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 Sterling P. Auty - JP Morgan Chase & Co, Research Division Nandan Amladi - Deutsche Bank AG, Research Division Gray Powell - Wells Fargo Securities, LLC, Research Division Tavis C. McCourt - Raymond James & Associates, Inc., Research Division Andy Cheng - Wedbush Securities Inc., Research Division Daniel H. Ives - FBR Capital Markets & Co., Research Division Gregory Burns - Sidoti & Company, Inc. William V. Power - Robert W. Baird & Co. Incorporated, Research Division

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2014 Synchronoss Technologies Inc. Earnings Conference Call. My name is Dave. I am the operator today. [Operator Instructions] As a reminder, the call is being recorded for replay purposes. I'd now like to turn the call over to Ms. Karen Rosenberger, CFO; and Mr. Stephen Waldis, Chairman and CEO. Please proceed. Karen L. Rosenberger: Thank you. Good morning, and welcome to the Synchronoss Fourth Quarter and Full Year 2014 Earnings Call. We will be discussing the results announced in the press release issued before the market opened today. I am Karen Rosenberger, Chief Financial Officer of Synchronoss. 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: Thank you, Karen. Thanks to all of you for joining us this morning to review our fourth quarter and year-end financial results, which exceeded the high end of our expectations on both the top and bottom line. Our non-GAAP revenues in the quarter were $130.9 million, which represented 34% year-over-year growth and was $1.9 million above the high end of our guidance range. From a profitability perspective, we generated a 28% non-GAAP operating margin and a non-GAAP EPS of $0.53, which is above the high end of our guidance range after adjusting for some tax and accounting benefits. Now Synchronoss delivered a very successful set of results in 2014 and at the same time made tremendous progress against our long-term goals. Our Personal Cloud business outpaced growth expectations all year long, and our Activation Services businesses accelerated in the second half of 2014. In summary, we're excited at the progress we made within virtually all areas of our company. Now in 2014, we generated Cloud Service revenue growth of 81%, and exited the year with a run rate in excess of $250 million. This compares to a $100 million run rate in just the first quarter of 2013. And at the same time, as expected, our Activation business accelerated in the second half of the year, and our fourth quarter Activation revenue grew 16% year-over-year, driven by our business here in North America and opportunities with new international customers. Now in the fourth quarter and the first few weeks of 2015, we've executed on a number of exciting opportunities, including signing a substantial expansion of our contract with Verizon Wireless. This new expansion represents several hundred million dollars of incremental revenue over the remaining 4 years of our existing agreement. We believe we're in -- still in the very early stages of this Personal Cloud opportunity and have a long runway of growth over the next coming years. We're also excited about the announcement yesterday that we signed an agreement to acquire some of the cloud assets from F-Secure, which will directly support our strategic goals of expanding our Personal Cloud Platform to mobile operators around the world. We also successfully launched our Personal Cloud at Reliance Jio in India and finally picked up exciting new activation business wins with customers such as Sri Lanka Telecom and Telkom Indonesia. Now these new wins represent a significant expansion of our market opportunity across both our Activation and Cloud businesses and positive trends for the future. And as Karen will discuss in a few minutes, we are anticipating these trends of strong growth to continue in 2015 in both our Activation and Cloud Services business. Now during 2014, we made some great progress in Personal Cloud adoption across our customer base. As we exited 2014 and into the holiday season, we were adding roughly 400,000 to 500,000 Personal Cloud subscribers each week and saw frequent days of nearly a 100 terabytes or more of ingest of customer content from their devices in our cloud, which is up fourfold from the beginning of the year. Now this is direct evidence that more and more subscribers value the content and data as much as the actual device itself. Now we're excited about the success and expansion of our largest cloud deployment at Verizon Wireless. And while we can't get into the specific details due to confidentiality reasons, this expanded commitment is part of our existing 5-year deal and contemplates continued growth in both adoption and engagement of the Verizon Cloud, as well as new programs and services that will be part of the Personal Cloud and the support of a wide range of new devices that will be launched in the future. This expanded commitment from Verizon underscores the success of our cloud offering. And as I mentioned earlier, in direct support of our strategy to be the clear leader in the Personal Cloud space for mobile operators, we yesterday announced that we entered into an agreement to acquire F-Secure’s cloud assets, which is expected to close at the end of Q1. And our rationale for the acquisition can be summed up in 3 points. Upon completion of the transaction and combined with our current customers, Synchronoss will now serve 75% of the global worldwide market; Synchronoss will also have 9 of the leading Tier 1 mobile operators as customers around the world; and an addressable customer base that includes 75 mobile operators, or operators. These customers have an addressable subscriber base of 3.5 billion in North America, South America, Europe and Asia Pacific. This gives us plenty of expansion around the globe. And upon completion of the transaction, Synchronoss will now be responsible for the entire scope, the AT&T personal cloud. We plan to partner with AT&T by migrating and integrating the F-Secure locker with our existing cloud assets already deployed at AT&T into a single robust Personal Cloud platform. And also Synchronoss will have a partnership with F-Secure which will look to integrate security as part of our cloud offerings. We believe mobile operators and subscribers would enjoy a secure and safe personal cloud with all their important content that is backed up and stored in the cloud. This partnership will allow us to deliver a more powerful and integrated experience. Now upon closing of this transaction, Synchronoss will be integrating F-Secure assets into our standard Synchronoss Personal Cloud offering. This will include integrating certain F-Secure software capabilities, virtualizing our global data center infrastructure and migrating F-Secure customers onto the Synchronoss platform. These integrations will be completed over the course of 2015 and will result in a single platform supporting approximately 75 mobile operators. Now consolidating our cloud capabilities in our personal cloud platform will provide a more robust product offering that's easier for subscribers to adopt while also lowering our cost structure and driving meaningful operating leverage. Now this is similar to a process we took with our NewBay acquisition several years ago, when we demonstrated that taking the time to integrate the technology and customers onto a single platform significantly improves adoption rates over time. And also like NewBay, we would expect relatively modest growth from F-Secure customers in 2015, who will likely wait for the full integrated platform to be available before ramping their market efforts around the cloud. However, these investments will position Synchronoss to drive meaningful growth in 2016 and beyond at increasingly attractive levels of profitability. Now in general, we're very pleased with the level of interest we're seeing from other North America and European operators around deploying our Personal Cloud. In the second half of 2014, we rolled out our Mobile Content Transfer product to over 5,000 retail stores here in the United States. The success of the program has helped us pick up momentum with many leading mobile operators on the strategic importance of the Personal Cloud in a very visible way, which is leading to a robust sales pipeline. Now turning to our Activation Service business. We delivered strong fourth quarter results of 16% year-over-year revenue growth that was driven by good transaction volume across all aspects of our business. Specifically, AT&T had a very strong quarter for us, delivering double-digit revenue growth that reflects strong volume across all of our service lines, including wireless, wireline, U-verse and our indirect channel partners. We have successfully diversified our AT&T activation relationship in recent years to the point where segments like U-verse and the indirect channel are as big and sometimes even bigger drivers of growth than our traditional consumer wireless business. Now the new customer win secured by our international team earlier this year created some of the benefit, generating solid growth as these new customer relationships began to scale. This is an important growth driver for us going forward, and we're focused on building on the significant momentum we're seeing around the world for our Activation Services. The cable MSO business also showed additional improvement during the fourth quarter as increasing regulatory clarity surrounding the Comcast/Time Warner merger and associated transactions is leading to renewed investment. While it's not back to the 2013 levels, the growth of our business in the MSO market has gotten better as -- and we expect that to continue in 2015. And our Synchronoss Integrated Life platform is starting to scale. Transaction volumes, particularly around wearables and connected cars at AT&T. Mobile operators and major auto OEMs are making significant investments in the connected car market, which we believe is a very positive indicator for future growth in this area. Now as we look to 2015, we expect each of these areas in our Activation business to contribute positively to our growth, which reflects the success of our efforts to diversify this business in recent years. Now in summary, the fourth quarter was a strong finish to a great year with positive momentum across all our businesses. We're in the early stages of benefiting from these investments we've made to maximize our long-term opportunities and continue to drive long-term value for our shareholders. With that, let me turn it over to Karen. Karen L. Rosenberger: Thanks, Steve, and good morning, everyone. As Steve mentioned, we are pleased to have ended the year with a strong fourth quarter performance from both a financial and operational perspective. We continue to see positive demand trends across both businesses, and we are confident in our ability to continue driving meaningful growth and profitability going forward. I'd like to begin by reviewing our fourth quarter financial results and will finish by providing our guidance for the first quarter and full year 2015. Starting with the income statement. GAAP revenues were $130.2 million for the fourth quarter. Non-GAAP revenues after adding back $651,000 of deferred revenue write-downs from certain acquisitions were $130.9 million, which was above the high end of our guidance and up 34% on a year-over-year basis. Our non-GAAP Cloud Services revenue in the fourth quarter was $63.4 million, which represented 48% of our total revenue and year-over-year growth of 61%. We continue to see strong adoption of our cloud solution, and our expanded contract with Verizon is a testament to the value our solution generates for our cloud customers. We are extremely pleased with the performance of our cloud business this year, having grown 81% over 2013, and we see a long runway of opportunities for continued growth in the future. Our non-GAAP Activation Services revenue was $67.5 million for the fourth quarter, representing 52% of our total revenue and year-over-year growth of 16%. As expected, our Activation Services revenue generated solid double-digit growth in the fourth quarter, driven by strong volumes across each of our service lines. Additionally, some of the newer international wins during the quarter have begun to scale and are contributing solid growth. The Cable MSO market also provided incremental growth during the fourth quarter, and we expect to see the trend continue into 2015. Breaking revenue down further. 78% of our fourth quarter non-GAAP revenue came from recurring sources, mainly transaction processing and subscription arrangements, while the other 22% came from nonrecurring sources, namely professional services and licenses. Turning to costs and expenses. We will review our numbers both on a GAAP and non-GAAP basis. A full reconciliation table between the 2 can be found in our earnings release, which is located on the Investor Relations section of our website. Non-GAAP gross profit in the quarter was $79.9 million or a gross margin of 61%, which is consistent with the last several quarters. As we've said in the past, there will always be a certain amount of variability in our gross margins depending upon our mix of revenue and investment. Non-GAAP income from operations was $36.2 million in the fourth quarter, representing an operating margin of 28%. Income from operations was positively impacted by a change in our accounting treatment of certain purchased hardware in our data centers which we have determined to have a longer useful life than previously estimated. This change lowered depreciation expense compared to our prior expectations and increased non-GAAP income from operations by approximately $3.6 million or $0.05 per share. Our non-GAAP tax rate for the quarter was 30.8%, which led to a non-GAAP EPS of $0.53. Our non-GAAP tax rate was positively impacted by the retroactive extension of the U.S. R&D tax credit at the end of the year. This contributed approximately $0.03 to EPS in the quarter. If we adjust for these 2 onetime benefits, our non-GAAP EPS in the quarter was above the high end of our guidance range or $0.45 per share. On a GAAP basis, fourth quarter gross profit was $77.6 million. Income from operations was $20.5 million. And GAAP fully diluted per share was $0.30. Looking at our cash. Total cash, cash equivalents and marketable securities were $290.4 million compared to $305 million at the end of the third quarter. We generated $26.4 million in non-GAAP cash from operations compared to $42.1 million in the year-ago period. Non-GAAP cash from operation excludes the payments for additional purchase price for acquisition earn-outs and the excess tax benefit of exercising of stock options. Our cash flow in the quarter was negatively impacted by the timing of the Verizon agreement as Steve discussed earlier, which delayed invoicing and cash collections related to that account. We do not expect -- or we do expect there will be a strong cash collections in the first quarter as our accounts receivable balance normalizes. Subsequent to the end of the quarter, we agreed to acquire certain F-Secure assets for $60 million in cash. For the full year 2014, we generated $72.2 million in non-GAAP cash from operations compared to $77.9 million for the full year 2013. Similar to our fourth quarter performance, full year cash flow was impacted by the timing of collections related to the Verizon account as we completed details of our new agreement. Capital expenditures were $49.1 million for the fourth quarter and $73.9 million for the full year 2014 or 16% of total revenue. However, we had a substantial amount of CapEx that was invoiced to us by our suppliers but not yet paid by the end of the quarter. And if we adjusted for these accounts payable related to CapEx, our cumulative capital expenditures was $87 million for the full year or 19% of non-GAAP revenue, which is in line with our adjusted CapEx expectation we provided on our last earnings call. As we look to 2015, we expect CapEx to be approximately 15% of our total non-GAAP revenue for the full year with a few points of variability, which could have -- which would be a meaningful reduction from 19% of our non-GAAP revenue in 2014. With that, let me turn to the guidance, starting with the full year 2015. Non-GAAP revenues are expected to be in the range of $562 million to $574 million, representing year-over-year growth of approximately 24% at the midpoint, and includes approximately $10 million to $15 million in revenue contribution from the F-Secure acquisition for the remainder of 2015. Please keep in mind that we anticipate closing the transaction later in the first quarter and anticipate 9 to 10 months of revenues associated with those assets acquired. Breaking our revenue guidance down further. We currently anticipate our Cloud Services revenue will be in the range of $277 million to $283 million or growth of 32% at the midpoint of our range. With our international cloud deployments beginning to ramp and the overall increase in subscriber adoption being driven in part by our Mobile Content Transfer deployments, we see a long runway of growth opportunities for our Personal Cloud offering. We currently anticipate our Activation Services revenue will in the range of $285 million to $291 million or growth of 16% at the midpoint of our range. Outside of the typical activation volumes we see at our wireless and wireline accounts, we are seeing increasing volumes coming from emerging devices such as wearables and connected cars, which we anticipate will contribute additional growth in this business. Turning to profitability. We currently expect non-GAAP gross margins in the 61% to 62% range, with usual quarter-to-quarter variability. In terms of operating profitability, we expect non-GAAP operating margins of 25% to 26%. This is expected to drive non-GAAP EPS of approximately $2.07 to $2.14, assuming a tax rate of approximately 34% and a diluted share count of approximately 47.4 million shares. Our guidance includes non-GAAP -- a non-GAAP operating income benefit of $13.9 million or $0.19 related to the change in depreciable life for certain hardware in our data centers that I referenced earlier. We expect the acquisition of F-Secure to have a neutral to accretive impact on our earnings for the full year. In addition, as Steve mentioned earlier, one of our top priorities in 2015 is consolidating the cloud platforms that we have acquired in recent quarters onto our Personal Cloud Platform. This integration will provide a more robust platform that we believe will drive improved adoption, engagement and subscriber satisfaction and improve profitability over time. We are currently in the process of finalizing the level of effort in anticipated costs of this integration work. As these costs are onetime in nature and to present comparisons in the most meaningful manner, we plan to exclude these acquisition-related expenses from our non-GAAP results. Turning to the first quarter. We are currently targeting non-GAAP revenues in the range of $130 million to $133 million, which represents year-over-year growth of approximately 32% to 35%. We expect non-GAAP gross margins will be 61% to 62%. Non-GAAP operating margins will be between 25% and 26%. And non-GAAP EPS will be approximately $0.47 to $0.49, assuming a tax rate of 34% and a diluted share count of approximately 47.1 million shares. In the first quarter, we anticipate incurring a GAAP restructuring charge of approximately $6 million to $8 million related to the consolidation and elimination of redundancies as part of the integration of F-Secure’s cloud assets. This charge will be excluded from our non-GAAP results. Before I close, I'd like to announce that we will be hosting our third annual Analyst Day in March at Synchronoss' headquarters in Bridgewater, New Jersey. We plan to share to greater insight into our strategy to capitalize on the multiple growth opportunities we are targeting and where we believe the market is growing. We look forward to seeing many of you there. In summary, the fourth quarter was a strong finish to 2014. The investments we made throughout the year allowed us to significantly scale our Personal Cloud solution as evidenced by the 81% growth in cloud revenue during the year, while also driving solid growth in our Activation business. We believe we are well positioned to benefit from the long runway of opportunities across those businesses to drive substantial top and bottom line growth in order to increase shareholder value over the long term. With that, let me turn it back to the operator to begin our Q&A session.

[Operator Instructions] First question which comes from the line of Tom Roderick at Stifel. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: So Steve, let me throw the first question at you. I'm sure you've heard it. There seems to be some skepticism out there that the Verizon opportunity itself is already very heavily penetrated. Now what I heard you guys say on the call this morning is that there's -- you're talking about several hundred million dollars of incremental additive revenue opportunity from Verizon over the next few years. Can you talk about where that incremental opportunity is coming from aside from just further penetration of handsets? Are there other device types you can talk about, other service types you can talk about? If it's largely pricing? We'd just love to know how you get to that sort of magnitude of incremental opportunity. And maybe the second part of that is how much of that are you already into? In other words, is that showing up in the numbers now? Or will that take some time to materialize? Stephen G. Waldis: Okay. Tom, it's Steve. So yes, so we're really on early innings or early stage with our Verizon relationship. This just basically is driven by a couple of reasons. One, clearly, the adoption rates and success that we're seeing is clearly exceeding everybody's expectations, but the customers themselves, as they start to engage with these devices, the contemplation of offering more services through the cloud, more types of devices and more types of rollouts in the future are definitely planned that were above and beyond what we originally contemplated in the agreement. Now obviously, we can't get into the specifics of the programs due to our confidentiality arrangements, but you'll see during the course of this years some interesting announcements that we'll be making with Verizon and others in terms of where we see the market space going. But clearly, it's in the early innings of the game. And we emphasized that last year, I think this extension to the contract and some of the growth that you're seeing are just further evidence of where we are. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: And Karen, as you constructed your guidance for fiscal '15, does this sort of incorporate a full run rate of that Verizon opportunity? Or again, is this -- is this an opportunity that continues to evolve and expand and get bigger as we get through the year and even beyond 2015? Karen L. Rosenberger: Tom, it's the latter. Like you had just said, it will continue to evolve and expand as we move throughout the year and into the outlying years. Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. Last question from me. I want to address F-Secure. I mean, $60 million for an asset that could potentially bring you the entire scope of the AT&T digital locker seems like a relatively small amount to pay for something that is that large an opportunity, particularly looking at what you're doing with Verizon. Can you talk a little bit about in terms of how you got there? Was this sort of a situation like NewBay where the tides were already turning in your favor and this just sort of expedites that process? And when you talk about the entire scope of the digital locker, does that mean that other vendors like Asurion are no longer involved there as well? Or is that something you'd still have to work to gain share on? Stephen G. Waldis: Yes. So Tom, so it's -- I think it's a good analogy. I mean, we definitely were making tremendous progress at AT&T in various different portions of the cloud. I mean, they -- obviously, F-Secure had not only some assets at AT&T, but they had them positioned on a global basis in footprints that we hadn't really spent a lot of time really going after. One of the things that we've done, I think, a really good job on is when we go after an area, like you're starting to see in some of activation wins that we're picking up, we generally have some good success. And so we felt like the assets that they had in some of these areas made good reason for us to do that. As it relates specifically to T, we look to partner with these guys. And clearly, as part of our history has shown, we're -- we look at buying assets that we believe, with our execution and with our relationships with customers, we can exponentially grow those accounts. And clearly, the intent for F-Secure on a broader scale is much greater than AT&T. But to your point, it does provide us an opportunity now to take control over the -- basically entire scope of the AT&T cloud. There are no other providers, to your point, now responsible for it. Obviously, as I'd mentioned in our comments earlier, there will be some time, like we did initially at Verizon, where we'll consolidate and we'll pull that platform together. And we expect that to happen throughout the course of 2015 so that we can provide those customers an outstanding experience and put them in an environment that not only provides a great experience but gives us the operating leverage that we're looking for in the future.

The next question comes from the line of Michael Nemeroff at Crédit Suisse. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Just wanted to drill in a little bit deeper on the cloud. Steve, could you maybe give us some color on pricing and how that's been trending versus your expectations previously? I know you had given us a $1 to $5 price range. And could you maybe just give us a sense for how '14 ended the year? And then also on the Cloud Services, I was curious, other than your largest cloud services customer, could you give us a sense on how the subscriber trends have been working for, some in Europe let's say? Because I think there is some concern that maybe there was some penetration issues at one of your largest customers. Stephen G. Waldis: Yes, sure, Mike. So the pricing is typically, as we mentioned earlier, kind of in that $1 to $5 range, that has been trending more towards the higher end. I think one of the things that we look to do at our Analyst Day, as we mentioned, in March, is to give a little bit more color around how that's progressing. I think the big drivers for that really is the operators are looking to drive more and more services through those -- through these -- through the personal cloud, which means more devices, more devices require obviously more data to be backed up and restored. And those are all elements for us that obviously drive better pricing for us on a yearly basis. And as it relates to some of the other customers, we saw really good expansion across our customer base. Clearly, some of our customers are located in various different regions of the world, in which adoption rates do vary by region. I think one of the highest success stories that we're seeing, mentioned in our script, is we're excited with our relationship that we've got here with Reliance Jio, and we're excited about the way that's starting to progress. Certainly, certain markets at Vodafone seem to do better than others, so it's really -- it really depends on what market you're at. But collectively across the board, folks are really starting to see the value of how this cloud component can be core to their communication services. Our mobile content transfer process emphasizes that in the stores, because when consumers walk in, it's just an incredible experience for them to be able, in a matter of a few seconds, to go to a new device and know that, that information can be backed up and restored. And at that point, the importance of the cloud to the consumer and the value of that information versus the device itself becomes really relevant. Michael B. Nemeroff - Crédit Suisse AG, Research Division: That's really helpful. And then, just on the F-Secure acquisition and the customer base that, that acquisition brings to you. Is it your expectation, or would you think that within the next 2 years, that a company like AT&T, an operator like AT&T, would have a similar type growth profile in personal cloud as you saw in some of your largest carriers that are currently on the cloud product? Stephen G. Waldis: Yes, I mean, I think as we've always said with the cloud, there's a formula for success, right? And that formula is not only a robust platform that can provide customers that experience, but it's done in collaboration with the carriers' marketing programs, right, and how they go to market with those programs and how they leverage it and how they position products like Mobile Content Transfer at the point of store. So the good news is we feel like we've figured that formula out, and we've demonstrated that. And so we believe that now that we've got this formula figured out, that the operators will look to some of the market leaders like the Verizons, like the AT&Ts. And as we go to replicate those models across operators, we believe very strongly that each and every one of those larger accounts has the opportunity to scale and grow over time. Because ultimately, we believe that where the cloud will end up, if it truly becomes core of your communication strategy, every subscriber that's on one of these operator networks will have the ability to have the cloud as a capability of that. And if you look at the addressable base to your point, Mike, at 3.5 billion subscribers, that's a number that our current customers have. And we're very low penetration rates in those accounts, and we'll, again, cover a little bit more of this on Analyst Day. We've got a lot of legroom in front of us to really show these operators what the value of those services can be. And I think we've got some pretty incredible reference-able customers to do that off of.

Next question comes from the line of Sterling Auty at JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: I wanted to touch on a couple of different items. First, the international sales pipeline that you referenced, how much of that has come from the projects and the people that you put in place last year? Maybe characterize the growth of it, and how much of that is actually just coming through the acquisition of F-Secure? Stephen G. Waldis: So in the past -- so the current wins on the activation side are all through some of the service delivery personnel that we put in place during the course of the year. As we look to the comments, I think what you're referring to in my script is we're seeing a very robust sales pipeline here in North America as well as Europe through Synchronoss. Clearly, with the assets that we're picking up from F-Secure will help us kind of double down into areas that we weren't today per se, which made the asset and the transaction make a lot of sense to us because some of the accounts that they had focused on, because of the success they've had in their security products, were not areas that we had focused in. One particular area, for example, that we'll be picking up is some pretty marquee wins in their early stages in Latin America with América Móvil and Oi. And those are good opportunities for us where we've had no real effort or penetration to date in that region. And we'll have some really good solid beachheads for us to build off of here in the next year or 2. Sterling P. Auty - JP Morgan Chase & Co, Research Division: And then can you characterize in terms of the idea generation of going after the F-Secure assets, was that something that you guys were exploring? Or was there any motivation from your customers or mobile operators that this might be a transaction you should do? Stephen G. Waldis: I think it's really -- it's driven at the highest level, Sterling, on just strategy to really go out and really go into a market and be a dominant player. I think equally, the folks at F-Secure who have made quite a successful name for themselves in the security business, really recognize that we had a real dominant position in this space and we're really the market leader. And so there was an opportunity to go from a competitive environment to a collaborative environment, which is really what we struck. That being said, it goes without saying, the obvious, the folks like AT&T and others will really greatly benefit in the integration and the launch of some of these cloud products going forward as we manage it, no different than the success that Verizon has had in the early days as well with the NewBay acquisition. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Last question. How much -- in terms of the assets that come over with F-Secure, how much security capability comes with those assets, meaning that you will own? And how much of the security aspect is kind of just the ongoing partnership? Stephen G. Waldis: So there will no -- we didn't acquire any of the security, and we acquired some of their personal cloud assets in areas that we felt we wanted to -- where customers the support in. The relationship that we'll have with them going forward is that we will partner with them and integrate their security offering as part of our cloud offering. So when we talk and when -- we'll get into a little bit more of this at our Analyst Day in March. But as we talk about engagement and growth and services, a lot of customers will have the ability to have their content backed up and restored and secure, if they choose so, and we'll be embedding their technology in part of our activation and our setup process for customers who want to engage, offer that service out to their subscriber. So it will be their security products. We're only taking Personal Cloud, but we will make it a very integrated experience for the consumer.

The next question is from Nandan Amladi at Deutsche Bank. Nandan Amladi - Deutsche Bank AG, Research Division: Steve, just back on the F-Secure portfolio that you've acquired. How much of the thinking was focused on the customer base, obviously the AT&T being a big one, relative to the technology that you're getting with this acquisition? Stephen G. Waldis: So it is primarily on the customer base side, because as we mentioned, we're going to be migrating their -- those customers onto our platform. And that will take over the course of 2015. So they will be run on our platform. But their customer footprint were in areas -- clearly, we've talked about T, but they also had some initial success, because of their security offerings, in Latin America. And so that was a market that will now become accessible to Synchronoss. Clearly in Europe, we had the majority of that market to begin with, but there were some customers that resided there. So it was a combination. It was really on the customer side, Nandan. And particularly, when we looked at the overlap of some of the areas that they had been doing business, they really weren't areas that we had focused at. And we believe that by having those come over, combined with our strategy to really go after that space hard, it made a lot of sense to us. Nandan Amladi - Deutsche Bank AG, Research Division: And then a quick follow-up if I might. On the international expansion, what products are showing the best uptake? And what sort of ramp should we expect for the -- just on the international side for the Cloud versus the Activation business? Stephen G. Waldis: So it's a great question. It's probably evenly split. One of the things that the cloud offering, as it starts to take off, they are definitely taking notice of the some of the success we've had in some of the larger accounts here in North America. On the Activation side, what's really been driving our business is traditionally, in some of the Asia Pacific regions that we had not been even selling into, they are now rolling out bundled services, offering some form of wireline component with a wireless offer. And that orchestration and activation layer is really critical to these new providers in those regions. And so that's really been a big seller of our Activation products and where we've had some success with some of the newer wins that I mentioned during the script, where these guys are going to market and the clear benefit of deploying the platform on these orchestration services makes a lot of sense. So we're really seeing even distribution. Keep in mind, in some of those areas in Asia Pacific, where we're talking with customers that we had not been engaged for previously until last year when we started to put together Chris and his team, that we're focused on those regions and actually calling on those particular customers.

The next question comes from the line of Gray Powell at Wells Fargo Capital. Gray Powell - Wells Fargo Securities, LLC, Research Division: Just had a couple. So maybe if I look at a carrier in a theoretically mature state that's maxed out penetration of public cloud with its subscriber base, what kind of growth could you drive with the carrier, simply through pricing and bandwidth -- as pricing and bandwidth and storage needs increase? Stephen G. Waldis: Well, I think one way to look at it, which probably causes a lot of confusion if you think of it, we look at adoption and growth isn't just subscriber only, it's the engagement of that subscriber. So for example, somebody today that is a smartphone user with an address book is a completely different profile than that subscriber 2 or 3 years from now that has his car connected in, his home connected in, a smartphone, a tablet. He's storing and backing up all that information that's associated with that, and he's -- and by the nature of it, backing up and restoring more content across it. So each of those subscribers -- one interesting fact is that if we didn't add a subscriber every year, that subscriber revenue growth would increase, based on what we're seeing. Because that subscriber's -- as long as the operators are adding new devices and those devices go across multiple services, that particular subscriber becomes a more valuable component to the Synchronoss story. And that's where, again, we'll provide some further insight later in the year. But you'll get an idea of the subscribers themselves grow. So when you look at adoption, it's certainly new subscribers, but it's also subscribers who over time become more power users, buy more devices, store more information, et cetera. Gray Powell - Wells Fargo Securities, LLC, Research Division: Got it. That's helpful. So I mean, is there a way to quantify the components of growth in 2014 between subscriber growth versus pricing or more usage? Stephen G. Waldis: Well, one way I would definitely look at it as operators rollout more -- if you believe family share plans will continue to proliferate and there will be different versions of them, if you believe that connected cars and connected homes and consumers will expect that single sign-on experience where that content follows them everywhere, as those devices and programs become more relevant at the operators, those would be tremendous growth opportunities for Synchronoss because our cloud offering then essentially becomes more expanded for those individual subscribers. No different than if you're an operator and you're trying to sell someone a bundled or triple-, quadruple-play service, the value of that customer goes up exponentially. It's a very similar analogy to us.

The next question comes from the line of Tavis McCourt at Raymond James. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Karen, I've got a couple of housekeeping ones for you because you were talking little too fast for a bit. But can you repeat the Q1 revenue guide and then the amount of earnings benefit that the depreciation change has on 2015 guidance again? Karen L. Rosenberger: Yes, Q1 is $130 million to $133 million in revenues. And then the benefit from the depreciation useful life change in estimate was $0.19 for the year. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And did you give a percentage of recurring versus nonrecurring in the quarter? Karen L. Rosenberger: For Q4? Or are you talking about for Q1? Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: For Q4. Karen L. Rosenberger: Q4 was 78% recurring and 22% nonrecurring. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And then my question for Steve. I think this is going to be the fastest growth that you're guiding for in the Activation business in quite a few years. And it sounds like it's not really the traditional wireless activation that's the primary growth driver. So I wonder if you could kind of break out -- it looks like mid- to high-teens growth outlook, how much of that is -- I guess you did make a small acquisition last year, so how much of it is acquisition? How much of it is new customers that you already have visibility to? If there's anything else in that growth profile for this year. Stephen G. Waldis: Yes, it's evenly split in the sense that we definitely have picked up far more, especially here in the U.S., where wireless is important. But if you go to the roots of the company where it was 80% or 90% of Activation revenue, now it's pretty well-balanced with U-verse and broadband and our indirect panel -- channel customers, the work that we do with the MSOs. So that's continued to diversify the business. I would also say, when we look internationally, there's just new wins in areas where we've actually put our sales teams out there in the last year. And they've had a good degree of success. Some of that's been converting. We did a small acquisition last year on activation to our newer platform. Some of it has been just new -- net new wins in particular areas that make sense. I think when you look at the business going forward, I think it's going to change even more dramatically to diversify it, which is around connected cars and connected -- the Internet of Things, all those things at some point, if you believe what you're seeing in the press today with some of the Under Armour acquisition of some of these new fitness products. If you believe everything's going to have a -- have some form of connectivity to the web, the activation, what we're going to be calling -- and you'll hear more of it, of our Activation 3.0 product, is going to support a wide range of devices. And so what does that really mean? It means that there will be more opportunity for us to have to us to get additional transactions off these devices that in the past just weren't open for us to activate. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And if I look at the balance sheet now, you'll still have a significant amount of cash post the F-Secure acquisition, but you're also kind of growing in a very capital-intensive business and you're dealing with very large Tier 1 carriers. So I guess the question is, what is the level of cash or liquidity that you think you need to functionally run this business, which is now at a much larger scale than it was just 1 year or 2 ago? Stephen G. Waldis: It's a great question, Tavis. I would say that, I don't know if there's an exact number. I think the ability to have a healthy balance sheet and access to capital to your point is critical. I'm not sure how much of that is readily available -- needs to be readily available on the balance sheet. Clearly, one of the advantages that operators like with Synchronoss is that we've got several hundred million in our balance sheet. We have access to several hundred million more through various different lines. So that is something that obviously we know is important, it's just hard to quantify the exact number. I will tell you that one of the reasons why we look to do acquisitions that are accretive to -- neutral to accretive. We look at acquisitions that we know we can generate and monetize in a very short period of time, meaning within a year. Those are types of things that we do just as a rule of thumb to keep us in that position, so that the operators know that we're not only here today, and we've been here for 12 years, but we'll be here for the next 12 years.

Your next question comes from the line of Shyam Patil of Wedbush Securities. Andy Cheng - Wedbush Securities Inc., Research Division: This is Andy in for Shyam. I guess for -- can you just talk about your international trends that you're seeing in terms of what percentage of revenue it was 2014 as well as expectations for 2015? Stephen G. Waldis: So we definitely see it as a -- we haven't broken out the different elements of the growth, but we definitely see it as an area that's contributing. And I think it's contributing both in Cloud and Activation. Andy Cheng - Wedbush Securities Inc., Research Division: Okay. And going now for the F-Secure, and besides the AT&T, what were some of the tier -- key Tier 1 carriers, and any thoughts on opportunities to increase scope and size of those customers over time? Stephen G. Waldis: So I think if I understood the question, what other particular accounts were key to us? I mean, I certainly, all the customers that we're taking over are important. There are obviously larger ones. So I've mentioned obviously some of the América Móvil in Latin America, British Telecom in Europe. There's a couple other ones, SFR out of France. So there are some ones that we definitely think are bigger, but just to emphasize, all those customers are important to us. And what we'll be doing is putting together the right strategies once we migrate them over to ensure that they're getting a great experience. Because at the end of the day, what we're focused on as a company, it's not so much in the early days as which big customers are going to win next, but how many subscribers can we get on a global basis signing our products every month, every week, every year. And so in order to do that from a distribution perspective, these 75 mobile operators around the world, or these 75 operators, are going to help us kind of achieve those goals. Andy Cheng - Wedbush Securities Inc., Research Division: Great. And I guess lastly, can you talk about your -- what you're seeing in Mobile Content Transfer interactions that you're seeing with carriers outside of Verizon and AT&T? And also is it addressable for international? Stephen G. Waldis: Yes. So there's been, we're -- it's a very -- it's a great lead product to Personal Cloud, and it's been a big contributor to why we talked a little bit about how we feel confident in some of the pipeline opportunities that we're currently working with here in the U.S. and in Europe that will convert. It basically just puts, right in front of the consumer walking into a store, the value of being able to take your old device, back it up and restore it. And then of course, their natural inclination is to leave it in the personal cloud on a go-forward basis. So it really helps customers understand the value. It also eliminates the need to have to have a consumer go to an app store and download an app or wait for that device to have the software put on the firmware itself. So it creates a really -- what we've seen and you can see in some of the reviews that are on the site today, a really cool, powerful experience for a consumer to buy a device. But it also reminds them, hey, my content's there. It's valuable to me. I want to keep it available in case I want to buy the next big thing or the next cool device.

Your next question comes from the line of Daniel Ives at FBR Capital Markets. Daniel H. Ives - FBR Capital Markets & Co., Research Division: With another pundit fanning the bear flames over the last 2 months, nice to see you yet again prove the skeptics wrong. So maybe to that point, Steve, could you talk about, with the cloud market, in terms of customer traction, what you're hearing from the field? Maybe compare where we were a year ago to today. A moment to compare and contrast in terms of that opportunity in [indiscernible] almost the difference in terms of what's that perception again. Stephen G. Waldis: Yes, I think it's -- I think the recipe of success is a lot more defined and understood. And what I mean by that is that the operator is starting to recognize that these family shares for retention purposes are really key, and the way to keep customers engaged is cloud products. And we saw a huge benefit of it this summer during -- I think one of our biggest ingest days during the summer was over the 4th of July because families are on vacation. Families could have multiple types of operating systems and devices. The ability to put that all in one common kind of book to represent the vacation on the cloud was really big. So the marketing component of it is a lot more understood of how you get there. The technology has been much more easier. So not only on the back end, I think we've done a great job proving it can scale and you can handle the information in a way that consumers want a good experience. But the ease of implementing it, in other words, hey, it's not that hard. You go into a store, the apps work across platforms. You can -- a lot of the reps, if you walk in the stores here in the U.S., and we're in over 5,000 of them across carrier, will immediately refer to you this application because it's simple, easy to use, makes customers, gets them in and out of the store, gets their device updated with whatever information is important to them. And so I think that those pieces of it are coming together in a way where probably a year ago, there was a lot more education about how does it fit in and where does it sit out there. And I think one of the reasons why we've had a lot of success is that we've really positioned it as an enabler of their core communication strategies. Our operators aren't there -- aren't trying to monetize the cloud indirectly like some of these over-the-top guys have been doing and are struggling on a profitability perspective. They're saying this is a great way to get my best customers to buy more, stay longer and they become more lucrative over time. And by the way, if I can give them those experiences and I can create that level of personalization, and now I can take that where it's going, I'm going to take that across my automotive, I'm going to take that across my home. As the Internet of Things becomes more and more reality, people are going to say that's great, but when I'm using this device, I want access to this content. The cloud can give it to them. When I'm driving my car, I want access to this content. The cloud can give it to them. So those next reaches are a big part of where we see some of the expansion in these outer years about how we continue to see the cloud going to evolve for us and the operator. Daniel H. Ives - FBR Capital Markets & Co., Research Division: Got it. And just a quick follow up. I know it's hard to pinpoint, but how penetrated do you think this market is? Is it 5%? Less than 10%? Just -- I mean, I'm just wondering if you could just sort of put a number on it to help educate some of the folks that are still skeptical. Stephen G. Waldis: Well, I think -- we look at our market, and we'll give some specifics out later in the year when we can lay out the whole picture for you folks at our Analyst Day. But if you look at Synchronoss and you guess whether we're 100 million to 200 million somewhere penetrated on a subscriber base, our customers today currently control 3.5 billion eligible subscribers for us. We think there's over 3 billion devices left for us to go get over the next 5 years.

Your next question comes from the line of Greg Burns at Sidoti & Company. Gregory Burns - Sidoti & Company, Inc.: Just one last question on F-Secure. Very nice base of subscribers, but not much revenue. So I'm just wondering if you could kind of can reconcile the subscriber list that they have versus the -- their ability to monetize that and what that implies for the effort it might take for you to cultivate those relationships. And the potential upside down the road for you. Stephen G. Waldis: Yes, no. It's a great question. So F-Secure is traditionally, again, that the -- don't want to speak on behalf of their products and services, but their security products are bought and installed kind of downstream. They're not part of the upfront activation process. So they've done a nice job in some accounts being able to get customers to buy into the personal cloud component of it. I think the value of the relationship, not only from us getting personal cloud adoption, but where we also believe that we're going to have success or F-Secure will have success with us on the security side is, by putting that in front of a customer at the time of an acquisition during a Mobile Content Transfer, your opportunity to get a higher adoption rates really increases. What I mean by that is, you walk into a store today in the U.S., you're prompted to contact a transfer, and immediately, you're hit on your second or third button, do you want to sign up for your cloud? You get so much free gig. At the same instance, do you want to have this stuff backed up and secure? And if they opt into it, then they will have options to get security services. So you have to embed yourself really upfront with the customer process, which I think Synchronoss has done a really good job doing. And we think that when we go into these accounts and can provide the holistic view of how we engage with customers on that particular component, that is one of the areas of that recipe I referred earlier to how to get adoption and engagement up at these operators. Gregory Burns - Sidoti & Company, Inc.: Okay. And I guess based on what you said earlier, that's more of like a 2016 event after you have the platforms fully integrated, you could go after that opportunity more aggressively. Stephen G. Waldis: Yes. I mean, what we would like to do exactly is to -- certainly see growth, as Karen has given in our guidance this year, but there's going to be a big portion of our year similar to what we did on the first Verizon release. For the first 9 months of the year, we're going to be spending a lot of time really getting customers integrated and moved over to a platform that has all the capabilities that they'd looking for, that can provide all this functionality. Our assumption set is that the operators will start to look at what marketing plans make sense as we go through that migration process. And so when we look towards 2016, that's where we really would see the -- or where we expect to see that some of the marketing programs, again, we don't control those, to be clear, but where we'd see the 2 of those kind of coming together.

And your next question is from the line of Will Power of Robert Baird. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Steve, I guess a couple of questions for you. Maybe just coming back to the F-Secure deal. Can you give us any color as to the number -- and I apologize if I missed this, but the number of subscribers that F-Secure was supporting at AT&T today? And maybe how their pricing model might have worked. And I guess as you had that discussion with F-Secure, any commitments from AT&T with regard to the cloud? Any sense that they may get more aggressive than they've been in the past? That's the first question. Stephen G. Waldis: Okay, yes. So we didn't break out any of the specifics on any of the customers through F-Secure, obviously, for reasons, working with them. But I can tell you the revenue was pretty evenly distributed. In fact, like I know AT&T by far wasn't their largest customer, certainly a big customer, but it wasn't anywhere near. They were certainly sub-$5 million for example in terms of revenues for the year, to give you kind of a way to think about it. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then as you talked with F-Secure and presumably AT&T about this transaction, any commitments at all from AT&T with respect to how they're thinking about the cloud business going forward? Or is that still too early? Stephen G. Waldis: Well, I think it's a little bit early in the process, but I would safely say that we have a really good, strong, lasting relationship, as you know, for years with AT&T. And we believe that in the conversations that we've had with them, as well as conversations with F-Secure during the transaction, that the opportunity really to take this to the next level presents itself. And so we obviously are very early on in the acquisition, it hasn't even officially closed yet. But our expectation and dialogue with AT&T is obviously at a very senior level. And I think they understand the success that we've had in the cloud. I can tell you that they've expressed an interest of really getting more focused in and around what that can do for their subscribers. And so all those elements feel right to us, but to be completely honest here, Will, it's -- we're very early in that process. William V. Power - Robert W. Baird & Co. Incorporated, Research Division: Okay, and then the second question is, the comments around the Verizon Wireless expansion opportunity. Any changes in pricing as part of that? Either on the current contract or how you think about the opportunity moving forward? I mean obviously, you talked about revenue, so it would seem as if whatever volume you're expecting will roll over on the pricing. But I guess if you could speak to any pricing changes you expect on the current contract. And then how do we think about the future CapEx requirements around that? I mean, as that ramps should we expect an acceleration of CapEx as you get into '15 and '16? Any comfort you can provide there. Stephen G. Waldis: Yes. So obviously we can’t get into the specifics, but there was no pricing changes. It was all contemplation of new services and new offers that will be coming out, that will become pretty obvious in the years up. On a go-forward basis, the CapEx requirements are going to be -- continue to drop. And that will become more visible to you guys probably in the next month or 2 as we talk about some things we're working on over the course of the year. But our expectation, and as we look at our long-term operating model, is that the CapEx requirements, especially as it relates to this account, will drop off starting at the end of this year going forward.

Thank you. I would now like to turn the call back to Mr. Steve Waldis for closing remarks. Stephen G. Waldis: Great. And thank you, everybody, for joining us on our call today. And we look forward to speaking with all of you soon. Thank you very much.

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