Garth Russell - Managing Director of The Investor Relations Team Michael C. Willoughby - Chief Executive Officer, President, Chief Information Officer and Director Thomas J. Madden - Chief Financial Officer, Chief Accounting Officer and Executive Vice President

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division George Walsh

Good morning. My name is Brandy, and I'll be your conference operator today. At this time, I would like to welcome everyone to the PFSweb Second Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you. I'd now like to turn the call over to Mr. Garth Russell of KCSA Strategic Communications. Sir, you may begin.

Thank you. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call, other than historical facts, are forward-looking statements. The words anticipate, believe, estimate, expect, intend, will, guidance, confidence, target, project, and other similar expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and involve and are subject to risks, uncertainties and other factors that may affect PFSweb's business, financial condition and operating results, which include, but are not limited to the risk factors and other qualifications contained in PFSweb's annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PFSweb with the Securities and Exchange Commission to which your attention is directed. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. PFSweb expressly disclaims any intent or obligation to update these forward-looking statements. During this call, we may also present certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, non-GAAP net income, Service Fee Equivalent Revenue, merchandise sales and certain ratios that use these measures. In our press release with the financial tables issued earlier today, which is located on our website at pfsweb.com, you can find our definition of these non-GAAP financial measures or reconciliation of these non-GAAP financial measures with the closest GAAP measures and a discussion about why we think these non-GAAP measures are relevant. These financial measures are included for the benefit of investors and should be considered an addition to and not instead of GAAP measures. With nothing further, at this time, it's now my pleasure to turn the floor over to Mike Willoughby, CEO of PFSweb. Mike, the floor is yours. Michael C. Willoughby: Thanks, Garth, and thank you, everyone, for joining us on today's call. I am here with our Chief Financial Officer, Tom Madden, who will be discussing our financial performance for the quarter. But before turning the call over to Tom, I wanted to first provide an update on the key operational highlights during the second quarter. Overall, as you've seen from our earnings release this morning, we're very pleased with the results this quarter and the progress that we made in positioning our business to achieve sustainable and profitable growth. Going into 2013, we knew this was going to be a transition year as we restructured our operations and felt the impact from the loss of certain client programs. But despite the headwinds, our performance for the June 2013 quarter was stronger than we anticipated, driven by higher-than-expected service fee revenue activity, including client project work. In addition, we continued to make progress implementing initiatives to drive operational efficiencies and further reduce costs. As we've stated previously, we expect our results will trough in the third quarter of this year as the remaining client transition activity will be completed in the early part of the third quarter. We then expect to see a sequential improvement in our fourth quarter result as we realize increased benefits from new and expanded client relationships, as well as the seasonal client volumes during the holiday selling season. Our focus on controlling costs continues. So far, this year, we have implemented reductions in professional headcount; a change in executive compensation that lowered base salaries and better aligned management incentives with the performance of our business and with our shareholders; and a realignment of our organizational structure that better fits our current business model. We are confident that the changes we've implemented, and that we continue to evaluate, will drive operational efficiencies and increase the economies of scale in our services business. Many of you are probably interested in how the transcosmos relationship is going and we are very excited with how this relationship is unfolding. For those of you new to the PFSweb's story, in May of this year, PFSweb and transcosmos entered into a strategic relationship, which also included an equity investment by transcosmos into PFSweb of $14.7 million, just under 20% of the company. transcosmos is a public company based in Tokyo that manages call centers and provides IT data management and digital marketing services for a large portfolio of leading global brands. transcosmos has an extensive footprint towards operations, primarily in Asia, but also has facilities across the globe. In July, our executive team traveled to China and Japan to make a series of well-attended presentations with the transcosmos' team, to their executives on how the to expand their eCommerce presence in United States, Canada and in Western Europe from their base in Asia. transcosmos team put on a full-court press to promote the seminars, issuing advertisements in national newspapers. The level of effort transcosmos put into making our trip a success is indicative of their commitment to making this relationships succeed. Transcosmos has made it clear, both in words and actions, that it believes in PFSweb's value proposition, and that it will allow -- allocate the necessary resources to help us grow our business. We're already beginning to see new business opportunity arising from this strategic relationship. We continued to believe that taking a 2-pronged approach is the best way to maximize the transcosmos relationship. The first prong or what we call project-specific involves working with our current clients and our prospective clients to leverage our technology and transcosmos' infrastructure in China and Japan to expand our clients eCommerce presence in Asia. We believe there will also be project-specific opportunities to help transcosmos' current clients already operating in existing eCommerce programs in Asia, to upgrade their programs using our best-in-class technologies and services. The second prong, or what we call project Atlantic, involves helping transcosmos' current and prospective clients expand their eCommerce presence to the U.S. and Europe using our existing service as an infrastructure. We are very excited at the prospect of growing business in the U.S.A. and in Europe through transcosmos' client relationships, especially in the short-term as we leverage our existing mature solutions to support these Asian brands. However, we believe the best opportunities for growth are in China where the eCommerce industry is expected to undergo significant expansion over the next several years. The McKinsey Global Institute estimates online sales in China could reach $650 billion by 2020, compared to the $120 billion in 2011. Part of what will drive that growth is access to broadband. Only 30% of Chinese households currently have high-speed Internet. Growth in broadband adoption and the accompanying expansion of eCommerce in China will benefit both U.S. clients looking to expand into China, as well as Chinese brands that want to reach a wider audience in the country. In addition, we also see tremendous opportunities to work with emerging Chinese brands that are looking to expand their presence outside of China. To take advantage of the opportunities in China, we are working on optimizing our End2End solution to meet the needs of the brands operating in that market. This solution will offer a robust set of standard features and functionality, along with several templates to be used to create the look and feel of the Chinese site. This quick-start solution will allow for the same level of customization and scale after the site is deployed, but the standardized starting point will allow us to onboard more clients, increasing our deal volume and margins. We believe this quick-start approach also has application in our U.S. and European markets, particularly with some of the smaller initial opportunities from the transcosmos pipeline. We will look to provide more details as we begin to roll out this program using this solution. This is the time of year when we engage with our clients to begin to finalize holiday forecast and wrap-up pre-holiday plans, including wrapping up any infrastructure upgrades and certification testing that we're doing in preparation for the holidays. We are looking forward to building on the very strong performance from holiday 2012 as we prepare for the unpredictable roller coaster ride, that is our client's holiday selling season. Based on our experience from the past several years, we fully expect many of our clients to produce conservative forecasts and then proceed to blow these forecasts away with successful promotional events. We have engineered our technology platform to scale, using capacity on-demand features, so we can help our clients to capitalize on the demand, even when they exceed their forecast. This year, we have also added several significant new client relationships that will be ramping up for the holidays for the first time. This adds to the interesting holiday dynamic. We look forward to showing our clients what we can do this holiday. We expect to have a detailed update and a holiday outlook on our November conference call. In addition to our holiday preparations, we're also completing several significant updates to our operation in support of new client programs coming online this quarter. First, we have expanded our food grade climate-controlled facility, doubling the size of this facility to now over 100,000 square feet. This facility supports our Starbucks and L’Oreal client relationships, and the facility expansion will support organic growth in these programs, and 2 new L’Oreal brands we are currently onboarding. This facility expansion will be commissioned next week and will be an immediately supporting production operation. We are also working with the leading Fortune 500 apparel and home fashion retailer we announced on last conference call to launch a large dedicated distribution facility that we will manage for them as part of our master agreement with them. This project also includes very customed order management system and warehouse management system functionality, program-specific payment processing and product management tools and a highly customed fulfillment configuration to suit the unique requirements of this client. This project is one of our most complex and ambitious efforts to date, and I believe the intensity and scope of the project is an indicator of the significant future potential of this new deal. Finally, with regard to operations, we are upgrading our marketplace facility to reconfigure the large material handling system in the building. This new configuration will provide significant improvements in operational efficiency for the clients program in the facility, including our long-standing LEGO relationship. We are completing a similar reconfiguration in one of our facilities in Liege, Belgium, which will remove the obsolete and inflexible pick-to-light system that was originally configured for office supplies. This change should also yield significant improvements in operational efficiency and will result in a large increase in usable floor space in the building. Both of these facility improvement projects will be completed during the September quarter, in time to help us further ensure we're at the top of our operational game for the upcoming holidays. Now turning to the new business update. Since our last call, there are several new client programs that we have just launched or in the process of implementing. And we're very excited about many of these new solutions and the revenue that they can potentially generate. With planned launches in August and September, we'll be adding 2 new brand programs to our current portfolio of 6 L'Oreal brands, bringing the total number of supported L'Oreal brands to 8. Services provided to these 2 new brands include eCommerce development assistance, order management, storefront merchandising, fraud management, order fulfillment and customer care operations. Both of these new programs will be active and live by the end of September. We are excited to see the continual expansion of this enterprise agreement, as L'Oreal continues to leverage our eCommerce solutions built specifically for multi-brand Enterprises. We expect to announce the names of these 2 brands very soon. Over the past couple of years on these calls, I've consistently stressed the importance of our current clients in generating new business opportunities for us. This expansion of our L'Oreal relationship highlights the success we have had in leveraging existing client relationship to drive growth. Typically, our sales cycle is significantly shorter and our onboarding time reduced compared to the effort to close and onboard a new client. As a result, the return on investment for organic growth opportunities is significantly higher. I believe current client contribution is a very important indicator of the health of our pipeline, and I'm happy to note that an increased number of the new business deals signed and implemented this year will come from current clients. In our last call, we announced the launch of a major footwear manufacturer's first U.S. direct-to-consumer eCommerce solutions in April. For this solution, we are providing order management, payment processing, fraud management, customer care and order fulfillment services. We're now working to expand this program into Europe with the same services and foresee a go-live before this holiday season. As with many of our clients, we are delighted to help this prominent and global brand expand their eCommerce presence into new geographies, and we look forward to providing the infrastructure and services that allows them to grow. Also, since our last conference call, we signed and launched one new U.S. business-to-business program under a master agreement with a large unnamed CPG company. This new B2B program is for a well-known health and beauty brand, for which we already provide a direct-to-consumer solution. For this program, we provide B2B order management, payment processing and terms account management, creating partner relationships management, inventory management and fulfillment and transportation management in support of a large segment of this brand's retail clients. B2B engagement still account for a portion of our client activities, and we believe this new B2B engagement is an excellent example of how we can leverage our technical capabilities and service offering to expand an existing client relationship and add significant value to an existing client relationship outside our traditional direct-to-consumer eCommerce offering. Lastly, from an existing client perspective, we mentioned on our last call the comprehensive omni-channel commerce solution for an existing apparel brand client. This expanded solution will leverage the full range of our iCommerce technology ecosystem, including our iCommerce Product Content Management, powered by Riversand; an endless aisle application; Shopatron distributed order management platform; and our iCommerce agent application. This expanded solution is scheduled to go live this quarter and it will empower this multi-channel brand to further delight its customers by providing a consistent, high-quality brand experience across all channels. With regard to new business updates, on our last call, we announced the signing of a master services agreement with a leading Fortune 500 apparel and home fashion retailer. We are pleased to announce this very large implementation project is on schedule and the first iconic brand program under this agreement is in beta testing, but a soft launched to a friends-and-family audience scheduled for September and an expected national launch in October. As a reminder, we will be providing order management, payment processing, fraud management, customer care and order fulfillment for this brand. We will perform the order fulfillment services from the large dedicated distribution facility I mentioned earlier in the call. We're very excited about this enormous potential of this new client relationship. And we expect to be able to share the names of this relationship at some point after the national launch. We've also been building and implementing a U.S. End2End program for a premium European-based luggage brand. This will be their first direct-to-consumer eCommerce solution, and we're proud to be their chosen global End2End eCommerce provider. We'll be launching the U.S. program in Q4 of this year and we'll deliver the European End2End program some time in early to mid-2014. The last few months have also been busy with business development activity around our transcosmos relationship. As previously mentioned, we have received tremendous interest from Asian brands as a result of the seminars we conducted in Japan and China last month. We're excited to work with these Asian brands and explore opportunities to launch eCommerce programs for them in the U.S. and in Europe. Although it is still early in our joint business development process with transcosmos, we are very excited that several companies have already reached out to us to express their interest in our eCommerce solutions. And we have recently delivered our first proposal to a very successful Japanese luxury brand operating an eCommerce initiative in Japan today. We are also in contact with several of our existing and prospective clients to discuss supporting their eCommerce plans in China and Japan. We are already working to localize and deploy our End2End eCommerce technology platform, be ready to support client program launches in China and Japan. We anticipate that we could launch our first client programs in China early to mid-2014, followed then by launches in Japan. Including the benefit of several of these new opportunities from our transcosmos relationship, our new business pipeline continues to grow and currently sits at a little more than $55 million in average annual contract value based on client projections. In addition to the Asia-related activity, the growth in our new business pipeline can be attributed to a busy summertime of new leads and proposals. As our prospects begin to prepare for the fourth quarter holiday surge in sales, we hope to wrap up several of these new deals and begin mapping out our 2014 implementation schedule. We now have a net total of 78 total client programs live around the world, which is down slightly, as compared to the prior quarter, due to the previously announced client transitions. 28 of those 78 are End2End programs. We currently have 10 programs in implementation and scheduled to go live periodically over the next 6 to 9 months. As I conclude my prepared remarks, I would like to reemphasize our primary objective to enhance shareholder value. I'm excited about the ongoing efforts we are making to streamline the business, open up new channels of opportunity through our geographic expansion, and the evolution of our service offering and the recovery of our client relationships to the point that we are now referenceable with each of our current clients. To make sure Wall Street knows about the developments in our business, we have been aggressive in our Investor Relations effort. Over the past several 2 months, Tom and I have conducted a series of investor road shows in New York, the West Coast and Dallas, as well as conducting a number of investor conference calls. PFSweb has also received greater visibility through expanded research coverage. We have enjoyed the opportunity to share the PFSweb story with existing investors, prospective investors new to our story and other interested parties. We expect to continue this commitment through greater transparency and engagement as we return to New York and travel to additional cities and venues throughout the rest of the year. Now I'd like to turn the call over to Tom for a detailed review of our second quarter 2013 financial results. Tom? Thomas J. Madden: Thank you, Mike, and good morning, everyone. I want to spend some time going through the June quarter results reported earlier today, as well as our outlook for the remainder of calendar year 2013. On an overall basis, while we're pleased with the results of our second quarter, we continue to expect calendar year 2013 to be a transition year for us, as we wind down certain previously announced client programs, as well as incur several restructuring and other related costs related to our initiatives to streamline and improve our operations. Our total consolidated revenue for PFSweb in the quarter ended June 30, 2013, decreased to $58.2 million compared to $67.1 million reported in the second quarter of last year. This decrease was primarily related to the anticipated drop in our products revenue segment activity, as well as a drop in our service fee business related to previously disclosed client transitions. Our product revenue activity is expected to continue to decline due to restructuring activity by our largest client in this business. As in the past, we provided, or we provide key metrics in our business that we refer to as Service Fee Equivalent revenue. This metric is calculated by taking our service fee revenues, which is the primary business activity we perform, and adding the gross margin on our product revenue business, so that both businesses can be measured on a similar service fee basis. During our second quarter, our Service Fee Equivalent revenue declined 8% to $28 million, as compared to $30.5 million over the same period last year. While several new and expanded client programs, as well as project activity generated increased revenue for us on a year-over-year basis, the reduction in revenue related to client transition activity more than offset these increases. Consolidated gross profit for the June 2013 quarter increased to $10.2 million or 20.6% of net revenues, excluding pass-through revenues, as compared to $9.8 million or 17% of net revenues, excluding pass-through revenues, for the same period in the prior year. This improvement in gross margin percentage was both due to business mix as we experienced a higher percentage of our net revenues from the higher gross margin service fee business segment, and also due to improvements in the overall gross margin for that service fee business. Our gross profit percentage for the services business grew to approximately 32% during the June 2013 quarter, as compared to approximately 27% in the prior year. A portion of this increase is related to improved operating efficiencies, including the positive impact from our restructuring efforts, as well as an increasing percentage of our Service Fee Revenue being generated from higher margin, professional services and technology activities. In addition, the service fee gross margin in the second quarter of 2013 included the benefit of higher-margin project activity and an incremental benefit of approximately $0.4 million due to certain client transition-related agreements. We continue to target an overall gross profit percentage of 25% to 30% on existing and new service fee contracts, and expect to perform within this range for the remainder of the year. We are focused on continuing to increase the level of higher-margin service fee activity, including our professional services model and technology-related services to help offset what can often be lower gross margin activity in certain, more commodity-like service areas of our business. Our gross margin percentage for the product revenue business decreased to 6.6% during the quarter from 7.3% during the same period last year, primarily as a result of a shift in product mix and reduced benefit from incremental gross margin earned on product sales resulting from certain product price increases and the impact of certain incremental inventory cost reductions. Our SG&A for the second quarter of 2013 increased to $10.9 million, as compared to $9.9 million in the same period of the prior year. Both quarters included approximately $0.3 million of incremental charges, either related to restructuring and other charges in the current year or move-related expenses in the prior year. Excluding the impact of the incremental charges in both periods, we had a year-over-year increase of approximately $1 million in SG&A, primarily related to increased depreciation and amortization expense, facility-related costs and personnel-related expenses. Looking ahead, while we continue to look for opportunities to reduce our SG&A cost levels. We do not currently anticipate that we will incur any additional restructuring charges during the remainder of the year. And expect our SG&A levels going forward to be closer to $10 million per quarter. With our various restructuring efforts and ongoing cost-focus, we are confident that our organization has merged leaner and stronger, yet still well-positioned to support our long-term growth initiatives. Our adjusted EBITDA for the quarter was $2.5 million, compared to $2.8 million for the same period last year. Our non-GAAP net loss, which excludes restructuring charges, among other items, was approximately $0.4 million, as compared to non-GAAP net income of $0.2 million during the same period last year. During the quarter, we took advantage of the cash infusion we received from transcosmos to reduce our debt levels and strengthen our balance sheet. Our total cash and cash equivalents as of June 30, 2013, was approximately $22 million, and our total debt was approximately $13 million. As a result, our net cash-to-debt position as of June 30, stood at around $8 million to $9 million positive, compared to a negative cash-to-debt position of approximately $6 million as of the end of March. Again, while we are pleased with our financial results for the first -- for the second quarter of 2013, full calendar year is still going to be a transition year for us. And as we look ahead, as Mike alluded to earlier, we do expect that we will experience reduced revenue and profit in the third quarter of 2013, as our remaining clients transition activity will primarily be completed in the early part of the third quarter. We then expect an improvement in our fourth quarter as we realize increased benefits from new and expanded client programs, including potential new clients through our transcosmos relationship, as well as seasonal client activity. Again, while we recognize this as a transition year, we are very excited about the positive momentum in our business, including the new business opportunities we are beginning to see from our sales pipeline with new and existing clients. Given the ramp-up time required to contract and implement new client solutions, we expect the benefit of these opportunities will primarily be reflected in our calendar year 2014 and forward results. Based on all of this, including our stronger-than-anticipated performance for the June quarter, we now believe our Service Fee Equivalent Revenue will be towards the high end of our previously announced range of $110 million to $115 million for the year. And we are increasing our adjusted EBITDA guidance to a range of $9 million to $10.5 million for the year. Now I'd like to turn the call back over to Mike for some closing remarks. Mike? Michael C. Willoughby: Thanks, Tom, and I'd like to thank everyone that attended the call today, and I hope to be speaking with many of you over the next few days and weeks. I am fully committed to delivering the best possible returns for our shareholders in the highest levels of service and value for our world-class customers. And this concludes our prepared remarks. And so we will open the call up for questions. Operator?

. [Operator Instructions] Your first question comes from the line of Greg Sutton of Craig-Hallum. George F. Sutton - Craig-Hallum Capital Group LLC, Research Division: It's George Sutton. So Mike, you mentioned that you're starting to develop forecast with customers for the holiday season. And you mentioned that, in many cases, there are conservative forecasts that they may end up blowing away in some cases. And then you've also got a number of other first-time programs coming on. As you're giving us guidance for your business, how are you thinking of it in context of these forecast you're being given? Are you using those same conservative forecasts in your guidance? Michael C. Willoughby: Right. So in the prepared comments, we indicated that based on our experience over the past couple of years, we sort of been led to expect our clients will give us conservative forecast because that's what happened over the past couple of years. And so our program management team takes those forecasts and they look at the trends and frequently, we will be more optimistic than some of our clients with regard to the business in the fourth quarter as we're trying to accurately, as we can, predict what might happen. We certainly, operationally prepare for anything to happen. Over the last 2 years, we have seen our clients, in the aggregate, anywhere from 30% to 40% over their forecasts. And we wouldn't be surprised if we don't see something similar this year. So while we don't necessarily take the most conservative view, I would say we're sort of aiming for a middle ground as we project into the fourth quarter, and in this exercise that we go through with the clients to really try to fine-tune those forecasts, which is something that happens in the September and October timeframe, is very, very important so that we can try to be on the same page with our clients. It really revolves around their promotional schedule and what they're intending to do around these key events of Thanksgiving and Black Friday and Cyber Monday and Green Monday and all the different promotional events that are being created in this holiday season. And specifically, what kind of things that they're planning on doing to promote their products. Being on the same page with them is an important exercise, and that helps us to, when we come around in November, hopefully give a little bit better indicator for what we expect to happen in the holiday. George F. Sutton - Craig-Hallum Capital Group LLC, Research Division: Got you. Okay. That's helpful. And relative to your current business pipeline, which I was happy to see you raised from $50 million to $55 million. Can you give us a sense of -- is there much, if any, transcosmos' business in that, or would that be incremental to that pipeline? Michael C. Willoughby: Yes, as we indicated, it's really early. We've been working with these guys really now for just a little over a month in a concerted effort to build some pipeline value. And you wouldn't see most of the opportunity in what we would call the early stages of our pipeline, which doesn't end up being reported in the number. The pipeline numbers that we report is based on proposals that are outstanding but not yet signed. And as you might recall, I mentioned that we have actually delivered one proposal already to a prospect from our transcosmos pipeline. They would anticipate needing to launch before the holiday, so we'll know pretty quickly whether we're going to win that or not, because we have to get to work -- we have to launch that brand. It would be startup here in the U.S., although a very successful program in Japan. I would say that this particular opportunity is kind of indicative of a lot of what we'll see with the transcosmos opportunity, where you have a successful, maybe even iconic brand in Asia, but is less well-known here. So there's going to have to be a lot of effort on our part, and on our client's part, to build brand equity in the U.S. and to have a successful launch. That's one of the reasons that we indicated that we're tuning our solutions to be appropriate for somebody who's starting from scratch, which would have a higher emphasis on IMS and professional services and a lot more standardized solution coming out of the box so we can lower the entry price to our client of the product and at the same time, raise our margin expectations for some of these startup-type brand opportunities. George F. Sutton - Craig-Hallum Capital Group LLC, Research Division: Understand. And now, lastly for me. Now that you've got a better handle on the transcosmos' opportunity, what does that give you in terms of potential opportunity as you look worldwide, relative to what you had prior to this relationship? Michael C. Willoughby: So I think we're very excited about the potential, although, I think, we're still -- it's too early to try to quantify what it actually means. As indicated in the comments, we sort of divide the opportunity up into 2 buckets. One is what we call project Atlantic, which is all these new potential coming out of transcosmos' current client relationships and the context that they have in China and Japan. And those brands, realizing that to be successful as a large brand, you need to have a global perspective and therefore, they should be we serious about the U.S. and European markets in addition to sort of their home markets. That's the area we're focusing on initially because we think that's where the low-hanging fruit is based on it's already having a very matured solution in U.S. and Europe. And we're very excited about the potential. I think over the next 4 to 6 months, that will start showing up in a meaningful way in our pipeline as we report. The other is what we call project Pacific, which is, over the long-term, the opportunity I'm most excited about because it gives us an opportunity to go into the Chinese and Japanese markets, particularly. And then as transcosmos continues to be very aggressive about their own international expansion, opens up a possibility down the road that we would be able to move our solution in -- natively into the South American countries like Brazil. Or even into Russian-speaking Eastern European countries. These are all sort of on-the-plate for transcosmos. And so as they make infrastructure investments in those countries, we can follow them with our End2End solution, which is kind of our operating plan at this point. I think that potential, the potential to take our current clients and prospects that are already well-established and successful into these Asian markets is long-term, the most exciting potential that we have. And it would be our ambition to, as I've said, leverage the investments transcosmos is making to be really the only truly global End2End provider operating on a single platform within our industry today, which is very exciting. George F. Sutton - Craig-Hallum Capital Group LLC, Research Division: I assume it's part of your now product roadmap. That product roadmap is part of your pitch as you're going after domestic customer opportunities as well. Michael C. Willoughby: Absolutely. And not only with prospective clients that we're talking to for the first time. But obviously, we're wrapping back around with all of our current clients now that we have a solution that's not just sort of on paper, but is actually being deployed. Are you ready to get serious about taking advantage of this amazing opportunity in China? It's time to get off the side line and actually participate in what's happening over there.

Your next question comes from the line of Mark Argento of Lake Street Capital. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: A couple of questions in regards to your -- some of your customer accounts and programs. I think you mentioned 78 live programs. How many unique customers do you guys have in that 78? Michael C. Willoughby: Sure. Let me turn to my little dashboard and kind of give you a little bit of color on that. So we talked about brand programs as being programs that are specific to supporting a brand, whether it's in a certain geography or across geographies and it could be part of the portfolio underneath the sort of an enterprise master service agreement. So the total number of companies that we are contracted with, these are enterprises, is 35, so 35 enterprise relationships. Four of those 35 companies we serve has 67 brands. And obviously, some of those brands are in multiple geographies, which gets you to the 78-brand programs that we're operating. And then we also mentioned that we're implementing 10 additional programs for a launch over the next 6 to 9 months. So as those go live, then you'd expect to see those raise that brand count. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: That's helpful. And then I think you mentioned 28 of the 78 programs are End2End programs. Is that accurate? Michael C. Willoughby: That's correct. So that would be programs where we are reselling the Demandware platform in addition to our core infrastructure-related services and marketing services and et cetera. The key definition there is that we would be providing the Demandware platform to those clients that are categorized as End2End. Thomas J. Madden: There are a number of additional clients that we have that used the Demandware platform, but have a the direct relationship with Demandware, and we provide all the other services [indiscernible] provide in our End2End solutions. Michael C. Willoughby: Correct. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: Right. So you effectively -- so you have some customers that you actually bring Demandware in and then bring -- provide the whole solution, and some other clients bring their own Demandware relationship, and you execute? What ballpark -- what's the total number of Demandwaresque-type customers, I guess, that you guys are interacting with? Double the number of 28 or...? Michael C. Willoughby: No. It wouldn't be quite that much. Thomas J. Madden: It's probably another 10 or 12. Michael C. Willoughby: That's probably about right. Thomas J. Madden: It's just about half. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: And then do you guys work and wrap or work with any of the other eCommerce platforms like the Oracles platform or anybody else? How do you manage that relationship? Michael C. Willoughby: Yes, absolutely. So of the non-Demandware clients where we're providing the rest of our services or in some cases, just selected services, there is typically another platform deployed. So you mentioned Oracle's ATG platform, IBM, Websphere is another one. Hybris is another one, Magento. We have active integrations with all 4 of those platforms in addition to Demandware. And in many of those relationships, because we're using the same application program interfaces to connect these other platforms to our OMS and the rest of our capabilities, even though we're not necessarily giving -- providing access to the platform or working directly on the platform, we're able to operate the program in a similar way to our End2End engagements. We're able to tightly integrate these other platforms and create an End2End feeling engagement. So I mentioned active engagements with ATG, Websphere, Hybris and Magento. Five today, in addition to, obviously, our core platform, Demandware. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: That's helpful, peeling the onion a little bit there. Looking at segment gross margins, the gross margins in the services business are actually incredibly strong in this quarter, over 32%, I believe, if I'm doing my math correctly. You guys talked to that 25% to 30% range. Was there anything in the quarter that -- was there some service revenue in the quarter or project revenue in the quarter that moved that up, and maybe you could walk us through a little bit of the outperformance this quarter? Thomas J. Madden: As I -- this is Tom. As I alluded to in my comments, the -- we did have some benefits this quarter from project activity. Oftentimes, our project activity comes at a higher gross margin because we generally have some of the infrastructure already in place to support those additional initiatives. And as our level of project activity is much higher this quarter, we also -- we had some higher level of technology and professional services activity this quarter as well that operate at the higher gross margin. So both of those positively impacted us. It's probably -- it's project activity side, I don't -- while we always have some project revenue each quarter, I don't expect that level of activity to continue into Q3 and Q4, as what we had in Q2. And then the other thing, we did have a little bit of the benefit of a $0.4 million of benefit in our profits are -- kind of leverage the [indiscernible] premium with one of our clients. So that also benefited us in the quarter somewhat as well. So as I look forward, I think it's more appropriate for us to continue to guide using the 25% to 30% positive rate for that service business. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: And what was the actual dollars in terms of project revenue for the quarter? Thomas J. Madden: We don't disclosed that piece. So it was not a overly meaningful piece, but it -- again, it comes at a nice stronger gross margin percentage. And as a result, drives the overall gross margin percentage up.

[Operator Instructions] There appear to be no other questions at this time. I would like to turn the floor back over to Mike Willoughby for any closing comments. Michael C. Willoughby: Okay. Thank you, operator, and as I said, really appreciate your participation. Operator, it actually does look like maybe we have one. Can you just make sure?

Yes. Your next question is a follow-up from Mark Argento with Lake Street Capital. Michael C. Willoughby: Mark, Sorry. It looks like we dropped you mid-conversation. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: Yes. No, I appreciate you letting me chime back in just quickly. So long story short, some project revenue in the quarter, but you didn't -- you're not going to break it out, which is fine. Last question I had for you is around gross merchandise volume. I know you guys don't provide that as a metric, but I think it's a good way to think about the -- talk to the activity level within your customer base. Like could you talk broadly what kind of gross merchandise volume are you seeing kind of increases year-over-year? In the 20% range? Is it 30%? Just trying to get a better feel, given the fact that revenues -- you have some client attrition. We don't really have a good same-store sales number. Maybe you can help me think about that? Thomas J. Madden: Okay. This is Tom. So just as a perspective, we take a look back from a calendar year 2012 standpoint, our total gross merchandise value was about $1.7 billion worth of products that we moved on behalf from our clients. So that -- it's going to be a combination of both our direct-to-consumer activity, as well as business-to-business activity that we perform for certain clients. The -- it's difficult at this time to really have a similar comparison because we have not yet gone through the holiday season, and that's where you get the biggest ramp. And especially from our B2C business. So we'll continue to update that as we go forward. With our Service Fee Revenue number being down somewhat this quarter as compared to last year, I would say that, in total, it would also be appropriate to assume that our gross merchandise value for this quarter has decreased as well. But again, as we look out to the future, we're hopeful that new client activities as we going to 2014, that we'll see growth in our metrics. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: Maybe I can ask it a different way. If you excluded the loss of the -- to the customer and pretended like they weren't in the mix last year this time. If you looked at just existing customers today, I'm trying to identify, is there -- the secular growth trends in eCommerce suggest 15% to 25% type growth in -- with existing kind of -- existing customers or existing business today. Have you guys seen that type of growth in the -- on a 4-wall basis on a client basis regardless of all the noise and the -- of losing customers and all that? Michael C. Willoughby: Right. For -- yes, for our existing clients, we definitely are seeing an increase year-over-year, especially in our direct-to-consumer piece. On our business-to-business side, we do see relatively stable performance year-over-year for those clients, but the direct-to-consumer piece for the existing client relationship, we definitely see an increase. We've got strong growth activity occurring with clients like Starbucks, L'Oreal, et cetera, on a year-over-year basis. That's definitely helping to offset some of the reductions from that other client transaction activity that's occurred. We're definitely seeing organic growth that's occurring within our existing clients as driving our service fee revenues with them as we go forward. Michael C. Willoughby: Mark, let's see if we can come back with -- let's see if we can come back with a little more granular answer next quarter. That's a good point. Mark Nicholas Argento - Lake Street Capital Markets, LLC, Research Division: I just think given just the tougher compares with the change in the constitution of your customer base, that it would just be helpful, either metric or just directionally, it would be helpful just to understand that -- because you talked to activity levels within that customer base, get a little bit better feel for how that's progressing. Michael C. Willoughby: Yes. It's a great point. Let's do a better job next conference call.

Your next question comes from the line of George Walsh with Gilford Securities.

Mike, could you talk about, as you go into these, let's just stick with project Atlantic, as you call it. What are the ramp-up costs of this as you build this going forward or deployment of capital you'll be needing to do this? Or will you be using existing capacity? And is there anything special about that, relative to the way your booking revenues to this versus other clients you've had? Michael C. Willoughby: George, I think one of the advantages to this whole project Atlantic pipeline, is that it leverages everything we have in place today. So we would expect that these engagements -- some of them look very much like our large enterprise engagements that we currently support today with a customized operating and tons of flexibility and those would -- do it onboard ,[indiscernible] onboard and support those just like what we do with our large clients today. But I also think, as I mentioned in my comments, there's a real opportunity here to engage with some smaller brands, some startup-type opportunities that they have much more standardized offering that is much lower cost for us to deploy out of the box and a lower price point for our client, to start off with. And then as we support them with that standardized offering, I think it's a lower-cost environment for us and also a higher-margin engagement for us as well. I think it's important to have this what we call quick-start solution in place, so that we can engage more of these mid-market type opportunities, get them in our portfolio and then help grow them into a large-enterprise-type engagement, and do that at a very effective cost basis and price point. I also think that those mid-market type engagements, the sales cycle will be shorter. It will be a lot less expensive for us to support these sales cycle since we're not going to do as much traveling and as many sort of intensive engagements with the prospect. So we're actually pretty excited about -- with these mid-market opportunities coming out of the transcosmos' pipeline could do to help us onboard more clients into our solutions. And then, finally, I think this approach, as we're starting to see competitively some of our competitive companies offering a mid-market type solution that, it would work for prospects, even in the U.S. and Europe, that are looking for a high-quality, scalable solution, but may be looking for that at a lower price point with a lower entry price. So I think there's application even to our current market.

Okay. And just an outline of project Pacific, instead of [indiscernible] solutions on project Atlantic. With project Pacific, is that something that really -- that rolls out more in 2014 into '15? And also would that -- is that one that has a bit more capital expenditure to set up since -- or are you leveraging the transcosmos infrastructure? And is there also some difference in the revenue stream? How you would book revenues on that? Michael C. Willoughby: Right. So there is more capital work for us to do, primarily on the technology side, as we integrate with a new payment gateway and as we localize the solution appropriately for the Chinese language or Japanese language. Infrastructure-type investments are going to be minimized because we are leveraging our transcosmos relationship with the facilities that they already have in place. So we're not expecting to have to deploy our capital for physical infrastructure, more really for technology. The engagements, I think, will be very similar to our existing engagements, fee revenue-based. I do expect that there'll be more emphasis on the higher-margin activities, such as the digital marketing services and eCommerce technology platform-oriented services, because the call center on that would will be provided on a subcontract basis by transcosmos' employees. So if anything, I would guess, that these engagements for us would tend to be higher-margin. Because some of the commodity components will be effectively surpassed through, for us. And then you were right about the timing. We're working to deploy the solution now. We're obviously working on generating pipeline opportunities with our current clients and prospects. We would expect 2014 program launches beginning in China.

Okay. Good. And can I ask you a general question? Just going back to the master agreements and kind of the issues between -- if you could just do a little bit of comparison and contrast of, let's take something like L'Oreal, which has been -- seems to be a very good example of retention and expansion versus some of the customer churn issues that you've had. So as you looked over this, Mike, and you're grabbing on to this and running this company, what's the differences there and what are things -- is it the nature of the customers that with -- the nature of the way you're doing business? Is it maybe your actual size and capacity limits? Why does one seem to work very well and then you might have some where -- I know there's churn in the business, but are there differences there you see in things that you feel can make a difference going forward, as you're leading the company? Michael C. Willoughby: Sure. That's a great question. So there are elements of churn in the business that are just there as clients change their strategy. We've seen situations where a program just doesn't meet the expectations of the client so they've decided to discontinue it, or there's an acquisition that brings capacity into the business and they've decided to leverage it. And those are things that are just outside of our control. And even if the client is happy and referenceable, we sometimes see those engagements come to an end. But I think, there are certainly areas where we actually have control over whether the engagement continues, whether the contract renews, and it really boils down to a very simple fact that if we are taking care of our clients, supporting them, meeting their needs and doing it in a cost-effective way, they tend to stay with us, renew their contracts and even expand the relationship. And the client transitions that we are experiencing in 2013 are largely a direct result of the challenges we had in holiday of 2011, where we didn't meet our clients' needs, especially some of the larger engagements. We've talked about this on our past conference calls and even in our earnings release that we had to make some significant investments and sort of rethink the way that we approach promotional events and holidays, so that we would meet our client's expectations. And then we did perform very well last year and expect to do the same this year. When we have a happy client and a referenceable client, we would expect them to generally stay with us, renew their contract and give us opportunities for expansion. There are occasionally times like we had with Carter's, where as the business scales to be very large and very successful, as if they would have a tendency to look at, do they insource portions of the operation because they wouldn't start to view as a potential core competency. I think, when we're doing a really good job for our clients, we do have a defense against that concept. But there is the potential that, especially for our client that has a retail operation in place already, that they would look to bring a portion inhouse. In those situations, we look to retain a part of the business if we can, like we've done with Carter's. Hopefully, the higher-margin, more value-added services, and at that points, it would be more of a partial engagement.

There are no further questions at this time. I would now like to turn the floor back over to Mr. Mark Willoughby for any closing comments. Michael C. Willoughby: Great. Once again, I appreciate you all for joining us. We look forward to the next conference call. We'll bring you additional details on our transcosmos relationship, hopefully talk about some of these new client launches by name. Certainly, we'll update the quarter 3 results, and we'll give a holiday outlook and what plans that we have for supporting our clients then. We look forward to talking to you then. Thank you.

Thank you. That concludes today's conference. You may now disconnect.