Business Overview
Manhattan Associates, Inc. (MANH) is a leading provider of supply chain commerce solutions that help organizations optimize the effectiveness, efficiency, and strategic advantages of their supply chains. With a focus on innovation and customer success, the company has established itself as a pioneer in the industry, delivering cutting-edge technology and unparalleled expertise to its global client base.
Founded in 1990 in Manhattan Beach, California, and later incorporated in Georgia in 1998, Manhattan Associates has grown to become a prominent force in the supply chain management and omnichannel retail software market. The company develops, sells, deploys, services, and maintains software solutions designed to manage supply chains, inventory, and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers, and other organizations. Since its inception, Manhattan Associates has expanded its global presence, establishing offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States. The company also maintains representatives in Mexico and has forged reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.
Over the years, Manhattan Associates has faced and overcome challenges typical of a technology company, including the need to continually advance its products to keep pace with changing industry standards and customer demands. The company has addressed this through significant investments in research and development, which have allowed it to maintain its position as a leader in supply chain and omnichannel software solutions. Another significant challenge Manhattan Associates has successfully navigated is the shift towards cloud-based software delivery. The company has adapted its solutions to be offered as subscription-based software-as-a-service, which has required changes to its business model and operations. Throughout this transition, Manhattan Associates has worked to ensure a seamless experience for its customers while continuing to innovate and meet their evolving needs.
Over the years, Manhattan Associates has made significant investments in research and development, pouring nearly $1 billion into its supply chain planning, execution, and omnichannel solutions. This unwavering commitment to innovation has allowed the company to maintain its position as an industry leader, consistently delivering new and enhanced capabilities to its customers. In 2024, the company spent $137.7 million on R&D, up from $126.8 million in 2023 and $111.9 million in 2022.
Financials
In 2024, Manhattan Associates reached a significant milestone, surpassing $1 billion in total revenue. This achievement is a testament to the company's ability to adapt to the rapidly changing landscape of supply chain and retail technology. The company's revenue mix has evolved, with cloud subscriptions now accounting for 32% of total revenue in 2024, up from 27% in 2023 and 23% in 2022.
Manhattan's financial performance has been impressive, with the company reporting record results in 2024. Total revenue increased by 12% year-over-year to $1.04 billion, while adjusted earnings per share grew by 26% to $4.72. The company's strong cash flow generation, with $295 million in operating cash flow and a 27.5% free cash flow margin, has allowed it to maintain a solid financial position, with $266 million in cash and no debt as of the end of 2024.
For the most recent fiscal year, Manhattan Associates reported annual net income of $218.36 million and annual free cash flow of $286.33 million. In the most recent quarter, the company achieved revenue of $255.80 million, representing a 7% year-over-year increase, and net income of $48.02 million. The revenue growth was primarily driven by a 26% increase in cloud subscriptions revenue.
Manhattan Associates' performance varies across its geographic segments. The Americas segment generated $802.49 million in revenue, while the EMEA (Europe, Middle East, and Africa) segment contributed $190.52 million, and the APAC (Asia-Pacific) segment added $49.34 million.
Liquidity
Manhattan Associates maintains a strong financial position with a debt-to-equity ratio of 0.16. As of the end of 2024, the company held $266.23 million in cash and cash equivalents with no outstanding debt. The company does not have any credit facilities. Its current ratio and quick ratio both stand at 1.26, indicating a healthy short-term liquidity position.
Products and Solutions
Manhattan Associates offers a comprehensive suite of software solutions designed to help organizations optimize their supply chain, inventory, and omnichannel operations. The company's product portfolio is organized into three main segments: Supply Chain Execution, Omnichannel Commerce, and Supply Chain Planning.
The Supply Chain Execution segment includes Manhattan's Warehouse Management Solutions (WMS) and Transportation Management Solutions (TMS). WMS is widely regarded as an industry-leading system that helps organizations optimize productivity and throughput in their distribution centers and warehouses. The TMS offerings provide shippers and carriers with comprehensive tools to manage their transportation operations, including freight procurement, network modeling, and automated procurement-to-pay processes.
The Omnichannel Commerce segment addresses the growing demand for seamless, unified commerce experiences. It includes solutions for Order Management, Store Inventory Fulfillment, Call Center, Point of Sale (POS), and Customer Engagement. These applications provide retailers and wholesalers with the capabilities to effectively manage inventory availability, optimize order fulfillment, empower store associates, and deliver an exceptional customer experience across all sales channels.
Manhattan's Supply Chain Planning solutions help distributors and retailers forecast demand, determine inventory needs, and develop profitable inventory buying plans. These advanced analytical tools, powered by sophisticated algorithms and data science, enable customers to maximize customer service levels while minimizing inventory investment.
One of the key drivers of Manhattan's success has been its ability to assist customers in their digital transformation journeys. The company's cloud-native solutions, delivered through its Manhattan Active platform, have been enthusiastically embraced by clients, with cloud subscriptions revenue growing by 32% in 2024. This transition to the cloud has not only improved the scalability and accessibility of Manhattan's offerings but has also enabled the company to provide more frequent updates and enhancements, ensuring its customers remain at the forefront of industry trends.
Industry Recognition
Manhattan's strong performance has not gone unnoticed by industry analysts. In 2024, the company was recognized as a leader in the Forrester Wave for both Omnichannel Order Management and Point-of-Sale solutions, underscoring its ability to deliver innovative and effective solutions to its clients.
Challenges and Outlook
Despite the overall economic headwinds, Manhattan has remained resilient, with the company's services revenue growing by 8% in 2024. However, the company has noted some near-term challenges in its services business, as certain customers have reduced their planned implementation and rollout activities for 2025. This has prompted Manhattan to adjust its 2025 guidance, with the company now expecting services revenue to be in the range of $494 million to $500 million, down from its previous expectations.
Manhattan Associates faces competition from various sources, including corporate IT departments, ERP vendors, supply chain execution and planning vendors, POS vendors, and smaller independent companies. However, the company believes its domain expertise, platform-based solution approach, track record of innovation, strong customer relationships, and ability to execute give it a competitive advantage in the market.
The company's international business is subject to risks typical of an international business, including differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. In 2024, Manhattan recognized foreign exchange losses of $1 million, compared to losses of $1.5 million in 2023 and gains of $4.7 million in 2022.
Future Growth Prospects
Looking ahead, Manhattan remains optimistic about its long-term growth prospects. For 2025, the company has provided guidance targeting RPO (Remaining Performance Obligation) of $2.11 billion to $2.15 billion, representing 20% growth. Total revenue is expected to be in the range of $1.06 billion to $1.07 billion, including cloud revenue of $405 million to $410 million (21% growth), services revenue of $494 million to $500 million, maintenance revenue of $118 million to $120 million, and license revenue of $13.5 million.
The company is targeting 20%+ cloud subscription revenue growth over the next several years, with cloud subscriptions expected to surpass services revenue by the end of 2026. This shift towards a more subscription-based model not only provides the company with a more predictable revenue stream but also aligns with the broader industry trend of enterprises seeking cloud-based, scalable solutions.
For the first quarter of 2025, Manhattan expects total revenue of $256 million to $258 million, with adjusted EPS of $1.01 to $1.03 and GAAP EPS of $0.71 to $0.73. The company anticipates an adjusted operating margin of 33% to 33.5% for the full year 2025, with adjusted EPS of $4.45 to $4.55 and GAAP EPS of $3.05 to $3.15.
Furthermore, Manhattan's commitment to innovation remains unwavering. The company's recent launch of its Manhattan Active Supply Chain Planning solution, which integrates planning and execution capabilities on a unified platform, has been well-received by the market. This and other new product introductions are expected to further expand the company's total addressable market and drive future growth.
Conclusion
In conclusion, Manhattan Associates has established itself as a premier provider of supply chain and omnichannel solutions, delivering innovative technology and exceptional customer service to its global client base. Despite the near-term headwinds faced by the company's services business, Manhattan's strong financial position, robust pipeline, and ongoing investment in product development position it well for long-term success. As the industry continues to evolve, Manhattan's focus on staying at the forefront of supply chain technology trends will likely maintain its status as a leader in the market.