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 Shyam Patil - Wedbush Securities Inc., Research Division Michael B. Nemeroff - Crédit Suisse AG, Research Division Sterling P. Auty - JP Morgan Chase & Co, Research Division Nandan Amladi - Deutsche Bank AG, Research Division Tavis C. McCourt - Raymond James & Associates, Inc., Research Division Gray Powell - Wells Fargo Securities, LLC, Research Division William V. Power - Robert W. Baird & Co. Incorporated, Research Division Daniel H. Ives - FBR Capital Markets & Co., Research Division Gregory Burns - Sidoti & Company, LLC John F. Bright - Avondale Partners, LLC, Research Division

Good day, ladies and gentlemen, and welcome to the Q2 2014 Synchronoss Technologies Inc. Earnings Conference Call. My name is Adrian, and I'll be the operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd now like to turn this call over to Karen Rosenberger, Chief Financial Officer. Please proceed, ma'am. Karen L. Rosenberger: Thank you. Good morning, and welcome to the Synchronoss Second Quarter 2014 Earnings Call. We will be discussing the results announced in the press release issued before the market opens today. 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 regarding our financials and our forward-looking outlook. Steve? Stephen G. Waldis: All right. Thank you, Karen. Good morning, and thanks for joining us on our call today to review our second quarter financial results, which were at or above the high end of our expectations on both the top and bottom line. Our non-GAAP revenues of $103.6 million grew 22% on a year-over-year basis and exceeded the high end of our guidance. From a profitability perspective, we generated 25% non-GAAP operating margin and non-GAAP EPS of $0.41, which was at the high end of our guidance range. Our strong performance year-to-date and the encouraging trends we are experiencing in each of our businesses are providing us the confidence to raise our full year revenue and profitability guidance again this year, as Karen will detail a little bit later. Now Synchronoss continued to perform at a high level in the second quarter, particularly in our Cloud Services business, which delivered 74% year-over-year growth. The inclusion of a compelling cloud offering with substantial levels of free storage that are bundled into data wireless offerings are attracting top and bottom line results for our mobile operators. In the second quarter, we experienced strong adoption rates both for new subscribers and in the number of devices and amount of storage existing subscribers were utilizing in the cloud. We are especially pleased with the positive trends we are seeing in adoption and increased subscriber engagements, which we believe demonstrate the value subscribers are getting from our cloud solutions. Now as we've mentioned previously, a key driver to increase adoption is to get applications pre-embedded into the smartphone and then become part of the activation process, where the Personal Cloud can be activated on a new device with a simple click or 2. Now over the past year, a big part of our development efforts were to roll these enhancements into the market on many of the newest and latest devices. These enhancements began to hit the market in Q1 of this year. And as a result, we are seeing adoption rates materially higher, when you combine this easy and intuitive way to activate the cloud, a compelling marketing offer and providing your subscribers ample free storage for their valuable content. It is one of the several drivers that gives us confidence in the substantial and long-term growth opportunity in our Cloud Service business. Now to give you an idea the type of growth and adoption we're seeing today, we are now ingesting over 60 terabytes of data a day. This is up from 35 terabytes a day at the time of our Analyst Day in March. Now to put that in perspective, we've backed up and stored over 10 billion address book contents. We have over 3 billion photos. We have over 300 million music files, over 90 million videos and have over 1 billion-plus call logs and SMS messages. From a revenue perspective, we now expect our Cloud Services business to exit 2014 at a greater than $200 million annual run rate, only 6 quarters after reaching the $100 million annual run rate level. As a quick update on Synchronoss WorkSpace, we began testing and gathering user feedback in a limited group during the second quarter and expect to roll the first version of WorkSpace at Vodafone Portugal and expand delivery to additional operators throughout the year. Now similar to Synchronoss Personal Cloud, Synchronoss WorkSpace provides mobile operators a differentiated way to expand their core communication offerings as they make those available to their customers. Now we further enhanced our position in the cloud market with the recent acquisition of Voxmobili, a provider of address book personal cloud solutions to many of the world's leading mobile operators, including AT&T, Airtel and Orange. This acquisition enables Synchronoss to further expand our market-leading position in providing Cloud Services to mobile operators worldwide. We believe there's a significant opportunity to leverage Voxmobili's customer relationships similar to the success we've had in the past with other tuck-in acquisitions. Now turning to our Activation Services business, our revenue in the quarter saw a slight uptick from Q1, as we had previously discussed. And we believe we have a clear path to deliver double-digit Activation Services revenue growth in the second half of this year. We see this growth primarily coming from our wireless customers, as well as new business and strong forecasts from both existing international customers as well. At AT&T, we continue to see positive trends across all areas of our business, with strong transactional growth on both wireless and broadband businesses. Now during the quarter, we're pleased to roll out our first connected cars with AT&T via the relationship -- their relationship with Audi and Volvo. This in an exciting early use case for our Synchronoss Integrated Life offering, and we see converged subscribers' digital life being accessible across array of devices and emerging growth driver for our business. Now our growth at AT&T is more than just activation as we continue to make incremental progress on the cloud side, with volumes trending steadily higher. We also recently expanded our cloud offerings with AT&T to support a broader range of devices, including the recently launched Amazon Phone. We're pleased with the overall performance of our business with AT&T and the increasing number of growth drivers we have with the strategic customer. Now we're also seeing good customer interest in our Synchronoss Integrated Life platform, particularly in the automotive sector. We are actively working on a number of engagements within this sector to develop next-generation activation and cloud solutions with these customers, which we also think can help facilitate direct enterprise opportunities that we expect to announce over the next few quarters. Now another positive driver in our Activation business is our international operations, where Chris Halbard and his team have doing a terrific job on the business development front with both new and existing customers. In particular, we're seeing strong traction in the Asia Pacific region and during this -- and during the quarter, with customer activation wins with Axiata, Telcom Indonesia and Reliance Communications. These 3 Activation customer wins represent a significant beachhead in the region, and we believe provides us significant credibility with other mobile operators. Now to support these new activation wins and further growth opportunities in the region, we recently acquired certain assets from Clarity International, the incumbent activation provider to some of these mobile operators, which primarily consisted of a 50-person delivery team. Now by acquiring this group, this will ensure a seamless transition over to our activation platform for these customers, while having a support capability in the region that can ramp with future wins in both our Activation and Cloud Services business as the sales pipeline remains strong. In summary, we've delivered strong top and bottom line results during the second quarter. Adoption and usage of Synchronoss Personal Cloud Platform continues to gain traction across our customer base, and we have gained truly critical mass with this solution. We are also seeing encouraging volume trends in our Activation business that we believe will drive double-digit revenue growth in the back half for the year, being driven by both North America and our new international activation wins. We are excited about the multiple growth opportunities in front of us and remain focused on continuing to build a global company and brand that we believe is the clear market leader in both activation and cloud solutions. With that, let me turn it over to Karen. Karen L. Rosenberger: Thanks, Steve, and good morning, everyone. I will begin by reviewing our financial results for the second quarter and finish with an update to our guidance for the third quarter and full year 2014. As Steve mentioned earlier, we are pleased with our results in the second quarter from both a financial and operational perspective. Our strong revenue performance was largely driven by our Cloud Services offering, where we are seeing strong adoption of our Synchronoss Personal Cloud Platform. We believe we are still at the early stages of adoption in our cloud business and, as I will discuss later, we will continue to make investments to ensure our business is properly positioned to maximize this significant growth opportunity. I will now review our results for the quarter, starting with the income statement. GAAP revenues were $103.5 million for the second quarter. Non-GAAP revenues, after adding back $100,000 of deferred revenue write-downs from certain acquisitions were $103.6 million, which was above the high end of our guidance range and up 22% on a year-over-year basis. Our Cloud Services non-GAAP revenue in the second quarter was $46.7 million, representing 45% of our total revenue and year-over-year growth of 74%. Our strong performance in the quarter was driven by increased adoption of our Synchronoss Personal Cloud offering. We continue to ramp additional Personal Cloud deployments globally and are encouraged by the success we are seeing across all of our cloud customers. The growth in our Cloud Services revenue was driven by recurring revenue growth, which was up in excess of 30% sequentially. Activation Services non-GAAP revenue was $56.9 million for the second quarter, representing 55% of our total revenue. Activation Services revenue was down 3% year-over-year due in part to a difficult comparison in the year ago period. However, we remain pleased with year-over-year growth we saw with our AT&T-related business. As Steve mentioned, we are seeing positive trends developing in the Activation Services business in the second half of the year, which we believe will enable us to achieve higher revenue growth in the second half of the year. Further, on the revenue mix, 77% of our second quarter non-GAAP revenue came from recurring sources, namely subscription and transaction arrangements, while professional services and licenses made up the remaining 23%. We are pleased with the mix shift we are seeing in the business towards recurring revenue, which reflects the increasing scale of our Cloud Services business. We currently anticipate a similar revenue mix between recurring and professional services and licenses in the second half for the year. Moving down the P&L, we will review our numbers on both a GAAP and non-GAAP basis. There's a full reconciliation table between the 2 in our earnings release, which can be located in the Investor Relations section of our website. Non-GAAP gross profit in the quarter was $63.7 million or a gross margin of 62%, up 140 basis points from the year ago period. Non-GAAP income from operations was $25.9 million in the second 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 $0.41, up from $0.31 in the year ago period and at the high end of our guidance. The weighted number of shares outstanding for the quarter was 41 million, up from 39.5 million in the year ago quarter. On a GAAP basis, second quarter gross profit was $62.2 million. Income from operations was $13.8 million, and fully diluted earnings per share was $0.20. Moving on to the balance sheet and cash flows. Total cash, cash equivalents and marketable securities were $84.1 million, up from $62.2 million at the end of last quarter. We generated $31.4 million in adjusted cash flow from operations for the quarter. Our significant cash flow generation was driven by very strong cash collections during the quarter, with DSO declining to 76 days. 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. Subsequent to the end of the quarter, we paid approximately $32.6 million in cash for the combined acquisition of Voxmobili and the Clarity assets. In addition, we recently drew down $40 million from our revolving credit facility in order to provide additional flexibility to our balance sheet. Capital expenditures were $7.6 million or 7.4% of non-GAAP revenue. As I mentioned earlier, adoption for our Synchronoss Personal Cloud solutions are tracking well ahead of our initial expectations for the year. And we see continued opportunities for additional growth in 2015 and beyond. As a result, we are increasing our CapEx investment in the second half of 2014 and now expect our total CapEx investment for the year to be 14% to 15% of total revenue. However, we will continue to make incremental CapEx investment, when we have line of sight to an attractive return and higher committed growth rate from our customers. With that, let me turn to the guidance, starting with the third quarter. For the third quarter, we are targeting non-GAAP revenues in the range of $117 million to $120 million, which represents year-over-year growth of approximately 30% to 33% and includes approximately $4 million of revenue contribution from Voxmobili and Clarity acquisitions. We are targeting non-GAAP gross margin of 61% to 62%, non-GAAP operating margins of between 24% and 25%, and non-GAAP EPS of approximately $0.43 to $0.45, assuming a tax rate of 35.5% and a diluted share count of approximately 41.6 million shares. For the full year, based on our second quarter results and outlook for the second half, we are increasing our revenue guidance and are now targeting total non-GAAP revenues in the range of $440 million to $446 million versus our previous guidance of $420 million to $430 million. This represents growth of 25% to 27% on a year-over-year basis. Our revised full year revenue guidance includes approximately $8 million of revenue contribution from the acquisitions made during the quarter. Excluding the impact of acquisitions, we are raising the low end of the revenue range by $12 million, and the high end of our revenue range by $8 million. 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%. We are increasing our non-GAAP EPS to $1.66 to $1.72, assuming a tax rate of approximately 35.5% and a diluted share count of approximately 41.4 million shares. We expect the acquisitions to have a neutral impact on our earnings for the full year. In summary, we are pleased with our operational and financial performance in the second quarter. We are benefiting from a number of positive growth drivers, and we believe, we are well positioned to capitalize on this substantial market opportunity and grow Synchronoss over time. With that, I will turn it back to the operator to begin the Q&A session.

[Operator Instructions] Your first question comes from the line of Tom Roderick of Stifel. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Let me start with talking a little bit about the Activation business, a couple of questions there. You're noting that you raised the guidance fairly substantially by, I guess, $8 million organically at the high end of the range. Let's start on the Activation side, you're indicating double-digit growth in the second half for the year. How much should we attribute that to kind of a core pickup in volumes from existing customers? How much is really driven by some of the new Integrated Life offerings that are being adopted perhaps more aggressively by AT&T? And then how should we think about what was a little bit of a delayed impact in the cable MSO business in Q1? Any more clarity on that? Stephen G. Waldis: Sure, Tom. So I think it's really driven by 3 reasons. First is just the strength of the forecast we're seeing in North America from our wireless customers, particularly a lot of the work we're doing at Integrated Life, as well as some of the new channels we support at AT&T, but also as we start to pick up both our international activations that we expect to come in towards the latter half for the year. Certainly, the MSO business, albeit, coming back slightly, we wouldn't expect it to come back to the levels that it was until we -- at least the merger between Comcast and Time Warner gets completed. I think at that point, we get further clarity down the road. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. Second question in thinking about the CapEx guidance, Karen, I think you said 14% to 15% in the back half of the year, maybe that was just the fourth quarter. But knowing that you typically have that line of sight towards committed business, can you comment on whether that is a function of committed volume and level increases with existing customers? Or is there something more behind this with respect to new logo wins that we ought to think about that could drive more of an ongoing expansion with this CapEx number? Karen L. Rosenberger: So it's a combination of a lot of things. First, we usually -- we always talk about CapEx spend, and as we get a better visibility to line of sight for both new, as well as increased usage within our existing customers, we will make those investments. I think we've been able to deploy capital efficiently in the past to support and scale with quality. And we'll continue to make those investments, when we have customer commitments and that line of sight into future growth. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. Last quick one for me. You've indicated $4 million next quarter, $8 million for the year inorganic contribution. Can you just give us a little bit additional granularity as we think about Voxmobili? I presume that'll be bucketed into the Cloud Services business, whereas the Clarity would seem go on activation. Is the majority of that $8 million for the second half for the year, will that go into predominantly the Cloud Services business or how would you encourage us to think about breaking those 2 apart? Stephen G. Waldis: Tom, so this is Steve. So clearly, Vox is roughly -- we haven't broken out the specifics of it, but Vox roughly is cloud-enabled solutions that we support today, particularly with some existing clients that they have of ours, which is AT&T, as well as new opportunities at Airtel and Orange. Clarity, you're absolutely right, is more on the Activation side. Primarily the Clarity presence gives us some service delivery resources in the region to really back up some of the great success that Chris Halbard's sales team's been having in the region. And we really feel that we've had our R&D facilities, obviously, overseas for a while, adding the service delivery component on to that sales team really puts us in great shape to start to drive things globally, specifically on the Activation side for Clarity. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: And Karen, no gross margin degradation expected from adding, what sounds like it's a bit more of a manual procedural type of business with the Clarity? Karen L. Rosenberger: No, I mean, we've taken all those factors into consideration, when we determined what our forward-looking guidance would be for the year at 61% to 62%.

Your next question comes from the line of Shyam Patil of Wedbush Securities. Shyam Patil - Wedbush Securities Inc., Research Division: Steve, I wanted to start with Vox. If you go back several years, you purchased FusionOne and you were able to successfully penetrate Verizon with a very advanced cloud offering. How do you think about being able to leverage Vox for the same approach at its key clients? And what kind of timing would you expect around something like that? Stephen G. Waldis: So when we think -- one of the things that we have found in the various deployments of our Personal Cloud and as we've gotten more and more global is that one of the key data classes that sits in that is the address book. And so Voxmobili obviously, one of their primary capabilities was the address book, very similar to the success that we had at Verizon with FusionOne. We believe that having an address book integration into our technology, along with some of our Personal Cloud capabilities, really helps us in 2 areas. It helps us make the transition to the complete cloud more seamless for our end customers and allows us to really accelerate some of the deployments that we look for in the region. One of the things that we noticed this year, which is demonstrating in some of the numbers that we're seeing in cloud growth is that most of the major operators are -- moved cloud from a nice-to-have offer to a centerpiece to their core communication strategies. It's enabling their multibillion-dollar businesses, they're -- why is that? Because the churn rates are dramatically lower on these customers, they're signing up multiple connected devices. They're buying the most lucrative 4G data plans. And the cloud's really an enabler of those strategies, and so we felt those acquisitions into these regions, when you combine our embedded base, we have over 30 of the biggest mobile providers in the world, over 3 billion subscriber addressable base. It really puts us in a position to really go after that market and continue on the growth trend that we've seen in the past. Shyam Patil - Wedbush Securities Inc., Research Division: Great. That's really helpful. And maybe as a follow-up to that. On the international business initiative, it seems like you're much more focused on that with the new head of international. How do you see the opportunities for Cloud versus Activation? I know this quarter, you announced some pretty good wins on the Activation side. But just near term and longer term, how do you think about the opportunities for those 2 segments internationally? Stephen G. Waldis: Well, I think one of the things that we feel good about on the international Activation front is that for the first time with Chris and his team, we actually have a dedicated sales and delivery organization outside the United States that really understands the regions, has the relationships with the customers and are really generating some good traction. So we feel because of some of the investments we made in the organization that the Activation business will start to untap opportunities that we weren't addressing before, given just the limited size and scope of our teams. That being said, we believe that the cloud offers are significant in those markets, specifically as more and more smartphone adoption and multiple devices go out on the market. And so we see both opportunities to have great legs for us, so to speak, in those markets. And I think now with having the right teams set up, we would believe that, that portfolio of Activation and Cloud types of sales that we would see internationally would follow very similar to some of the success we've had here in the U.S. with both of those product lines.

Your next question comes from the line of Michael Nemeroff of Crédit Suisse. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Just wanted to ask about the distribution of the Cloud Services revenue. I think we saw very strong adoption rates for the More Everything plan, which included a healthy amount of storage at Verizon this quarter. But I'm curious on the outperformance and your expectations from some of the other carriers that you've got the Personal Cloud launched, how are they progressing? Specifically, if you can give us an update on Vodafone, too, because I think at the end of this year or this year, you expected the Vodafone launch on Personal Cloud for consumers to look similar to the rollout with Verizon, which was very, very strong in the back half of the year? Stephen G. Waldis: Sure, Mike, so this is Steve. So conceptually, obviously, without getting specifics around our customers for obvious reasons. We think that the Cloud Services in general has really resonated well across all of our customer base. I think many of the consumers that we deal with, carriers that we deal with today are starting to see the real business benefits of it. Clearly, some of the implementations that we've had in the market for a period of time like those here in the United States is Verizon, are obviously, experiencing. Those tractions a little ahead of the curve because of the nature of their deployments. But we expect those same business benefits not just across some of our larger accounts in Europe on the Personal and Business Cloud, but also in some of the new emerging territories that Chris and his team are working with. And so we see collectively that the biggest transformational change we're seeing, is that the cloud is starting to become something that these operators really want to build around their core communication services. And we're seeing that in the pipeline of opportunities. So the short answer is, we're seeing good traction across our base. And we're also seeing the pipeline of opportunities even here in the U.S. to be much stronger in terms of other opportunities for us to deploy the cloud at other operators. Michael B. Nemeroff - Crédit Suisse AG, Research Division: That's helpful, Steve. I think in the past, you've said about 45,000 subscribers a day. If you can maybe just give us an update on the trends there, and how that's looking? Stephen G. Waldis: So what we've done, Michael, is obviously, we try to do an update once a year at our analyst report meeting, Analyst Day to give everybody common insight. I can tell you that 1 indicator of activity and engagement is 2 things that we've talked about in the script: one is our adoption rates that we spoke about at Analyst Day a year or 2 ago, when you have the right offer on the device are materially higher, and we're seeing those rates happen in terms of adoption. And I gave same data indications in that. If you just think of March over the last 3 or 4 months, our ingest rate has essentially doubled per day. And that's a good indication of the numbers of subscribers that we're signing up, but also the number of subscribers are becoming very involved. They're very -- they're engaging in the application, the applications developing the results that the operators had intended. And it's that level of engagement that's driving a lot of the business benefits for the operator. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Great. And then for Karen, typically in the back half of the year, you said Q4 for Activation specifically, you said that Activation will be up double digits in the back half for the year. The last 2 years, 2 to 3 years, the activations in Q4 has been sequentially flat or down. Should we expect the same trend this year? Or would there be a little bit of an increase, given the new signings in Asia Pacific? Karen L. Rosenberger: Well, as it relates to the Activation Services, we did say, the back half for the year, so that's both quarters 3 and 4. Typically, Q3 is a pretty strong quarter from an Activation perspective, with a lot of things going on in that quarter, some element of seasonality involving back-to-school, as well as new launches, et cetera. And then Q4, we are anticipating seeing that -- Q4, we're starting to look at that right now. Clearly, Q3 is a strong quarter from an Activation perspective. Q4, as it relates to the back half for the year, is continuing to give us strong results, as well, at least as we see at this point in time. Michael B. Nemeroff - Crédit Suisse AG, Research Division: And then related to Tom's earlier question on the CapEx, is the increase in CapEx primarily related to Cloud or Activations revenue that's committed that you see in the future? Karen L. Rosenberger: It is primarily related to cloud.

The next question comes from the line of Sterling Auty of JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Curious on the cloud side, within your existing customers, how you would characterize the additional new subscriber sign-ups being correlated with either new phone introductions that have the app embedded versus new programs, such as, I think there's some discussion some of the things that Verizon did in the quarter versus other drivers. So what are the biggest levers that you see to new activation -- or I should say, new subscribers in the Cloud side of the business? Stephen G. Waldis: Sterling, it's Steve. So it really is, I guess, a powerful combination of 3 elements at work, and it's hard to get scientific around it. But one, clearly embedding the software in the setup process of newer devices that are hitting the market is definitely having a good effect on adoption. Consumers turn on the device, the device is available to be activated on the cloud within 1 or 2 clicks of you getting the new device. Some of the capabilities that we built in the in-stores allow content to be transferred from your old device to the new device. You're talking a few gigabytes of data in a matter of a few minutes. So the ease of getting it online is definitely a huge contributor. The second component of it is the fact that the free storage that most of the operators are handling, if you look at the millions and millions and millions of customers that use our products every day, there's only a few thousand customers that actually pay for the storage, so it's essentially free. So the offer of allowing customers to have 25, 50 gigabytes-plus of data free as part of the plan, clearly eliminates the barrier of worrying about the capability of costs associated with it. And the third element that's been very effective bundled into that is making it a core part of family share plans and data offers, where it's a very value-added differentiator. And the operators do that because typically, those folks have multiple devices. They want to share that information across devices. They have a micro family setting at home, where those memories want to be shared amongst groups, and it just has a very high value proposition to that user community and it's a user community that typically buy the most lucrative 4G data plans. And so when you add those 3 together, they all have contributed, I think to a winning combination that we believe that recipe drives very high adoption. Sterling P. Auty - JP Morgan Chase & Co, Research Division: On the investment that you're making on the CapEx side. Can you give us a sense what percent of revenue in terms of the CapEx spending you would consider maintenance CapEx versus the incremental investment to support growth? Stephen G. Waldis: Well, I think a majority of it, and I'll let Karen provide additional color on it, is really based upon in the Cloud business, obviously, you want to make sure, you prepare for volumes. And the good news story is that every time we've prepared for that, our volumes across our base have increased, and it's been reflected over the last few quarters in our forward-looking view. And so part of that requires us to get that infrastructure in place, so that we can provide the type of experience that our subscribers expect to see through their operators who use our product. So the overwhelming majority of it is really based upon forecast and line of sight, as Karen said, for revenue opportunity and growth within our accounts. Karen L. Rosenberger: Correct. And when we're talking about the CapEx component being 14% to 15% of revenue, that is on the traditional capital expense requirements. Clearly, there's a component that follows the CapEx investments that you make as it relates to maintenance and as it relates to storage, and both of those costs are taken into consideration, when we gave our forward-looking gross margin targets at 61% to 62%.

Your next question comes from the line of Nandan Amladi of Deutsche Bank. Nandan Amladi - Deutsche Bank AG, Research Division: So Steve, question on the automotive side, that's clearly an opportunity that you've been talking about for some time, but looks like we're seeing some early success here. What is the typical sales process and the sales cycle for this? And second part of the question, is this primarily Activation or is there a Cloud component to it, as we look out over the next couple years? Stephen G. Waldis: So part of our engagement process obviously, has been through our AT&T Drive relationship that we announced at Mobile World with AT&T. And so it's given us an opportunity to work very closely with AT&T, as they bring in new providers. I think what's fueling it, is many of the car manufacturers that are coming into the studio and are working with us and other partners in the ecosystem really see 4G enablement as the standard offer in all vehicles. And so when you look out 2 or 3 years, it'll be hard-pressed to see vehicle lines that aren't fully 4G enabled. The opportunity for Synchronoss has been great, primarily, Nandan, to your question has been really our lead on our activation capabilities, because not only can we provide and orchestrate and manage those activation processes here in the U.S., we can also do that on a global basis. But now that we've got that capability and as cars become more mobile and the ability to sync those up across multiple devices either on your desktop at home for information or for gathering music from the vehicle or even from some of the handsets or tablets, there is a cloud capability play that is associated with it. So the short answer, Nandan, is in the interim short term is typically led by activation. But then the opportunity to pull through cloud in terms of providing customer experience is very much forefront for us in those opportunities. Nandan Amladi - Deutsche Bank AG, Research Division: And then how's the revenue model associated with this segment? Stephen G. Waldis: Very much similar transactional-based with some subscription elements, if there's some cloud capabilities being contemplated as part of the offer.

Your next question comes from the line of Tavis McCourt of Raymond James. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Karen, a couple of clarifying ones for you. It looks like in the cash flow statement, there was about a $6 million acquisition in Q2. Was that Clarity or does that the cash flow impact from Clarity hit in the third quarter? Karen L. Rosenberger: No, both Clarity and Vox were in the -- will be in the third quarter. We did a small asset acquisition in the second quarter related to Digidata. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Got you. And then it sounds like you won the Asia Pacific Activation business on your own platform. So are you counting the Clarity revenues as acquired revenues or is that full acquired revenue estimate related to Voxmobili? Stephen G. Waldis: Yes. So we didn't break them out, but think of it as roughly even in the sense that Voxmobili is typically on the cloud side, Tavis. Clarity really is the opportunity to take some of the assets in region on the delivery side that could accelerate some of the newer wins that Chris's team were doing within those regions, so that company has multiple customers. What we did was worked on the teams that have familiarity to pull over to help us do the migration to our platform for those 3 particular accounts. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And Stephen, in your script, you mentioned a $200 million number related to Cloud. Was that a full year number or run rate exiting Q4? Stephen G. Waldis: Yes, that's a run rate number exiting Q4. Just to give kind of a perspective view on both the Cloud ramp, as well as the forward-looking view in services versus transaction or subscriptions. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And then final question is on the Activation strength in the back half of the year. Is Integrated Life meaningful in relation to that yet? Or is this primarily due to the inclusion of the new customers in Asia Pacific, as well as strength at existing customers? Stephen G. Waldis: It's really the first -- without getting specific on it, but clearly, the forecast that we got from our existing customers was one of the primary drivers in Q3. They came in, as you know, as a reminder to all on the call, when we typically have a month, obviously, of forecasts complete and then a committed view, so it's the strength of those customers. Clearly, Integrated Life is a contributor. But it hasn't materially, as we'd said beginning of the year, we would expect more material impacts in 2015. And then obviously, we do expect some contribution as we start to ramp up towards the latter half for the year some of these new international wins.

Your next question comes from the line of Gray Powell of Wells Fargo. Gray Powell - Wells Fargo Securities, LLC, Research Division: Just have a couple here. So obviously, the recent Voxmobili acquisition is pretty interesting. What carrier relationships there are most interesting to you? And can you talk how in past deals you gained a carrier relationship and then further up sold Synchronoss services to the acquired carrier? Stephen G. Waldis: Sure. So obviously, there's -- Voxmobili support a bunch of customers. There's a few that we think are opportunities that fit our model that are Tier 1 in focus that view the cloud as a valuable asset. Obviously, they have relationships, we mentioned a few on the call with AT&T, Orange and Airtel. In terms of the success we've had in the past, I think a great example would be the work that we have done in the early days, when we launched in the cloud in 2010. We acquired FusionOne, which gave us a small entrée into Verizon, and we were able to really build one of the leading carriers in the world, kind of referenceable deployment with us over the last 2 or 3 years since then and going forward. And so the track record of what we've been able to provide our operators is they view us as very flexible and nimble enough to meet their needs, incredibly focused on their success since we don't sell direct customers, direct deals for cloud into their particular customers directly. And they can understand, but yet, we still have the size and strength as a public company and balance sheet, which is important to us for them to feel comfortable they can really entrust their subscribers to us. Gray Powell - Wells Fargo Securities, LLC, Research Division: Got it, okay. That's helpful. And then just one more question if I may. Can you give us a sense on trends or maybe the percentage of devices, where your cloud app is preinstalled or embedded as part of the activation process? And what did that statistic look like a year ago versus today? And then where do you see that going a year from now? Stephen G. Waldis: So one of the things that we had talked about in terms of data points we did give, Gray, was we talked about our Analyst Day, we talked about, if you have the combination of embedding it on a device and the right flows, you could get 60% adoption rates. And we haven't given any specific factors. Lately, we plan obviously, to do that like we typically do at the end of the year. But we can say safely that we're materially higher than those 60% numbers that we had thought about at Analyst Day and projected that the adoption rates are coming in much stronger.

Your next question comes from the line of Will Power of Robert Baird. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Just a couple of questions. Just maybe coming back to Voxmobili, any additional color you can provide on the growth rate there, what kind of growth that business was generating? And I guess any other background on, given -- well, I guess as you look at the opportunity for cloud and the growth you're seeing, any other background as to why they were interested in selling might be helpful. Stephen G. Waldis: Sure. So when we look at their particular base, keep in mind our philosophy, when we look to acquisitions is they may support multiple customers, but there's few that we'll really focus on in the acquisition. So they have more customers than on a go-forward basis we probably will support. Some of those customers don't fit our right business model, or not in the right markets that we're at. And so when we look at companies like Vox, where we basically try to figure out whether they have 2 or 3 or 4 really key accounts that we think would accelerate our deployment of our full cloud strategy. We mentioned some of those customers today that we think fit that model effectively. In terms of why the ability to move forward, I think in our space, it's really becoming obvious, not only do we have one of the largest cloud deployments in the world, but we're clearly the market leader in providing white label solutions to the operators. And so it becomes a decision of whether these operators, as cloud becomes more and more instrumental of a business, really want to rely on smaller companies that aren't well-funded, that don't have a good track record of execution. And it really puts Synchronoss in a great opportunity to take that asset like we've done in the past and really put it into our model and everybody creates a win-win opportunity. So a lot of the operators, who are in this space today, or a lot of the providers rather, really see us as the dominant player in the space today, who has relationships very deep with carriers, who depend on us and know that we can do the job. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then I want to come back on the $200 million run rate cloud guidance actually in 2014. If I look at the Q2 results and what Voxmobili will contribute, it looks like you're effectively already there. So I guess, I'm just trying to understand is the $200 million at this point really more of a conservative number? Or should for one of the reason or another, we expect some sort of flattening of that growth here in the second half for the year? Stephen G. Waldis: Right. It's basically the key word, well, it's a great way to look at it. Basically, it's greater than a $200 million run rate. So we just used it as a way to kind of quantify. I think the way you're looking at it makes sense, but just for clarity, it's a greater than $200 million number. And obviously, as the year ends up, we'll obviously, give you guys update on where that's at. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Okay, all right. That's helpful. And the last question for me. As I think about the activation trends, I guess, I want to come back to A, to what degree the cable mergers out there might still be impacted or is that now behind you? And given the slower year-over-year growth you saw in the first half, and albeit I know you're expecting greater growth in the second half. But how are you thinking about the longer-term organic growth opportunity in Activations from here? Is this really now more of a, I don't know, mid-single-digits growth business? Can you get back to double digits organically? How do you all think about that? Stephen G. Waldis: Yes, so I think there was a period of time, we historically looked at it as the high single-digit growth opportunity for us. We think with especially some of the new activation wins in markets frankly, that we really weren't servicing before from a sales perspective, those are very reasonable assumptions. Clearly, the cable headwinds that we saw with a lot of the M&A activity with 3 of our largest customers. Clearly, we saw, as those deals became a little bit more clear on how they'd be structured, there was a modest uptick. But we still expect that to be relatively modest, they'll be growing towards the latter half for the year. Until those mergers are completed, which are expected either in Q4 or early Q1, that clarity will become obviously stronger for us. So we think that, that's a reasonable assumption set on our businesses. Obviously, from time to time, we'll do greater than that as we open in new markets, and/or some of the cable business ends up getting clear, quicker. But I don't see that material change in terms of how we view the business in the long run really changing.

Your next question comes from the line of Daniel Ives of FBR Capital Markets. Daniel H. Ives - FBR Capital Markets & Co., Research Division: Just a question on Cloud. Can you just talk about domestic versus international opportunities just in terms of any changes you're seeing there in this pipeline? Stephen G. Waldis: Sure. I mean, I think domestic obviously, for a couple reasons, earlier entrées into seeing the value of the cloud a lot more centralized. I think the challenge we have in other European locations with some of our larger accounts there is because the -- we cross-country, there's different rules and different groups that manage it in countries. But we see that, so it ends up being a little bit harder within individual countries to go out and scale differently. You end up putting more work into different regions. For example, I mentioned on our call, we're starting with some work with Vodafone in one of their operating companies in Portugal, and then we're going to bring that onto other operating regions for them. So I think the combination of being a little bit later to the market versus here in the U.S. and then ultimately, the more centralization of the management flow of the subscribers helps with scalability in the short term. But in the long run, the big advantage is that the business benefits and the success that's being -- that's happening here in the U.S. markets is clearly being seen overseas and that's a good guide for us.

Your next question comes from the line of Greg Burns of Sidoti. Gregory Burns - Sidoti & Company, LLC: A question about the activation wins in Asia. Can you just give us a sense of the number of subscribers that those 3 carriers have? And also the channels that you'll be supporting, is it just one channel like online wireless or is it multichannel with these carriers? Stephen G. Waldis: No, so in those channels, they don't have specifics on that, but they're clearly in the tens of millions of subscribers. Typically, it'll be multi-channel, and it'll be done without getting too specific on some of the accounts. Obviously, [ph] will be doing some regions where they're launching newer services and where the activation capabilities and orchestration components specifically around bundled offers really have a strong value prop.

Your next question comes from the line of John Bright of Avondale Partners. John F. Bright - Avondale Partners, LLC, Research Division: Steve, you called out AT&T cloud business increasing, I think, in your prepared text. Is this something that's going to move the needle in '15? Stephen G. Waldis: Well, I think, it's something, John, it's too early to discuss what '15 might look like. But clearly, we're encouraged by the number of devices that we're beginning to support with the cloud products that we have there today. And so that's been a positive trend for sure heading into this last quarter. John F. Bright - Avondale Partners, LLC, Research Division: On more of a practical question. When I'm thinking about Verizon Cloud and if I have a tablet of Verizon Cloud. Walk through if you will, how Synchronoss benefits from my use of cloud -- Verizon Cloud if I have a tablet through them? Stephen G. Waldis: You as a subscriber? John F. Bright - Avondale Partners, LLC, Research Division: Yes. Stephen G. Waldis: Yes, so without getting specific on any of the customers, just generically, when you're a subscriber on a carrier's network, the biggest advantages you get are a couple things. One is, all of your content gets backed up and stored securely. So if your phone gets lost, your tablet gets destroyed or there's user-generated content that you have on that device, that obviously protects it. Secondly is, the minute that you want to migrate from a particular new tablet, or you may want to share content that you've taken from your tablet onto one of your smartphones and maybe that smartphone is an Android device or a Windows device, our capability to allow you to transcode that over to the device. And that's very critical in a family share plan with operators, where there's a lot of important vacation photos and pictures and photo albums that like to be shared with particular important events to families. And so gives you the capability to know that your data is safe, that your information on your device is secure and that you can share it across devices. The third and most important for the operator is, when you go to buy a new device, the ability to walk into a store and within a manner of a few minutes, take a couple gigabytes of data off your devices and transcode those to the newest devices. All set up, all your SMS, MMS messages restored, everything but your passwords obviously, that you'll re-enter in. And you're good to go as a huge benefit for you as a subscriber because you can get in and out of the store quick period of time. And when you get a new phone or in a new device or a new tablet, those memories come with you. John F. Bright - Avondale Partners, LLC, Research Division: Karen, a question for you on the revolver, you said you drew down $40 million on the revolver, I think. What's the -- flexibility, I think, you mentioned for that plan, I think is pay that down over time? Karen L. Rosenberger: That's correct.

We have no more questions at this time. I would now like to turn the call over to Steve for closing remarks. Stephen G. Waldis: Great. Thank you for joining us here on our second quarter call, and we look forward to speaking with all of you soon.

. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.