower than the growth in our licensed TCV metric. License TCV is calculated using each contract's terminal year annual payment, and therefore takes into consideration the total price escalation over the course of a multiyear time period, whereas annual spend only takes into consideration the current level of spend. Now let me turn to our quarterly financial results on a GAAP basis. Total revenue of $77.3 million was up 16% on a year-over-year basis and well above the high-end of our guidance range of $66 million to $68 million. The primary driver to the revenue upside was approximately $6 million of revenue associated with customer contracts that are recognized on a cash basis. As a reminder, we previously discussed several large contracts that have payment terms, which come due toward the end of our second quarter. Excluding cash basis deals where cash was collected earlier than expected, our revenue exceeded the high-end of our guidance range by approximately $3 million, primarily driven by higher-than-expected services revenue. Looking at revenue by line item. Subscription and software revenue was $59.5 million for the second quarter, which is an increase from $46.5 million in the prior year period, and $54.1 million last quarter. In order to provide further transparency into our consolidated subscription and software line, we provide some additional details on the components within subscription and software that have quarter-to-quarter variability. During the second quarter, we had $6.5 million of revenue related to legacy term license arrangements not recognized on a daily basis, and approximately $400,000 of perpetual license revenue. Our growing subscription business positively impacts our deferred revenue balance, which was $191.9 million at the end of the second quarter, representing a 33% increase compared to the end of the year-ago period. On a sequential basis, deferred revenue increased approximately $11.4 million. As we discussed last quarter, deferred revenue has a similar seasonality pattern to our cash flow due to the timing of annual customer invoicing. We expect significant deferred revenue growth in the second half of our fiscal year. On a quarter-to-quarter basis, we believe it's more meaningful to look at the growth in our annual spend in TLCV metrics, as compared to changes in deferred revenue, in order to evaluate the pace of business during the quarter. Finally, services and other revenue was $17.9 million compared to $20.1 million in the year-ago period, and relatively similar to $17.4 million last quarter. Consistent with our previous commentary, maintenance revenue is increasingly being reported within the subscription revenue line, as more contracts are converted to the aspenONE subscription licensing model. As a result, we continue to expect the run rate in our services and other revenue line to be variable quarter-to-quarter, but trend downward as our revenue model transition completes. Turning to profitability. Gross profit was $64.9 million in the quarter, with a gross margin of 84%, which compares to $53.6 million and a gross margin of 81% in the prior year period. Our gross margin continues to be positively impacted by the mix shift toward subscription revenue, and we're pleased with the progress we're making toward our long-term targeted gross margin of 83% to 85%. Second quarter gross margin was ahead of our expectations due to the cash basis revenue that was recognized earlier than expected in Q2. Operating expenses for the quarter were $50 million, compared to $46.6 million in the prior year period. Total GAAP costs, including cost of revenue, were $62.4 million, which was up from $59.5 million in the year-ago period, and essentially flat from $62.5 million last quarter. We continue to effectively manage our cost structure and believe there is meaningful leverage in our business going forward. Operating income was $14.9 million for the second quarter of fiscal 2013, an improvement compared to operating income of $7 million in the year-ago period. Net income for the quarter was $9.9 million or $0.10 per share, compared to net income of $3.8 million or $0.04 per share in the second quarter of fiscal 2012. Turning to non-GAAP results. Excluding the impact of stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, we reported non-GAAP operating income for the second quarter of $18.6 million, an improvement from $10.1 million in the year-ago period. Non-GAAP net income was $12.3 million for the second quarter, an improvement from $6 million in the year-ago period. Our non-GAAP EPS was $0.13 in the second quarter of fiscal 2013 based on 95.5 million diluted shares outstanding, compared to non-GAAP EPS of $0.06 in the second quarter of fiscal 2012, based on 96.3 million shares outstanding. It's worth noting the slightly lower diluted share count on a year-over-year basis, which is the result of continued execution of our share buyback program. Reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website. Turning to the balance sheet and cash flow. The company ended the second quarter with $175.2 million in cash and cash equivalents, an increase of $11.9 million from the prior quarter, after spending $19.7 million of cash to repurchase common shares and reducing our secured borrowings balance as I'll detail in a moment. From a cash flow perspective, the company generated $35.7 million of cash from operations during the second quarter, and $34.5 million of free cash flow. This was well ahead of our expectations due to stronger-than-anticipated collections activity. Year-to-date, the company has generated $53.4 million of free cash flow versus $27 million in the first half of 2012. The company once again did not sell any receivables to raise cash during the second quarter of fiscal 2013, and during the quarter, we fully retired our secured borrowings. This is a meaningful milestone in our business model transition, and we've repaid $147 million in secured borrowings since the end of fiscal year 2008. With that, let me turn it over to Mark Fusco. Mark? Mark E. Fusco: Thanks, Mark, and thanks to everyone for joining us today. We had a solid quarter that exceeded our guidance on all key metrics. We are very pleased with where we stand at the halfway point of the fiscal year, and believe we are well-positioned to deliver another solid annual performance. We continue to see strong customer demand and positive customer usage patterns. This is driving solid, consistent, total license contract growth, which grew approximately 40% year-over-year, and 3% sequentially during the second quarter. We are mindful of the economic backdrop our customers are facing, and as we have shared in the past, no company is completely immune if the economy were to worsen significantly. That said, we remain optimistic about our outlook based on the continued strength of our sales pipeline and momentum of our business. In addition, our business model has been resilient over time. We have a multiyear contract along with long-standing relationships with a broad base of blue chip customers. In addition, our solutions deliver a significant return on investment and are considered mission-critical to the operations of our customers. During the second quarter, energy, chemicals and engineering and construction continued to represent 90% or more of the company's business. This quarter, energy returned to being the largest vertical contributor, followed by engineering and construction and then chemicals. Looking at our 10 largest transactions in the quarter, there was, again, a mix of engineering and manufacturing and supply chain-driven deals. We have been pleased by the increased usage trends we are seeing on the aspenONE platform and among customers who have converted to our new commercial model, but in many cases, they are still using only a minority of the functionality available to them. There is also a significant opportunity to get engineering customers to deploy our manufacturing and supply chain solution sets. A key focus of ours has been to simplify the user experience inside aspenONE in order to drive increased utilization, and we made significant advancements on this front in the second quarter. In December, we released the latest version of the aspenONE platform named "aspenONE version 8", that includes an upgraded version of HYSYS, the integration of solids modeling functionality we acquired from SolidSim, a new refinery planning solution called Aspen PIMS Platinum, an updated version of the Aspen Collaborative Demand Manager, along with breakthrough innovations in advanced process control, energy and economic analysis. Several of these innovations are available only as part of our subscription offering, which we believe provides further incentive for customers, not on our aspenONE subscription model, to convert. The significant upgrades in the end-user experience and numerous functionality improvements are expected to enable our customers to generate substantial efficiency gains and cost savings. Early customer feedback has been positive, and we believe aspenONE V8 is another advancement that makes our end-to-end product suite more compelling and easy to use, the combination of which is expected to continue driving increased customer usage going forward. During the quarter, we also announced the establishment of the AspenTech Academy, an advisory group of world-renowned university professors whose mission is to advise and guide AspenTech on the development of the next generation of aspenONE software and products. This announcement is part of a broader initiative we are undertaking to improve our product development efforts and increase the value we deliver to our customers. We've already demonstrated some of this change with the acquisition of SolidSim and our ability to quickly integrate that product into aspenONE to broaden our suite's capability to include solid process modeling. We anticipate making additional tuck-in acquisitions of this type going forward. We are now in a position where we have a well-capitalized balance sheet and a demonstrated record of significant cash flow generation. We think utilizing our financial strength to invest in the next generation of the aspenONE suite, primarily through internal R&D and now augmented by M&A, can deliver significant value to our customers. Our focus is on how we can extend the aspenONE platform deeper into our customer base and make our technology even more mission-critical. We will outline our plans for the next generation of the aspenONE suite at our optimized conference, where we will be hosting an Analyst Day as well in early May in Boston. While we are generating solid growth in investing in our industry-leading product suite, we have remained disciplined with our expense structure. We have once again lowered our outlook for expenses in fiscal 2013 and are now forecasting low to mid single-digit growth in expenses, even as we target double-digit growth in our business. We have demonstrated that expense management is a core competency of this management team, and we are confident in our ability to deliver 30% to 35% non-GAAP operating margins when our revenue model transition is completed. We are using our strong balance sheet and expanding cash flow generation to consistently return capital to shareholders and drive shareholder value. During the second quarter, we repurchased approximately $20 million of stock, and we still have $88 million of buyback capacity remaining on that plan. Also as Mark pointed out a moment ago, we achieved a milestone during the second quarter as we fully retired our secured borrowings. Moving forward, AspenTech will be able to use all of its cash flow and even greater source of funds to support our share buyback activity, as well as to execute our tuck-in M&A strategy. On the corporate governance front, I wanted to note that we announced, after the market closed today, that Steve Jennings resigned from AspenTech's Board of Directors. He has been on our Board since 2000 and has served as Chairman of the Board since 2005. Steve made great contributions to our business over the last decade, and I am grateful for his efforts and dedicated service over this period. We wish Steve all the best in his future endeavors. We also announced that the Board elected Bob Whelan as our new Chairman. Bob was originally elected to the Board in 2011 and also serves on our Audit Committee. We are confident that his many years of experience and insight will serve AspenTech well into the future. In summary, Q2 was another strong quarter, and we are well-positioned to meet our double-digit TLCV growth and our increased profitability and free cash flow guidance. Our updated product portfolio should increase our already-strong market position, and we are focused on maintaining the solid momentum of our business. With that, I'll turn it back to Mark. Mark P. Sullivan: Okay. I'd like to close by updating our thoughts regarding our fiscal -- financial outlook for fiscal 2013, as well as providing guidance for the third quarter. Before doing so, I'd like to reiterate that even though we are now past the halfway point of our revenue model transition, our P&L is still not a meaningful indicator of our business performance, and it won't be until after our revenue model transition is complete. With that said, we expect third quarter revenue in the range of $71 million to $74 million. Clearly, our expected Q2 to Q3 sequential revenue comparison is impacted by the approximately $6 million of cash basis revenue that was recognized in Q2, that we previously anticipated would fall in the Q3 time frame. This is simply due to the timing of cash collections being faster than previously anticipated. From a profitability perspective, we currently expect non-GAAP operating income of $6.5 million to $8.5 million, and non-GAAP EPS of $0.04 to $0.05 for the third quarter. On a GAAP basis, we expect third quarter operating income of $3 million to $5 million, and EPS of $0.01 to $0.02. As it relates to the full year fiscal 2013, we're increasing our revenue guidance to $295 million to $302 million, an increase from our previous target of $285 million to $295 million. From an expense perspective, we are lowering the high end of our guidance for total GAAP costs and expenses to approximately $263 million to $270 million, which compares to our previous full year target of $265 million to $275 million. Taken together from a non-GAAP perspective, we are increasing our non-GAAP operating income guidance to $46 million to $53 million for full year fiscal 2013, up from our prior guidance of $36 million to $46 million. This would lead to non-GAAP earnings per share in the range of $0.28 to $0.33 for the fiscal year, an increase from $0.21 to $0.27. We now expect GAAP operating income in the range of $31 million to $38 million for fiscal 2013, which is an increase from our prior guidance of $20 million to $30 million. We now expect GAAP net income of approximately $17 million to $21 million, or $0.18 to $0.22 per share, which is an increase versus our prior expectation of net income of $10 million to $16 million, or $0.10 to $0.17 per share. With respect to our non-GAAP metrics, we are maintaining our guidance for double-digit growth for total license contract value. At the halfway point of the year, we're tracking well towards this goal, and we're optimistic about our growth prospects for the second half of the year, based on the continued high customer interest levels we are experiencing. From a cash flow perspective, we are increasing our free cash flow target to $120 million, an increase from our prior target of $115 million. Our cash flow continues to be positively impacted by the underlying momentum in our business, along with our focus on expense and working capital management. We expect our free cash flow to be weighted towards the back half of the year, with the third quarter once again being the largest contributor to cash flow. Also as a reminder, during the fourth quarter, we have a meaningful amount of collections that are due in the final days of the fiscal year. That creates a level of potential variability, which we take into consideration in our guidance formulation. To summarize, we executed well in the first half of 2013 and believe we are well-positioned to sustain our momentum into the second half of the year. With that, we are now happy to take your questions. Operator, let's begin the Q&A.

[Operator Instructions] Your first question comes from the line of Tom Ernst of Deutsche Bank. Stan Zlotsky - Deutsche Bank AG, Research Division: It's Stan Zlotsky sitting in for Tom. So the first one is, as we sit here at the midpoint of the year and as we look into the second half of the year, you mentioned your pipeline is solid. If you just -- if you can put a little bit more meat on that one, compared to last year, same time, how is the pipeline looking? Mark E. Fusco: The pipeline still looks good. The coverage ratios in the quarter are similar to what we had last year at this time, and really for the past number of quarters, I think the team is executing well. I think there is definitely traction with the aspenONE suite and the penetration strategy that we have. And I made some comments on the call here tonight about the investments that we make in R&D and some of the ones that we're doing for M&A. We do believe they'll drive additional growth over a period of time. We've also seen nice usage growth of customers that converted some time ago to the aspenONE model, several of whom have bought additional usage several times in the past couple of years, so including the biggest deal of the quarter, this quarter. So we see positive momentum in the business. We think we're organized and aligned correctly. We're certainly mindful of the backdrop globally and we're watching it, but we're well-positioned, and we don't see any difference in the coverage ratios or the facts and forecast that we have. Stan Zlotsky - Deutsche Bank AG, Research Division: Okay, thank you. And on your hiring plans, anything to note there? I know you said you're trimming your operating expense costs. How does that figure into your hiring plans? Mark E. Fusco: Well, we trimmed our guidance here tonight. If you look at our overall headcount from where we were a year ago, at the end of the December quarter, we're probably up 4% or 5% in headcount for over a 12-month period. We talked on some prior calls about, last spring, doing a university hiring program for the first time in many, many years. We're planning to do another university hiring program here this spring and recruit a whole bunch of new folks into the company. So we would expect our headcount to drift upward in the back half of the fiscal year, into the beginning of the next fiscal year, as the graduates get out of university. That said, it's certainly been a mix of employees base that's changed over a period of time, which has allowed us to maintain our cost structure in this quarter and certainly for this half of the year. There's been G&A reductions and things over time. So we continue to have a good cost structure. It's not impacting the company's ability to invest in employees or anything else that we're interested in. And we continue to believe that investments in our personnel are the biggest thing that we can do, and we're planning to hire some more folks while continuing to maintain some discipline around our cost structure. Stan Zlotsky - Deutsche Bank AG, Research Division: Okay. And then just last one. I know we've asked this before and I just want to make sure, you mentioned that there were price increases across the customer base. Is it just the typical price increases when customers renegotiate, or has there been something that has changed? Mark E. Fusco: No. Nothing's changed around pricing in general. You know that we have these 5- to 6-year long contracts. They generally have escalation of 2% or so annually built into them. But nothing material about pricing. I think Mark's -- in Mark's comments, he was just referring -- the makeup of sales increase has pricing increases into it, but there's nothing material or different quarter-to-quarter.

Your next question comes from the line of Richard Davis of Canaccord.

This is Richard for Richard. Say, I have 2, kind of 2 quick questions. Now one, the mid-market effort, I know has kind of been spooled up and in theory, let's say, let's just say for grins and giggles, you kind of grew in a long-term contract value by 12%, would like 1/6 of that be kind of mid-market, or is it even -- is it only like 10% of your growth? Or I'm just trying to kind of size that effort. And then the second question is, remember like a year or so ago, you did -- you were going out with the kind of like this best practices to your customers and saying, "Hey, look, if you want to be like this superstar firm over here, they use the following 4, 5, 7 modules." Has that panned out like you thought it would, and if so, how much and how little? Mark E. Fusco: So we -- as you know, we don't really disclose growth rates by segment, big, middle, small. We do have an active targeting and segmentation of the market with different groups in the company, focusing on different parts of the business, in the large customer space and then in sort of middle or medium customer space, our direct sales force is doing that. We did start a year ago, an inside sales force and an aspenONE model force, small customers, and that is a global business as well. All parts of the segments have done well. There's -- I would say that the smaller segment, we haven't talked about it much publicly, has done quite well in their first year. And we think the aspenONE model for the small customers is a good one. We do sell it a bit differently. I think everyone knows we sell usage or tokens in the large model. In the small model, we sell seats. So you can get an aspenONE seat for engineering software. So we do target things differently. We are seeing good growth rates, and we do continue to believe that the medium and small market will be a good market for us. But the big deals, on a quarterly basis, are generally driven by the big guys, and we have them from quarter-to-quarter as well. So the segmentation, I think, is working. And as far as the best practices go, I think it's part of our overall executive engagement program that we have for customers to meet and help them understand what AspenTech does. We do a lot of things in the suite, and even some of our best customers don't know all of the things that are coming out on a quarterly basis. And as we've ramped up the innovation of the company and ramped up the delivery of technology consistently over a 90-day period, sequentially throughout the year, there's many things coming at our customers, and we have increased not only our beta program with our customers, so that they understand it and play with it before it's released and generally available, but we are increasing and have increased our executive engagement with our customers as well. And in those executive engagements, we'll look at things like profitability that they're getting, future profitability they could get they're not getting today, what best practices look like, about how they should use our software. So we're doing all of those things.

Your next question comes from the line of Peter Goldmacher of Cowen. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: I wanted to ask you a little bit on what's going on in the manufacturing and supply chain part of the business. One of the biggest strengths in the story is once you get a data set, you help your customers leverage that data set, not only with a lot of different applications in the core engineering, but able to extend that data into the manufacturing and supply chain. How do you sell that value to your customers? What are your -- how are your customers using it? Is it a different person you're trying to reach in the organization? Or how is the organization -- how are your customers set up relative to the linear nature of moving that data through those 3 kind of categories? Mark E. Fusco: So I think there's several threads for the story, Peter. One, there's a technology thread. As we have built aspenONE over the past 8 years or so, and as it's become more integrated, and it's really substantially more integrated in the last year or 2, you can start to transfer data and information to make it available from one set of users to another set of users, and including getting realtime data out of a plant into the simulation and onto the flow sheet and vice versa. So there's a lot more that goes on between applications now than there used to be. There's also a contract thread to this. Over the past 8 years or so, we've gone from multiple contracts with different customers in different places, really to 1 or 2. And that allows us to simplify what we sell, to simplify our messaging to our customers, and while there may be different users or buyers, they're more common, especially in the middle market than one would think. Meaning that the CIO or the head of refining or the head of the business unit is responsible for multiple different things, not just one little piece of the business the way we would have sold it in the past. And so today, what we're trying to do is meet with our customers and talk to them about the different things that we do, how you can use software together, explain the new IP that we have. And back to this whole idea about optimization, aspen is in the business of saving its customers' expenses, or looked at differently, increasing profitability. So we can look at our customer and get an assessment of what they use from us today and what profit enhancement they have gotten, and what profit enhancements could be gotten if they use more of our technology. So it's really a business discussion now, in a way, as opposed to a technology discussion, which is, there's money available in your manufacturing environment, here's how you go get it, here's how much we think it is. And then we target to try to go after that with them, which will increase their own profitability and increase Aspen's licenses over time. So I think the messaging has gotten into alignment and it's -- with how our customers think about the business along with the integrated way the software is brought to market. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: Let me -- I mangled my question. Is the person that buys engineering or understands the engineering reasons for buying the same person that buys -- that understands manufacturing and the same person that understand supply chain? Or do you have to get 3 different guys from 3 different disciplines in the room, get them talking and have them understand that this technology cuts across all 3 disciplines? Mark E. Fusco: Yes, there may be one buyer, but there's multiple influencers in the corporation that have different interests. And there could be somebody who's responsible for feed in the supply chain, there could be somebody who's responsible for distribution, somebody responsible for manufacturing, somebody who's interested in modeling. So there's different influencers or champions in each one of the accounts, and it's our job to talk to them. But there's not 100 of them, there's a few. And our job is to know them and help them understand what we're doing. Over the past 14 months, we've run many, we call them technical innovation forums around the world for our major customers, where we'll go talk to them about all the different things that we do. We run executive relationship events with our customers, where I'll go or someone else would go. And we'll talk about their specific environment and how we can help them do things better. So I think it's multiple touch points, multiple different ways. But it's not plant by plant, I would say the way it would have been years ago. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: And do you still feel like there's still a lot of upside in just educating people? Or do you feel like, even in the supply chain area, you know who you are now, it's just about converting? Mark E. Fusco: Well, I think there's a conversion story and we're certainly working on that, but I really do think it's an education story. Our customers are busy doing what they're doing, and they don't necessarily know all the things that we could do or how much money we could save them if they ran some of our additional technology. I ran a little sales call here in our second quarter with a customer and they were unaware of some of the opportunities, and it turned into business for Aspen, and it will turn into tens of millions of dollars of annual profit enhancement for that customer. So that was -- just one sort of data point about what we do.

Your next question comes from the line of Sterling Auty at JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: I wanted to start with the cash flow guidance. Mark Sullivan, you mentioned, at the end of the commentary, about some of the cash collections that are back-end loaded. Just to clarify, the $120 million cash flow of guidance, are you assuming that those collections happened in the year, so it's part of the $120 million? Or is it similar to how you handle kind of the December quarter revenue guidance end, if you get those collections, it would provide upside to it? Mark P. Sullivan: Well, I'm not sure, it's probably not either of those black-and-white extremes, but we've taken into consideration historical collection rates and whatnot. But I just really want to point out that there's a tremendous amount of receivables that come due at the very end of the quarter, given the nature of software, you have the annual billings, and things are booked at the end of the quarter, and that's when the next payment was due. So we're just taking all that into consideration and just wanted to make you aware of it. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Okay, I think that's fair. You mentioned, still the 5- to 6-year contract duration. Has anything changed, and especially as you talk about the segmentation in the marketplace, do you find that different types of customers or different sized customers are doing different things when it comes to their contract length? Mark P. Sullivan: Not appreciably, no, that's been pretty consistent. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Okay. And China, the PMI is starting to pick up, and there's, I think, more robust or positive talks around China. And if we go back to when China was so big in the BRIC discussions, there was all the talk about the energy needs, et cetera. Are you seeing some pull-through in terms of your customer demand, to go back and service the region? Mark P. Sullivan: I wouldn't say that we're seeing a bounce, in particular, in one region or another. We've seen relatively consistent demand over time. And our customers are making long-term decisions, they make big investments over time. I don't expect to see things exactly track, what goes on in GDP, unless it goes materially negative and then it's possible that all spending stops. But we haven't seen that for sure. So we've seen consistent demand in all parts of the world, Asia, Europe, North America, Middle East, Latin America. I mean, it's been pretty broad-based across the world, with no one group really standing out one way or the other, which is, I guess, exactly the way you'd want it. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Okay. And last question, if we take the $4 million of cash collection revenue out of the December quarter last year, and then look at the December to March sequential, it was actually down $1 million. This year, you take out the $6 million, you're actually guiding to flat to up. How much of that improvement, if you will, is just being a year further into the model transition and layering in the revenue recognition around the term contracts versus actual improvement in just the underlying sales pipeline? Mark P. Sullivan: Well, I prefer to look at the numbers on an annual basis. I mean, obviously, we can get some variability quarter-to-quarter on this cash basis stuff, so I didn't 100% follow your math. I didn't write it down here, but I mean, obviously, revenue is up quite a bit year-over-year. That's predominantly the model changing, as well as growth on top of it. And I think if you look at the annual guidance versus where we had, at the beginning of the year and sort of where we guided to at the end of the first quarter, and that's an increase in business really that's driving that.

Your next question comes from the line of Richard Williams of Cross Research. Richard T. Williams - Cross Research LLC: Could you provide some color on the geographic business conditions? Mark E. Fusco: Yes, geographic? It was pretty broad-based, as I mentioned just a minute ago. No one region stood out in the quarter or in the first half of the year versus last year. It was pretty broad-based, nice growth in the licenses during this part of the world -- part of the year. We're more than -- sort of 2/3 of our business is non-U.S. That continues to be way we see the business going forward. That hasn't changed too much. So overall, I think we are pretty pleased with all the different segments of the business that we have, including the channel and the small customer inside sales business. It was all in this broad-based growth for the first half of the year here, and we are positive on our outlook for the second half. Richard T. Williams - Cross Research LLC: Any feedback on the Mid East reselling situation? Mark E. Fusco: No, other than it just grinds along. So I think -- I may have said something on prior calls. I mean, we've got a judgment against those guys in the Middle East. Whether we get it or not, it's a TBD. I don't think about it too much anymore. And we moved on. We're open in the Middle East, we had pretty good growth here in the first half, and we're positive on the space and looking forward to doing more business there.

Your next question comes from the line of Brendan Barnicle of Pacific Crest Securities. Brendan Barnicle - Pacific Crest Securities, Inc., Research Division: Mark, you were talking about aspenONE V8, and I think you are alluding to some of the things that you've been calling the calibrating products. Is that going to be more enhanced in V8? Is there any color you can give us on that product? Mark E. Fusco: Yes, we rolled out that product in the spring last year and then rolled out some more parts of it in November. So that's just now, Brendan, starting to go to market, really. It's starting to get used by the customers, and then we'll be able to give you some more feedback, maybe in May, at the Investor Day that we have. But I expected that. We've got a big install base of controllers around the world. That is an example of an application that is only available in the subscription aspenONE model. So if you're a legacy perpetual customer, you can't buy it. But I expect that we'll do well with that product, and we'll see how the adoption rate goes. But I expect it to be good. Brendan Barnicle - Pacific Crest Securities, Inc., Research Division: Great. And then, and Mark Sullivan, in trying to reconcile the op income and your non-GAAP EPS, are you assuming any differences in tax rate or interest expense that we're going to be seeing through the back half of the year? Mark P. Sullivan: None of a material nature, no.

Your final question comes from the line of Mark Schappel of Benchmark. Mark W. Schappel - The Benchmark Company, LLC, Research Division: Just switching gears a little bit, Mark, on your supply chain products. I was wondering if you just sketch out for us a little bit how you see the battlefield unfolding there. In the process industries, we saw a smaller competitor of yours acquire this quarter with lab systems, and I was just wondering if you could just talk about some of the changes you're seeing competitively in that market? Mark E. Fusco: Well, we're -- that product has been completely redone and refreshed, and we're actively out there selling it. Supply chain in general, the one you're speaking of, supply chain in general has actually been pretty good for the first half of the year. We have, I think everybody may know, very strong, competitive differentiation in the petroleum supply chain and some other spaces, and that continues to drive growth. I mentioned in my prepared remarks that we rolled out our new PIMS Platinum, our refinery planting tool. That, again, is only available in the aspenONE subscription model. And as we start to tie this week together, the manufacturing and the supply chain together with things we can do in the engineering space, I think we have a very nice set of solutions for our customers that can give them access to information that they couldn't have in the past. And we've got some new IP that will be delivered this year as well that we think will be helpful for them to understand their profitability in various parts of their business, maybe even on a daily basis. So there's lots of new things coming out, and I would say overall, the supply chain part of the business has been pretty good this year. We'll see how it continues.

This concludes today's question-and-answer session of today's call. I will now turn the floor back over to Mr. Mark Fusco for any closing remarks. Mark E. Fusco: Okay. Thank you, operator. Thanks, everybody, for joining us here today. Thanks to all the folks here at Aspen for the hard work in the first half of the year. We're very pleased with where we are. For our first half, we have lots to do, both in product development and with our customers, and the remainder of the year and going forward, and we're looking forward to seeing all of our employees and investors in our travels. Thanks. Have a great day.

Thank you. This concludes your conference. You may now disconnect.