Manhattan Associates, Inc. (NASDAQ:MANH) is a global technology leader in supply chain and omnichannel commerce solutions. The company's software, platform technology, and unmatched experience help drive both top-line growth and bottom-line profitability for its customers. Manhattan Associates designs, builds, and delivers leading-edge cloud and on-premises solutions, enabling its clients to reap the rewards of the omnichannel marketplace.
Business Overview
Manhattan Associates was founded in 1990 and is headquartered in Atlanta, Georgia. The company's principal business is the development, sale, deployment, service, and maintenance of software solutions designed to manage unified omnichannel commerce, digital supply chain, inventory, and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers, and other organizations. Manhattan Associates' customers include many of the world's most premier and profitable brands.The company has five primary revenue streams: cloud subscriptions, software licenses, customer support services and software enhancements (maintenance), professional services, and hardware sales. Manhattan Associates' solutions address the needs of customers in various vertical markets, including retail, consumer goods, food and grocery, logistics service providers, industrial and wholesale, high technology and electronics, life sciences, and government.
Financials
Manhattan Associates has delivered impressive financial results, showcasing the strength and resilience of its business model. In the fiscal year 2023, the company reported annual revenue of $928.7 million, up from $852.1 million in the prior year. Net income for the year was $176.6 million, compared to $159.2 million in the previous year. The company's annual operating cash flow was $246.2 million, and its free cash flow reached $241.5 million.In the second quarter of 2024, Manhattan Associates continued its strong performance. The company reported total revenue of $265.3 million, a 15% increase compared to the same period in the prior year. Cloud subscription revenue grew 35% year-over-year to $82.4 million, while services revenue increased 10% to $136.8 million. The company's GAAP diluted earnings per share for the quarter was $0.85, up from $0.63 in the second quarter of 2023.
Geographic Breakdown
Manhattan Associates generates revenue from three geographic reportable segments: the Americas, Europe, the Middle East, and Africa (EMEA), and Asia-Pacific (APAC). In the second quarter of 2024, the Americas segment accounted for 77.6% of total revenue, EMEA contributed 17.7%, and APAC made up the remaining 4.7%. The company's international revenue, which includes all revenue derived from sales to customers outside the United States, was approximately 33% of total revenue in the second quarter of 2024.Revenue Breakdown and Trends
Manhattan Associates' revenue is primarily driven by cloud subscriptions, services, and maintenance. In the second quarter of 2024, cloud subscription revenue was $82.4 million, or 31% of total revenue, representing a 35% year-over-year increase. The company's services revenue, which includes professional services and reimbursements from customers for out-of-pocket expenses, was $136.8 million, or 52% of total revenue, up 10% compared to the same period in the prior year. Maintenance revenue, which includes customer support services and software enhancements, was $35.3 million, or 13% of total revenue, a 2% decrease year-over-year.The strong growth in cloud subscription revenue reflects the increasing demand for Manhattan Associates' cloud-based solutions, as customers continue to migrate from on-premises to cloud-based offerings. The company's services revenue growth is driven by the increase in cloud subscription sales, as cloud implementations typically require more professional services. The decline in maintenance revenue is due to the ongoing transition of customers from perpetual software licenses to cloud subscriptions.
Outlook
For the full year 2024, Manhattan Associates expects total revenue to be in the range of $1.036 billion to $1.044 billion, with a midpoint of $1.04 billion. This represents 17% growth, excluding license and maintenance revenue, and 12% growth overall. The company is also raising its adjusted operating margin guidance to a midpoint of 32.1%, up from the prior midpoint of 29.8%. Additionally, Manhattan Associates is increasing its adjusted earnings per share guidance to a midpoint of $4.26, up from the previous midpoint of $3.90.The company's strong performance and optimistic outlook are driven by robust demand for its cloud-based solutions, continued investment in innovation, and the successful execution of its global teams. Manhattan Associates remains cautiously optimistic about the global economic environment but is confident in its ability to capitalize on the numerous growth opportunities ahead.
Liquidity
Manhattan Associates' financial ratios demonstrate the company's strong financial position and operational efficiency. As of June 30, 2024, the company had a current ratio of 1.15, indicating a healthy ability to meet its short-term obligations. The company's quick ratio, which excludes inventory, was also 1.15, further highlighting its liquidity.Manhattan Associates' cash and cash equivalents totaled $202.7 million as of June 30, 2024, with no debt on its balance sheet. The company's strong cash flow generation is evident, with operating cash flow of $246.2 million and free cash flow of $241.5 million in the fiscal year 2023. This robust cash flow position provides Manhattan Associates with the financial flexibility to invest in product development, expand its global reach, and return capital to shareholders through share repurchases.