Karen L. Rosenberger - Chief Financial Officer, Executive Vice President and Treasurer Stephen G. Waldis - Founder, Executive Chairman, Chief Executive Officer and Member of Business Development Committee

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division Michael B. Nemeroff - Crédit Suisse AG, Research Division Gray Powell - Wells Fargo Securities, LLC, Research Division Sterling P. Auty - JP Morgan Chase & Co, Research Division Nandan Amladi - Deutsche Bank AG, Research Division Shyam Patil - Wedbush Securities Inc., Research Division Daniel H. Ives - FBR Capital Markets & Co., Research Division Tavis C. McCourt - Raymond James & Associates, Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Q1 2014 Synchronoss Technologies, Inc. Earnings Conference Call. My name is Mark, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Karen Rosenberger, CFO. Please proceed, ma'am. Karen L. Rosenberger: Thank you, Mark. Good morning, and welcome to the Synchronoss first quarter 2014 earnings call. We will be discussing the results announced in the press release issued this morning. Again, I am Karen Rosenberger, Chief Financial Officer of Synchronoss. And with me on the call is Steve Waldis, Founder and CEO. During the call, we will make statements related to our business that may be considered forward-looking statements under federal securities laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements reflect our current views regarding the future and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risk and other important factors that could affect our actual results, please refer to those listed in our SEC filings, including our most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. With that, I will turn the call over to Steve, and then I'll come back a bit later to provide some further details around our financials and our forward-looking outlook. Steve? Stephen G. Waldis: Thank you, Karen. Good afternoon, and thanks for joining us on our call today to review our first quarter financial results, which were at or above the high end of our expectations on both the top and bottom line. Our non-GAAP revenue of $98.7 million grew 25% on a year-over-year basis and exceeded the high end of our guidance. From a profitability perspective, we generated a 25% non-GAAP operating margin and non-GAAP EPS of $0.39, which was at the high end of our guidance range. The first quarter was a strong start to the year for Synchronoss, particularly in our Cloud Services business, which grew 83% year-over-year. Now we are encouraged by the early results, as our major mobile operators bundle our cloud software very effectively with their core communication services. In 2013, our customers saw their churn rates decrease and their postpaid family data plan revenues increase when subscribers register and use the Synchronoss Personal Cloud Platform. Now when you combine those results with the fact that these same subscribers are activating multiple connected devices per plan, the economics are extremely compelling. And as a result, we are seeing major customers ramping up marketing efforts that include Cloud Services as a core part of their data plans to gain subscribers. I am sure many of you have seen the media outreach with some of our major customers here in North America, and we expect similar marketing trends to happen in Europe later this year. The one important point I'd like to make clear is how mobile operators use storage and the success it has had in driving their core communication business. Now on almost all of our customer offers, subscribers can get up to 25 gigabytes or more of free cloud storage. Now when we look across our entire base of the tens of millions of Synchronoss cloud subscribers, less than a few thousand subscribers currently use even more than 25 gigabytes of storage. That storage is essentially free today. Now our customers are able to offer free storage because of the real benefits described above in their core business. And unlike the over-the-top players, who rely on storage as a key part of their revenues, our customers are using storage to grow and build their highly successful, multibillion-dollar core communication businesses. As a result, our value prop gets stronger with our customers, as their core business generates higher revenues. It's also why we get paid on each of our 70-million-plus cloud community of users. The results are both solid growth and profitability in our business. Now on top of the increased marketing efforts being made by our customers, Synchronoss is benefiting from the new release and integration of the cloud into the device setup and purchase process. As we've discussed previously, having our technology embedded in the firmware of the device or preloaded as an app that prompts the user to sign up for the cloud during the initial purchase or upgrade process, drives materially better adoption rates. And based on these early results, we are seeing favorable underlying trends around cloud adoption as these new devices hit the market. And as a result, and as Karen will provide more detail in a few minutes, we will be raising our full year revenue guidance, as we remain confident in strong growth opportunity in our Cloud Services business. Now during the first quarter, the mobile industry held 2 of their largest annual trade shows: the Consumer Electronics Expo in Las Vegas and Mobile World Congress in Barcelona, Spain. A common theme at both events was the increasing complexity of the communication landscape, including the proliferation of nontraditional connected devices. An exciting part of Synchronoss's increased visibility in the marketplace is the level of customer interest we are seeing from international mobile operators. And while we have had good customer success internationally to date, we've not had the full team in place to fully capitalize on the opportunity. We are thrilled to recently bring on board Chris Halbard, as President of our Synchronoss International business. Now Chris is a 25-year veteran of the telecom industry, previously serving as COO of British Telecom Global Services, and very senior positions at both Lucent and AT&T. Now Chris is focused on leveraging the foundation we have already put in place and continuing to build out a world class team to actively seek out opportunities across Europe and Asia Pacific. We have established the solid track record internationally, with customers like Vodafone, Telefonica, NBN Australia and Telstra. And I'm confident that Chris and his team will drive even greater success going forward. In our Cloud Services business, it's more than just Personal Cloud. And we're excited to be working with Vodafone to bring the initial deployment of our WorkSpace solution live during the second quarter. This platform is focused on file, sync and share opportunities and enables mobile operators to provide a robust cloud offering. It's a natural extension of their telephony internet and networking services, that they already provide to these small- and medium-sized businesses. Now we're seeing a strong interest from a number of other mobile operators for WorkSpace, and ramping adoption of this offering will be one of the key aspects of our overall continued long-term growth strategy. And as our cloud platforms have continued to scale, Synchronoss has become integrated into the digital lives of tens of millions of mobile subscribers around the world. We are seeing increasing levels of interest from third parties looking to utilize our software platform to directly reach their customers. Now to address this opportunity, we recently launched the Synchronoss developer program, which is a set of open APIs and tools that allow enterprises to provide unique services to the customers that leverage this Synchronoss technology. Now early examples of this program are our recent announcements of both Napster and the NFL. And as we continue to add millions of new subscribers each quarter, the contextual data we have and the ability to enhance our subscriber experience grows. Sharing music playlists inside your address book is just the start of some great opportunities ahead of us. Now turning to our Activation Services, we had a solid quarter. In particular, we saw good volume activity at AT&T, as well as other mobile operator customers. Now we're happy with the early positive trends in the year with AT&T. We saw solid strength in the first quarter as the adoption of the Next program grows, which offers subscribers the ability to upgrade to new devices in as little as 12 months. At the same time, was saw solid traction in both the U-verse and high broad -- high-end broadband channels. Now on top of these growth drivers, AT&T is continuing to invest in high-speed broadband business with the rollout of its ultrafast fiber network called GigaPower, which will power U-verse broadband speeds up to 1 gigabyte per second. Now Synchronoss is currently the activation platform for all channels in GigaPower. And as AT&T moves into 21 new markets in the coming years, we believe we're well-positioned to grow our diversified and successful relationship with AT&T. Now as you recall, our cable-on-the-cell business was an area of strength in 2013. One of the key value propositions for cable operators is helping them map their inventory and then reprovision and activate broadband connections, as each cable MSO attempts to maximize broadband capacity from both a cost and throughput perspective in order to efficiently meet growing broadband demands for their subscribers. This has historically driven strong activation transactions for Synchronoss. Now during the first quarter, the regulatory approval process associated with the Comcast/Time Warner Cable merger has caused some softness around our activation transactions, as these MSOs have opted to push back their deployments until they have greater clarity around which specific property each MSO will continue to serve. Now regulatory approval is expected in the fourth quarter 2014. However, we expect volumes of our cable MSO customers to pick back up again in the mid to late summer, as the path and timelines for approval become more visible. Recent news this week of Comcast and Charter reaching an agreement on asset sales and swaps is a positive step in clarifying the situation. Charter, Comcast and Time Warner or all activation customers of Synchronoss. And as such, we believe, we're positioned well to benefit from this favorable industry trend, as we did in 2013, as these deals gain clarity and final regulatory approval. Now we're also seeing strong customer interest from our Integrated Life, which provides activation capabilities for nontraditional devices, like automotive and household connected devices. In the first quarter, we announced Time Warner Cable as our second Integrated Life customer. They will initially focus on supporting the connected home. Now we are pleased with the early success we're seeing with Synchronoss Integrated Life and believe this can develop into a meaningful opportunity over time as the number of connected devices proliferates. Now in summary, the first quarter was a strong start to the year for Synchronoss. We are gaining traction with our Personal Cloud deployments, while continuing to diversify our business. We are targeting a number of exciting growth opportunities and believe we have the platforms and team in place to successfully capitalize on these opportunities. With that, let me turn it over to our Chief Financial Officer, Karen. Karen L. Rosenberger: Thanks, Steve. I'm excited about my new role at Synchronoss, and I look forward to working more closely with our analysts and investors moving forward. I will begin by reviewing our financial results for the first quarter and finish with an update to our guidance for the second quarter and full year 2014. Starting with the income statement. GAAP revenues were $98.5 million for the first quarter. Non-GAAP revenues, after adding back $224,000 of deferred revenue write-downs from certain acquisitions, were $98.7 million, which was above the high end of our guidance range and up 24% on a year-over-year basis. Our Cloud Services revenue in the first quarter was $43.7 million, which represented 44% of our total revenue and year-over-year growth of 83%. The strong cloud performance in Q1 was primarily driven by strong adoption of our Personal Cloud offering across our customer base as we realize the positive impact of their increasing promotional marketing campaign and higher levels of free storage offerings. In addition, we recognized some additional nonrecurring revenue related to the roll-out of some of our newer cloud deployments. We are pleased with the adoption trends we are seeing across our Cloud Services customer base and are optimistic on the growth potential for this business. Activation Services revenue was $55 million for the first quarter, representing 56% of our total revenue. Our Activation business was essentially flat year-over-year. This was due in part to a difficult comparison in the year-ago period, when our cable MSO business was strong and included a large transaction with the Australian government's National Broadband Network. In addition, while we are pleased with the year-over-year double-digit growth we saw with our AT&T-related business, our business with cable MSOs realized a modest near-term headwind due to the Comcast/Time Warner Cable merger. As Steve explained, we expect this softness to subside once these deals gain final regulatory approval. Further on revenue mix, 70% of our first quarter non-GAAP revenue came from recurring sources, mainly subscription and transaction arrangements, while professional services and licenses made up the other 30%. Moving down the P&L, we will review our numbers both on a GAAP and non-GAAP basis. There is a full reconciliation table between the 2 in our earnings release, which can be located under the Investor Relations section of our website. Non-GAAP gross profit in the quarter was $60 million or a gross margin of 61%, up a 100 basis points from the last several quarters. As we have said in the past, there will always be a certain amount of variability in our gross margins, depending upon our mix of revenue and investments. Non-GAAP income from operations was $24.2 million in the first quarter, representing an operating margin of 25%. Our non-GAAP tax rate for the quarter was 35.5%, which led to a non-GAAP EPS of $0.39, up from $0.28 from the year-ago period and at the high end of our guidance. The number of weighted average shares outstanding for the quarter was 40.7 million, up from 39.1 million in the year-ago quarter. On a GAAP basis, first quarter gross profit was $58.5 million. Income from operations was $12.4 million, and GAAP fully diluted earnings per share was $0.19. Moving onto the balance sheet and cash flows. Total cash, cash equivalents and marketable securities were $62.2 million, down $15.4 million from 76 -- $77.6 million at the end of the last quarter. We used $11 million in adjusted cash flow from operations for the quarter due to the timing of cash collections. Recall that we had very strong cash collections at the end of the fourth quarter 2013. We also had strong collections in the first week of April, which we expect will contribute to a sequential decline in DSOs for the second quarter. While there can be quarter-to-quarter fluctuations in working capital, as we've seen in the past, we expect the underlying growth and profitability of our business will generate strong year-over-year growth in operating cash flow for the full year 2014. As a reminder, non-GAAP cash from operations excludes the payments for additional purchase price for acquisition earnouts and the excess tax benefit of exercising of stock options. Capital expenditures were $8 million or 8% of non-GAAP revenue, down from $11 million or 14% of non-GAAP revenue in the year-ago period. We continue to expect that capital expenditures will return to historical levels of approximately 10% of revenue, with a few points of variability for the full year 2014. With that, let me turn to the guidance, starting with the second quarter. For the second quarter, we are targeting non-GAAP revenues in the range of $100 million to $103 million, which represents year-over-year growth of approximately 17% to 21%. We are targeting non-GAAP gross margins of 61%, non-GAAP operating margins of between 24% and 25%, and non-GAAP EPS of approximately $0.39 to $0.41, assuming a tax rate of 35.5%, and a diluted share count of 41.2 million shares. We are still early in the full year. But based on our first quarter results and second quarter guidance, we are increasing the range of our revenue guidance. And we are now targeting a total non-GAAP revenues in the range of $420 million to $430 million versus our previous guidance of $415 million to $428 million, and representing growth of 19% to 22% on a year-over-year basis. From a profitability perspective, we are continuing to target non-GAAP gross margins in the 61% to 62% range, with quarter-to-quarter variability; and non-GAAP operating margins in the range of 24% to 25%. Our non-GAAP EPS guidance will increase to $1.61 to $1.66 per share, assuming a tax rate of approximately 35.5% and a diluted share count of approximately 41.4 million shares. In summary, the first quarter was a strong start to 2014. We are encouraged by the strong adoption trends we are seeing in our Cloud Services business and we are increasingly confident in its long-term growth opportunity. We have built an increasingly diversified business that has a number of new and exciting growth drivers that we believe positions Synchronoss well to deliver significant top and bottom line growth over time. With that, let me turn it back to the operator and we'll begin our Q&A session.

[Operator Instructions] Your first question comes from Tom Roderick from Stifel. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Let me direct the first question at you, Karen, and Steve, feel free to chime in. I'm interested in digging a little bit further on this component of the revenue this quarter. Pretty similar to last quarter, about 30% of revenue for services and software and other. But you indicated on the call that, that was kind of driven by international customer ramps. So I guess, the 2-part question is, can you give a little bit more detail into sort of where and how and what those contracts are ramping and when we might start to see more material subscription or recurring revenue from those? And then, Karen, more specifically, as it relates to next quarter's guidance, what's the best way to think about cloud revenues directionally, knowing that there is a component of services and sort of nonrecurring onetime fees there? Stephen G. Waldis: Tom, this is Steve. So part of what we're starting to see in the business in the first quarter here, primarily the strong growth, what's coming still here from our domestic work here in the U.S. But we saw and when we looked at our International business, particularly with Vodafone, on both the personal and WorkSpace side, clearly, those guys are starting to ramp. And as I mentioned in the script, we expect that to continue throughout the course of the year and be a source of strength for us. At the same time, with some of the investments we've made with Chris internationally, as well as to some of the success that we're having, we are encouraged by our international pipeline as it relates to our Cloud Services in those regions. Karen L. Rosenberger: Right. And further on that, relating to cloud and how you can start to take a look at that as we proceed further in the year. I would say, although, there were components of the revenue that were nonrecurring in nature. I mean, they were very similar to the ranges that we have put forth and talked about publicly before and at Analyst Day, where you're still going to look to see pro services in that 20% to 25% range, licenses in the 5% to 10% range, and the subscription and transaction revenue in the 65% to 75% range. And I think that you could anticipate that in the near term and then potentially, we may look to see further subscription recurring revenue more towards the back half of 2014. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay, that's good detail. Steve, maybe a broader question, thinking about Verizon launching More Everything and upping that Personal Cloud storage to 25 gig. What are you hearing from other customers, whether it's domestically or international, and it looked like Telstra was a pretty good example of someone that followed pretty quickly on the heels of that. But what are you hearing from your other customers in terms of broader interest in launching a similar service, knowing that there are a lot of other the free consumer-oriented solutions out there? Are you hearing kind of an acceleration, given that Verizon is upping its marketing spend and visibility in this category? Stephen G. Waldis: Yes, I think it's a combination, Tom. How effective the early results have been across the current customer base, both here and obviously, not as large, but still a decent sized set of subscribers in Europe, is that the correlation between providing storage capabilities or free storage up to 25 gig, it typically allows consumers to eliminate that as a decision process when they're registering. And when you combine that with pulling our software in right during the purchase and setup process, has yielded really strong adoption rates. And so, when we look at customers who are on-boarding, registering for the cloud, becoming active users, and then buying more products and services, the carriers are starting to see -- or the operators are starting to see that the more customers deploy the cloud as part of these plans, the higher monthly ARPUs, the more connected devices they're adding to the plan. When you combine that with the ease of walking into a retail store, which you can do here in the U.S., and within 3 clicks of turning on the device, have it completely activated and backing it up in a real-time fashion, you start to see the real benefit. And so that has clearly been something that has been a showcase product for us here in the U.S. And that's one of the big drivers for sure, as you probably saw at Mobile World, and some of the international operators are trying to emulate. So we think that's good news for us.

Your next question comes from Michael Nemeroff from Crédit Suisse. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Just wanted to maybe address one to Karen first. Just on the Cloud Services revenue, if you could maybe help us understand what the mix of recurring license and professional services were in the quarter. And I have a follow-up for Steve, please. Karen L. Rosenberger: As far as the mix goes in the cloud, we've given the mix on an annual basis at the earnings -- last -- sorry, Analyst Day. We're not going to go into details on that mix in -- on a quarterly basis. However, what I would say is it's still within the ranges presented, and so within that range that I'd just given to Tom earlier on the call. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Okay, great. And then for Steve, on the cloud, everything seems to be rolling out pretty nicely. But you have a couple of international carriers, actually -- well, Vodafone in India specifically, that started to ramp this quarter. Could you just give us a sense on how quickly those are ramping relative to how quickly Verizon ramps in 2013? Stephen G. Waldis: Sure. Let me address a couple of issues. First, to add some color to Karen's commentary too, Michael, keep in mind that as we launch newer customers, right, there's typically little bit more of the service element on the front end of those deals. As you know, it's particularly with some of the newer rollouts in Europe that get blended in there as you look at the overall rate. But basically, what we're looking at is -- and a little update on the Indian operator alliance [ph], is that we had a very successful deployment that's going on this quarter. It's going to be a gradual ramp this year. So that you'll see it introduced into a subset of markets, which they haven't publicly announced yet. And then by the end of the year, they'll slowly ramp it up across the whole territory. So our expectation is that they'll add some additional markets in country, continue to refine the offer and then probably by the end of the year, they'll be positioned to start to roll that out at a nationwide basis by the end of 2014. As it relates to the work that we're doing in Europe, particularly around Vodafone, as you recall, last year, we launched in about, I guess, 17 or 18 properties within Vodafone today that were up and running. But there is a big effort underway as we speak to relaunch -- or actually relaunch is a strong word, a take-it [ph] approach with some new marketing efforts that you'll start to see as the year goes on, particularly over the summer timeframe. And as they start to kick in, our expectation is that the current adoption rates that were seen today should increase towards the latter half of the year, just probably reflected in some of the comments that Karen had indicated earlier in terms of our guidance view for 2014. Michael B. Nemeroff - Crédit Suisse AG, Research Division: And then just real briefly, the ASPs. Could you just give us a sense on how they've been trending over the last quarter? Stephen G. Waldis: So the ASPs continue to trend very well. Also on the enterprise space, those ASPs have a tendency to trend a little bit higher, as we've talked about before. And again, the bigger drivers for those ASPs is that we're finding that for each plan that's using our cloud, we're starting to see more and more devices connected to it. And then, although the operator obviously offers the free storage component, we get paid on each subscriber, so the amount of storage that those subscribers are consuming along those devices have increased as well. So the combination of the 2 have kept the ARPUs very strong on the consumer side. And as we've talked about in the past, Michael, on the enterprise side, it seems to be a little bit stronger.

Your next question comes from the line of Gray Powell from Wells Fargo. Gray Powell - Wells Fargo Securities, LLC, Research Division: Just had a couple. Can you give us a sense as to the number of handsets or maybe the percentage of handsets with your cloud application pre-installed last year and how you're seeing that change in 2014? And then do you see a point where your Synchronoss cloud app is pre-installed on a majority of your customer handsets, excluding the iPhone? Stephen G. Waldis: Yes. So some of the newer -- so in the past, there was multiple ways. We could be in the firmware of the device, which particularly related to our Network Address Book from our early day implementations, as well as available through the App Stores. And typically, they would get downloaded, as we discussed, by either a user would have to go and find that app and download it or there'd be some call to action to do so. On a go-forward basis, one of the things that we did with our newer software products last year is we integrated the cloud into the address book. And what we also did was created a really, what we believe, slick process for customers when they purchase a new device, where it's embedded in the setup flow of the device. And all those customers, as they turn on the device, you flow right into it. Right now, there's only a small handful of those devices that are on the market today, as we've just released that version of the software at the end of Q1. But as these new devices are released, depending upon the markets that we serve, obviously, in North America, that's a much more mature market, where in Europe, it'll take a little bit more time. But we would expect that is all new devices or upgrade cycles happened, that those fastest or hot-selling devices will have this pre-embedded set-up flow process as part of that device. And as that starts to proliferate, that's giving us the confidence in our business that we mentioned earlier, because you mentioned at Analyst Day, I guess, 1 or 2 years ago, we had numbers roughly in that 60% adoption rates for those that are embedded on the device. We're actually finding higher adoption rates with the few devices, albeit, popular devices that are in the marketplace today. Gray Powell - Wells Fargo Securities, LLC, Research Division: Understood, okay, that's very helpful. And then, I mean, how should we think about the timing to convert Verizon's NAB customers to the full Personal Cloud offering? Do you think the bulk of those 55 million customers that are probably paying close to, like, $1 on ARPU, can convert over and become a $3 ARPU-type customer over time? Stephen G. Waldis: So it's early. And I obviously, we don't comment on anything, specifically, with our customers. But I will tell you in general, Gray, that we believe, based upon the strength -- and it's early -- of the adoption rates we're seeing, that the platform is now in place, that as these devices or subscribers come up for renewal, that those won't convert from the traditional standalone Network Address Book to full Personal Cloud. And given the early adoption rates, it's very reasonable to see that process over the next few years.

Your next question comes from the line of Sterling Auty from JP Morgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: One question on cloud, one on activations. On the cloud side, when you look at a Galaxy operator, like a Vodafone, can you remind us how they're rolling out the technology and more importantly, how they're marketing this? Are they doing it from a centralized, from the parent Vodafone? Or is each operating company doing each decision in each marketing program separately to drive adoption? Stephen G. Waldis: So the program is managed centrally. There are some degrees of freedom that are given to the operators in terms of the local independent operators and how they choose to market it. However, some of the newer marketing plans, especially those that we expect to launch this year in mid-to-late year with Vodafone, will be driven out of a central kind of offer flow. And that -- our expectation is that there'll be a lot of similarities in those operating markets. So even though they have some degree of independence based upon the way the offer is being constructed, which obviously, we can't discuss the details of them, it appears to us that it will be rolled out somewhat uniformly in those markets. Sterling P. Auty - JP Morgan Chase & Co, Research Division: And then on the activation side. When you talk about like the Comcast/Time Warner combination and maybe some of the moves of subs over to Charter, et cetera, Does activations on that or does some of the activations separately -- you kind of talked about like a network grooming-type of implementation. Do those activations have different economics than a new customer activation, kind of a greenfield activation, if you will, of a subscriber coming in? Stephen G. Waldis: It's a good question, Sterling. So typically, they have the same type of economics. However, because there -- the forecasts are much more robust, the volume discounts on those transactions have a tendency to be higher, because they understand when they go into each region and they say, "Okay, we're going essentially clean up and reprovision these types of circuits," and then issue the activations, you typically have the higher volume. So the overall pricing schematic is the same, but they obviously can sign up for our forecast to give them better volume discounts because of the visibility.

Your next question comes from the line of Nandan Amladi from Deutsche Bank. Nandan Amladi - Deutsche Bank AG, Research Division: So Steve, the first question has to do with the Comcast/Time Warner/Charter situation. Does that change your view of the activation segment for this year? Stephen G. Waldis: No, I think what it does is that, as we tried to indicate, in 2013, it was a strong capability for us because of the combination of us being able to help them with mapping their inventory in regions and then reprovision and activate that. You'll recall last year, we had very strong -- stronger-than-normal activation flows. The cable MSO market was a good contributor to that. I think, prior to the last few weeks, it was unclear, based upon the merger activity of what properties were going to end up with what operator, there's a tendency to hold off those efforts until it's understood. Obviously, you wouldn't want to be cleaning markets up that you're going to have to diversify. However, over the last few weeks, particular earlier this week, as that starts to get clear in terms of where those assets will end up, our belief is that then those programs that we have been working on will start to kick in. And so although the approval may or may not happen towards the end of the year, we believe that some of those properties, for example, that are completely unaffected, will start to ramp up again in the latter half of second quarter, early Q3. And then as the merger gets completed for those other properties, as well as the new co that they're creating, all would be good opportunities for Synchronoss exiting the year, and then clearly for 2015. Nandan Amladi - Deutsche Bank AG, Research Division: Okay. And then a quick follow-up perhaps for Karen. Very strong Personal Cloud performance in the quarter. Does that change your view of the CapEx that you have discussed at the Analyst Day? Karen L. Rosenberger: Right now, we still believe that the CapEx expenses will be in line with that 10%, plus or minus, with global variability on that for the year. I would preface that with it's always subject to new customer wins and geographies of where those customers may or may not be located. But at this time, not significant increases forecasted.

Your next question comes from line of Shyam Patil from Wedbush Securities. Shyam Patil - Wedbush Securities Inc., Research Division: Just a couple of questions. On the cloud side, Steve, I believe about 12 months ago, you talked about a ramp from $45 million to $70 million at Verizon over a 12-month period. It seems like you're probably close to that $70 million now. I was just wondering if you could talk a little bit about what inning you think you're in there and how big of a driver the increasing visibility in the retail stores is going to be for you later this year? Stephen G. Waldis: So obviously, we did give that metric a year or so ago, just to give kind of investors an idea of how we saw the opportunity. Obviously, not getting specific around on any customers, this year, I will tell you that we're very comfortable of the robust activity that we're seeing, not just at Verizon, but across the board. I would say that the ability to market it, as they've done such a great job of that publicly as part of some of their More Everything plans, as well as the value that we bring to the table in terms of integrating all kinds of other devices, not just on the wireless side, but on the FiOS or other components that could be beneficial, we believe that the opportunity on a go-forward basis continues to maintain really strong opportunity for us. I think the biggest driver, as mentioned earlier, would be that as the natural upgrade of device cycles happen, even though we deployed the cloud and we had over-the-top apps and then we put some on the firmware, we're really proud of the capabilities that are on the brand new devices that have just recently been launched in the last few weeks, some in the hotter devices, if you go into the stores and you go through the set up and purchase process. Customers really like it, the reps in the stores, it's very easy-to-use. The adoption rates are much higher, and so our belief that as customers continue to go through that upgrade cycle, that we're going to continue to grow the Personal Cloud business in a very similar fashion now, like we grew the Network Address Book standalone business a few years ago. I think that's the piece that's given us a little bit of excitement here in the year, is that, albeit early, albeit on a few devices, we definitely exceeded our expectation in terms of what we thought we'd get from an adoption perspective. Shyam Patil - Wedbush Securities Inc., Research Division: Great, and then just as a follow-up on the cable side of activation. You mentioned that all 3 of the players are customers. Are you guys penetrated at the same level at each one? I thought that Time Warner was a little bit more advanced with the Synchronoss deployments than the others. And then just how do you think about the incremental opportunity for Synchronoss post the acquisition? Stephen G. Waldis: Yes, so we clearly -- Time Warner has definitely been our longest-standing relationship. However, last year, we made some great strides with Comcast. And so Comcast became a very large customer of ours on the cable. In fact, they became, I think, if not our biggest cable-on-the-cell customer, but I defer to Karen to make sure I have that correct. They're very big in size. We can't predict, obviously, on where these mergers and acquisitions can be in the future and how that would benefit or not benefit where Synchronoss will be. I would tell you that in the past, as you guys have seen, we've seemed to fare very well because we provide this medium of software across customers that creates -- big customers across their footprints that make it very, I guess, easy for them to do business. And so I don't have any insight as to one way or the other. We feel good about the fact that since we do similar work for all 3 and all 3 have been very good and long-standing customers with us, that we would believe going into that process that we are well-positioned. But obviously, we don't have as much as visibility yet today as we would later in the year on that.

Your next question comes from the line of Daniel Ives from FBR Capital Markets. Daniel H. Ives - FBR Capital Markets & Co., Research Division: Steve, I am just curious. If I even compare over the last year, I mean, talk about maybe more of the high-level strategic, how conversations have changed on the cloud with not just existing, but new customers and deployments internationally. Maybe you can just compare and contrast where you were 1 year ago, where we are today, even 6 months ago? Stephen G. Waldis: Yes, it's a great question, Daniel. 1.5 years ago, operators were out there saying, "Look, the cloud could have some opportunity for us," and it's kind of something they thought, "We should have it, not sure where it fits in." 1.5 years later, the operator discussions we're having is, "This is a core part of our multi-billion dollar communication strategy. And we see it as not a standalone separate businesses that we're trying to go after consumers that are doing all kinds of things in different markets. What we see it as a catalyst and a value-added differentiator for customers who can come to us, buy multiple devices, have multiple operating systems, buy more things inside the home." And by doing all those things collectively together, the cloud is really becoming kind of the glue that keeps those customers with them, makes them more profitable, adds more connected devices. So the conversations definitely have changed from a "nice to have" to "this is a really core piece of what we're working on, on a go-forward basis." And because of that's been demonstrated successfully here in the United States, it doesn't fall short on some of the major operators in Europe. And so that's why we believe those discussions are proceeding fairly well.

Your next question comes from the line of Tavis McCourt from Raymond James. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Karen, a question on the DSOs and your cash flow commentary. I think, you said you expect cash flow from ops to be up year-over-year. When I put that in my model, that kind of presupposes, I guess, the DSOs will finish the year certainly closer to where they finished last year than where they started out this year. Just wanted to make sure that that's kind of the reasonable range for DSOs and that you do expect that. And secondly, Steve, last year, you highlighted kind of an ARPU range for subscribers. And I guess, as you've talked about a lot of maybe a higher percentage of subscribers than you originally expected having multiple devices, if we could revisit that. Is that ARPU range that you talked about on a per-subscriber basis or on a per-device basis? Because I think you get paid on multiple devices as well. Just wanted to confirm that nuance to your commentary last year. Stephen G. Waldis: Yes, that's correct, Tavis. So think about the best way to look at the model. And obviously, there's nuances in different accounts, but we get paid by a subscriber, which is a set of data. And then of that active subscriber, we get additional fees for the number of devices that are accessing that subscriber data. So I get paid for, say, Karen has a smartphone plus a tablet and maybe a secondary phone and maybe even a connected car, whoever may be using it, we get a fee for those devices, and then obviously, the amount of storage you consume. Clearly, early on, as the operators decide to add more and more capabilities to the cloud, particularly in bundling beyond wireless, so where those carriers offer broadband offerings and to tie the broadband offering in with the family share or some type of plan, we see those trends, albeit early on, continuing to be more towards the higher end of the ASP. But it's still early, too early for us yet, to get comfortable changing that range. Other than I would say is the comment that I made earlier on the enterprise side, especially in the early days of WorkSpace, we are seeing those ARPUs slightly higher for sure. Karen L. Rosenberger: As to the DSO portion of your question. If you recall, we did have an abnormally -- we had an anomaly in that fourth quarter, where we received a lot of cash in the same quarter in which we billed it. And so from a normalized perspective, we are anticipating the DSO to smooth over the year and it would be back in line with the levels of the DSOs in 2013. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And Steve, a follow-up on the full year guidance. In terms of the activation revenue, is your commentary on the back half of the year that we will -- that you're building an expectation that, that will come back to a degree, where we could be looking at full year high-single-digit growth, which I think is more normalized? Or is it just that maybe you'll get some positive growth, but the revenue upside on the guidance for the year was despite activation likely being a little bit weaker than you would have thought 3 months ago for the full year? Stephen G. Waldis: Yes. So I think it's early on in the year as it relates to activation. It's a great question to ask. I can tell you that the first quarter, a little bit of the perfect storm because it's historically our weakest quarter coming off of, obviously, strong Q4 with the holiday season. The cable MSO causing some pause and softness. What we'll see -- and we'll have better feel probably as we go through the early part of the spring -- is we typically start to see it come back because people start to move. And on top of it, obviously, an exceptionally bad winter, especially in the Northeast, which does impact the movements for those locations that we service. But we typically see it come back in Q2. And then typically, there is some type of -- at least previous years, there's been some launch of new devices that take place in Q3 on the wireless side that are very big contributors in Q3. And then you have back-to-school and holiday season. So when you look at those elements of it, they're pretty consistent each year. I think the piece that has a little variability to is just how quickly will the cable MSO market, that was so strong in '13, get its clarity around these M&A activities and start to come back. And then to your point, Tavis, a good question, how much of that comes in towards the end of this year versus the run rate exiting the year? And that's something that we'll probably give you guys a better feel for as we head into the summer versus where we are today.

I would now like to hand the call over to Steve Waldis for closing remarks. Stephen G. Waldis: Well, I thank everybody for joining us on our Q1 2014 earnings call, and we look forward to speaking with all of you soon. Thank you.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.