Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Manhattan Associates Reports Record Revenue and Earnings By: Manhattan Associates Inc. via Business Wire October 24, 2023 at 16:05 PM EDT RPO Bookings Increase 37% over Prior Year on Strong Demand Company Raises 2023 Full Year Guidance Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $238.4 million for the third quarter ended September 30, 2023. GAAP diluted earnings per share for Q3 2023 was $0.79 compared to $0.47 in Q3 2022. Non-GAAP adjusted diluted earnings per share for Q3 2023 was $1.05 compared to $0.66 in Q3 2022. “We are pleased with our quarterly and year-to-date results. Solid demand for our industry leading cloud solutions and services drove record results on the top and bottom lines,” said Manhattan Associates president and CEO Eddie Capel. “Manhattan’s business fundamentals are strong, and our commitment to delivering innovation to our customers across mission-critical commerce and supply chain systems remains resolute. While we remain appropriately cautious and anticipate continued volatility, we are very optimistic about our expanding market opportunities. We are raising our 2023 outlook across all metrics and are providing preliminary solid 2024 parameters,” Mr. Capel concluded. THIRD QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.4 million for Q3 2023, compared to $198.1 million for Q3 2022. Cloud subscription revenue was $65.0 million for Q3 2023, compared to $45.3 million for Q3 2022. License revenue was $3.9 million for Q3 2023, compared to $6.4 million for Q3 2022. Services revenue was $128.0 million for Q3 2023, compared to $103.4 million for Q3 2022. GAAP diluted earnings per share was $0.79 for Q3 2023, compared to $0.47 for Q3 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.05 for Q3 2023, compared to $0.66 for Q3 2022. GAAP operating income was $53.4 million for Q3 2023, compared to $36.8 million for Q3 2022. Adjusted operating income, a non-GAAP measure, was $72.5 million for Q3 2023, compared to $51.3 million for Q3 2022. Cash flow from operations was $58.6 million for Q3 2023, compared to $39.9 million for Q3 2022. Days Sales Outstanding was 71 days at September 30, 2023, compared to 70 days at June 30, 2023. Cash totaled $182.3 million at September 30, 2023, compared to $153.3 million at June 30, 2023. During the three months ended September 30, 2023, the Company repurchased 128,133 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $25.1 million. In October 2023, our Board of Directors approved replenishing our remaining share repurchase authority to an aggregate of $75.0 million of our common stock. NINE MONTH 2023 FINANCIAL SUMMARY: Consolidated total revenue for the nine months ended September 30, 2023, was $690.5 million, compared to $569.0 million for the nine months ended September 30, 2022. Cloud subscription revenue was $183.2 million for the nine months ended September 30, 2023, compared to $124.8 million for the nine months ended September 30, 2022. License revenue was $13.0 million for the nine months ended September 30, 2023, compared to $19.9 million for the nine months ended September 30, 2022. Services revenue was $368.7 million for the nine months ended September 30, 2023, compared to $294.3 million for the nine months ended September 30, 2022. GAAP diluted earnings per share for the nine months ended September 30, 2023, was $2.05, compared to $1.43 for the nine months ended September 30, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $2.72 for the nine months ended September 30, 2023, compared to $1.95 for the nine months ended September 30, 2022. GAAP operating income was $151.0 million for the nine months ended September 30, 2023, compared to $108.0 million for the nine months ended September 30, 2022. Adjusted operating income, a non-GAAP measure, was $204.6 million for the nine months ended September 30, 2023, compared to $152.2 million for the nine months ended September 30, 2022. Cash flow from operations was $157.9 million for the nine months ended September 30, 2023, compared to $124.4 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company repurchased 1,024,328 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $166.0 million. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $912 $916 19% 19% Operating margin: GAAP operating margin - current guidance 21.0% 21.3% Equity-based compensation 7.9% 7.8% Adjusted operating margin(1) - current guidance 28.9% 29.1% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.59 $2.61 28% 29% Equity-based compensation, net of tax 0.98 0.98 Excess tax benefit on stock vesting(2) (0.06) (0.06) Adjusted EPS(1) - current guidance $3.51 $3.53 27% 28% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and related income tax effects. (2) Excess tax benefit on stock vesting occurred primarily in the first quarter of 2023. Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Manhattan Associates will make this earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its third quarter 2023 financial results will be held today, October 24, 2023, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software. The Internet webcast will be available until Manhattan Associates’ fourth quarter 2023 earnings release. GAAP VERSUS NON-GAAP PRESENTATION Manhattan Associates provides adjusted operating income and margin, adjusted income tax provision, adjusted net income, and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and nine months ended September 30, 2023. Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation – net of income tax effects. They also exclude the tax benefits or deficiencies of vested stock awards caused by differences in the amount deductible for tax purposes from the compensation expense recorded for financial reporting purposes. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release. ABOUT MANHATTAN ASSOCIATES Manhattan Associates is a global technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. Manhattan Associates designs, builds and delivers leading edge cloud solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com. This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2023 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: economic conditions, including inflation; disruption in the retail sector; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; disruption in the retail sector; risks related to our products’ technology and customer implementations; global instability, including the wars in Ukraine and the Middle East; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Cloud subscriptions $65,033 $45,267 $183,196 $124,767 Software license 3,870 6,386 12,967 19,869 Maintenance 35,296 35,820 106,772 107,115 Services 127,965 103,425 368,744 294,284 Hardware 6,277 7,203 18,791 22,946 Total revenue 238,441 198,101 690,470 568,981 Costs and expenses: Cost of cloud subscriptions, maintenance and services 111,142 95,691 322,914 266,482 Cost of software license 297 467 967 1,749 Research and development 33,093 29,375 95,487 84,754 Sales and marketing 17,650 15,742 54,278 47,881 General and administrative 21,371 18,392 61,561 54,963 Depreciation and amortization 1,440 1,664 4,247 5,157 Total costs and expenses 184,993 161,331 539,454 460,986 Operating income 53,448 36,770 151,016 107,995 Other income, net 1,739 1,612 2,923 4,593 Income before income taxes 55,187 38,382 153,939 112,588 Income tax provision 5,766 8,708 26,107 21,497 Net income $49,421 $29,674 $127,832 $91,091 Basic earnings per share $0.80 $0.47 $2.07 $1.45 Diluted earnings per share $0.79 $0.47 $2.05 $1.43 Weighted average number of shares: Basic 61,639 62,592 61,902 62,917 Diluted 62,310 63,165 62,501 63,483 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating income $53,448 $36,770 $151,016 $107,995 Equity-based compensation (a) 19,030 14,533 53,598 44,209 Adjusted operating income (Non-GAAP) $72,478 $51,303 $204,614 $152,204 Income tax provision $5,766 $8,708 $26,107 $21,497 Equity-based compensation (a) 3,030 2,265 8,067 7,013 Tax benefit of stock awards vested (b) 218 3 3,454 4,386 Adjusted income tax provision (Non-GAAP) $9,014 $10,976 $37,628 $32,896 Net income $49,421 $29,674 $127,832 $91,091 Equity-based compensation (a) 16,000 12,268 45,531 37,196 Tax benefit of stock awards vested (b) (218) (3) (3,454) (4,386) Adjusted net income (Non-GAAP) $65,203 $41,939 $169,909 $123,901 Diluted EPS $0.79 $0.47 $2.05 $1.43 Equity-based compensation (a) 0.26 0.19 0.73 0.59 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.05 $0.66 $2.72 $1.95 Fully diluted shares 62,310 63,165 62,501 63,483 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly because of Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of services $7,643 $5,308 $21,337 $16,267 Research and development 4,141 3,126 11,711 9,740 Sales and marketing 1,878 1,508 5,333 4,460 General and administrative 5,368 4,591 15,217 13,742 Total equity-based compensation $19,030 $14,533 $53,598 $44,209 (b) Adjustments represent the excess tax benefits and tax deficiencies of the equity awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible on our tax return for an equity award is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we exclude equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also exclude the related tax benefit (expense) generated upon their vesting. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except share and per share data) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 182,312 $ 225,463 Accounts receivable, net of allowance of $5,367 and $6,009, at September 30, 2023 and December 31, 2022, respectively 183,377 166,767 Prepaid expenses and other current assets 27,170 23,145 Total current assets 392,859 415,375 Property and equipment, net 11,266 12,803 Operating lease right-of-use assets 19,976 17,794 Goodwill, net 62,228 62,230 Deferred income taxes 55,523 37,206 Other assets 31,143 24,770 Total assets $ 572,995 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,253 $ 25,701 Accrued compensation and benefits 67,187 54,469 Accrued and other liabilities 26,429 24,569 Deferred revenue 213,440 208,807 Income taxes payable 517 2,049 Total current liabilities 332,826 315,595 Operating lease liabilities, long-term 16,237 14,065 Other non-current liabilities 13,827 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2023 and 2022 - - Common stock, $0.01 par value; 200,000,000 shares authorized; 61,562,480 and 62,191,570 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 616 621 Retained earnings 238,315 253,711 Accumulated other comprehensive loss (28,826 ) (27,532 ) Total shareholders' equity 210,105 226,800 Total liabilities and shareholders' equity $ 572,995 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 127,832 $ 91,091 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,247 5,157 Equity-based compensation 53,598 44,209 Loss (gain) on disposal of equipment 42 (20 ) Deferred income taxes (18,359 ) (20,736 ) Unrealized foreign currency loss (gain) 922 (2,933 ) Changes in operating assets and liabilities: Accounts receivable, net (17,168 ) (23,384 ) Other assets (7,747 ) (9,190 ) Accounts payable, accrued and other liabilities 13,477 20,743 Income taxes (4,347 ) (730 ) Deferred revenue 5,362 20,195 Net cash provided by operating activities 157,859 124,402 Investing activities: Purchase of property and equipment (2,761 ) (4,152 ) Net cash used in investing activities (2,761 ) (4,152 ) Financing activities: Repurchase of common stock (195,716 ) (179,029 ) Net cash used in financing activities (195,716 ) (179,029 ) Foreign currency impact on cash (2,533 ) (7,872 ) Net change in cash and cash equivalents (43,151 ) (66,651 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 182,312 $ 197,055 MANHATTAN ASSOCIATES, INC. SUPPLEMENTAL INFORMATION 1. GAAP and adjusted earnings per share by quarter are as follows: 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $2.05 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.73 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) - - (0.06) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 $0.88 $1.05 $2.72 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,501 2. Revenues and operating income by reportable segment are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $536,531 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 121,764 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 32,175 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $690,470 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $96,628 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $151,016 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $150,226 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $204,614 3. Impact of Currency Fluctuation The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) $104 $2,755 $(225) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 (3,716) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 3,491 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (939) $486 $1,350 $829 $583 $3,248 $(278) $721 $2,109 $2,552 Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $3,582 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 498 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $4,080 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $3,895 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (939) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (33) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $2,923 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $2,761 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 381 128 1,024 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 4 8 220 Total shares purchased 586 421 355 208 1,570 723 385 136 1,244 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 $66,769 $25,072 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock units 27,143 528 1,242 197 29,110 27,511 658 1,529 29,698 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $195,716 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Approximately 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Maintenance contracts are typically one year and not included in the RPO. Our RPO as of the end of each period appears below (in thousands): March 31, 2022 June 30, 2022 September 30, 2022 December 30, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 8. The 2017 U.S. Tax Cuts and Jobs Act eliminated the expensing of research and development costs as incurred for tax purposes beginning in 2022. This law changes the timing of cash tax payments, increasing near-term taxable income and payments, but normalizing over time as these expenses are amortized. Our income tax payments increased by approximately $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation may be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. View source version on businesswire.com: https://www.businesswire.com/news/home/20231024452925/en/Contacts Michael Bauer Senior Director, Investor Relations Manhattan Associates, Inc. 678-597-7538 mbauer@manh.com Rick Fernandez Director, Corporate Communications Manhattan Associates, Inc. 678-597-6988 rfernandez@manh.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Manhattan Associates Reports Record Revenue and Earnings By: Manhattan Associates Inc. via Business Wire October 24, 2023 at 16:05 PM EDT RPO Bookings Increase 37% over Prior Year on Strong Demand Company Raises 2023 Full Year Guidance Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $238.4 million for the third quarter ended September 30, 2023. GAAP diluted earnings per share for Q3 2023 was $0.79 compared to $0.47 in Q3 2022. Non-GAAP adjusted diluted earnings per share for Q3 2023 was $1.05 compared to $0.66 in Q3 2022. “We are pleased with our quarterly and year-to-date results. Solid demand for our industry leading cloud solutions and services drove record results on the top and bottom lines,” said Manhattan Associates president and CEO Eddie Capel. “Manhattan’s business fundamentals are strong, and our commitment to delivering innovation to our customers across mission-critical commerce and supply chain systems remains resolute. While we remain appropriately cautious and anticipate continued volatility, we are very optimistic about our expanding market opportunities. We are raising our 2023 outlook across all metrics and are providing preliminary solid 2024 parameters,” Mr. Capel concluded. THIRD QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.4 million for Q3 2023, compared to $198.1 million for Q3 2022. Cloud subscription revenue was $65.0 million for Q3 2023, compared to $45.3 million for Q3 2022. License revenue was $3.9 million for Q3 2023, compared to $6.4 million for Q3 2022. Services revenue was $128.0 million for Q3 2023, compared to $103.4 million for Q3 2022. GAAP diluted earnings per share was $0.79 for Q3 2023, compared to $0.47 for Q3 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.05 for Q3 2023, compared to $0.66 for Q3 2022. GAAP operating income was $53.4 million for Q3 2023, compared to $36.8 million for Q3 2022. Adjusted operating income, a non-GAAP measure, was $72.5 million for Q3 2023, compared to $51.3 million for Q3 2022. Cash flow from operations was $58.6 million for Q3 2023, compared to $39.9 million for Q3 2022. Days Sales Outstanding was 71 days at September 30, 2023, compared to 70 days at June 30, 2023. Cash totaled $182.3 million at September 30, 2023, compared to $153.3 million at June 30, 2023. During the three months ended September 30, 2023, the Company repurchased 128,133 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $25.1 million. In October 2023, our Board of Directors approved replenishing our remaining share repurchase authority to an aggregate of $75.0 million of our common stock. NINE MONTH 2023 FINANCIAL SUMMARY: Consolidated total revenue for the nine months ended September 30, 2023, was $690.5 million, compared to $569.0 million for the nine months ended September 30, 2022. Cloud subscription revenue was $183.2 million for the nine months ended September 30, 2023, compared to $124.8 million for the nine months ended September 30, 2022. License revenue was $13.0 million for the nine months ended September 30, 2023, compared to $19.9 million for the nine months ended September 30, 2022. Services revenue was $368.7 million for the nine months ended September 30, 2023, compared to $294.3 million for the nine months ended September 30, 2022. GAAP diluted earnings per share for the nine months ended September 30, 2023, was $2.05, compared to $1.43 for the nine months ended September 30, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $2.72 for the nine months ended September 30, 2023, compared to $1.95 for the nine months ended September 30, 2022. GAAP operating income was $151.0 million for the nine months ended September 30, 2023, compared to $108.0 million for the nine months ended September 30, 2022. Adjusted operating income, a non-GAAP measure, was $204.6 million for the nine months ended September 30, 2023, compared to $152.2 million for the nine months ended September 30, 2022. Cash flow from operations was $157.9 million for the nine months ended September 30, 2023, compared to $124.4 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company repurchased 1,024,328 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $166.0 million. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $912 $916 19% 19% Operating margin: GAAP operating margin - current guidance 21.0% 21.3% Equity-based compensation 7.9% 7.8% Adjusted operating margin(1) - current guidance 28.9% 29.1% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.59 $2.61 28% 29% Equity-based compensation, net of tax 0.98 0.98 Excess tax benefit on stock vesting(2) (0.06) (0.06) Adjusted EPS(1) - current guidance $3.51 $3.53 27% 28% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and related income tax effects. (2) Excess tax benefit on stock vesting occurred primarily in the first quarter of 2023. Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Manhattan Associates will make this earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its third quarter 2023 financial results will be held today, October 24, 2023, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software. The Internet webcast will be available until Manhattan Associates’ fourth quarter 2023 earnings release. GAAP VERSUS NON-GAAP PRESENTATION Manhattan Associates provides adjusted operating income and margin, adjusted income tax provision, adjusted net income, and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and nine months ended September 30, 2023. Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation – net of income tax effects. They also exclude the tax benefits or deficiencies of vested stock awards caused by differences in the amount deductible for tax purposes from the compensation expense recorded for financial reporting purposes. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release. ABOUT MANHATTAN ASSOCIATES Manhattan Associates is a global technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. Manhattan Associates designs, builds and delivers leading edge cloud solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com. This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2023 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: economic conditions, including inflation; disruption in the retail sector; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; disruption in the retail sector; risks related to our products’ technology and customer implementations; global instability, including the wars in Ukraine and the Middle East; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Cloud subscriptions $65,033 $45,267 $183,196 $124,767 Software license 3,870 6,386 12,967 19,869 Maintenance 35,296 35,820 106,772 107,115 Services 127,965 103,425 368,744 294,284 Hardware 6,277 7,203 18,791 22,946 Total revenue 238,441 198,101 690,470 568,981 Costs and expenses: Cost of cloud subscriptions, maintenance and services 111,142 95,691 322,914 266,482 Cost of software license 297 467 967 1,749 Research and development 33,093 29,375 95,487 84,754 Sales and marketing 17,650 15,742 54,278 47,881 General and administrative 21,371 18,392 61,561 54,963 Depreciation and amortization 1,440 1,664 4,247 5,157 Total costs and expenses 184,993 161,331 539,454 460,986 Operating income 53,448 36,770 151,016 107,995 Other income, net 1,739 1,612 2,923 4,593 Income before income taxes 55,187 38,382 153,939 112,588 Income tax provision 5,766 8,708 26,107 21,497 Net income $49,421 $29,674 $127,832 $91,091 Basic earnings per share $0.80 $0.47 $2.07 $1.45 Diluted earnings per share $0.79 $0.47 $2.05 $1.43 Weighted average number of shares: Basic 61,639 62,592 61,902 62,917 Diluted 62,310 63,165 62,501 63,483 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating income $53,448 $36,770 $151,016 $107,995 Equity-based compensation (a) 19,030 14,533 53,598 44,209 Adjusted operating income (Non-GAAP) $72,478 $51,303 $204,614 $152,204 Income tax provision $5,766 $8,708 $26,107 $21,497 Equity-based compensation (a) 3,030 2,265 8,067 7,013 Tax benefit of stock awards vested (b) 218 3 3,454 4,386 Adjusted income tax provision (Non-GAAP) $9,014 $10,976 $37,628 $32,896 Net income $49,421 $29,674 $127,832 $91,091 Equity-based compensation (a) 16,000 12,268 45,531 37,196 Tax benefit of stock awards vested (b) (218) (3) (3,454) (4,386) Adjusted net income (Non-GAAP) $65,203 $41,939 $169,909 $123,901 Diluted EPS $0.79 $0.47 $2.05 $1.43 Equity-based compensation (a) 0.26 0.19 0.73 0.59 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.05 $0.66 $2.72 $1.95 Fully diluted shares 62,310 63,165 62,501 63,483 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly because of Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of services $7,643 $5,308 $21,337 $16,267 Research and development 4,141 3,126 11,711 9,740 Sales and marketing 1,878 1,508 5,333 4,460 General and administrative 5,368 4,591 15,217 13,742 Total equity-based compensation $19,030 $14,533 $53,598 $44,209 (b) Adjustments represent the excess tax benefits and tax deficiencies of the equity awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible on our tax return for an equity award is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we exclude equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also exclude the related tax benefit (expense) generated upon their vesting. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except share and per share data) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 182,312 $ 225,463 Accounts receivable, net of allowance of $5,367 and $6,009, at September 30, 2023 and December 31, 2022, respectively 183,377 166,767 Prepaid expenses and other current assets 27,170 23,145 Total current assets 392,859 415,375 Property and equipment, net 11,266 12,803 Operating lease right-of-use assets 19,976 17,794 Goodwill, net 62,228 62,230 Deferred income taxes 55,523 37,206 Other assets 31,143 24,770 Total assets $ 572,995 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,253 $ 25,701 Accrued compensation and benefits 67,187 54,469 Accrued and other liabilities 26,429 24,569 Deferred revenue 213,440 208,807 Income taxes payable 517 2,049 Total current liabilities 332,826 315,595 Operating lease liabilities, long-term 16,237 14,065 Other non-current liabilities 13,827 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2023 and 2022 - - Common stock, $0.01 par value; 200,000,000 shares authorized; 61,562,480 and 62,191,570 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 616 621 Retained earnings 238,315 253,711 Accumulated other comprehensive loss (28,826 ) (27,532 ) Total shareholders' equity 210,105 226,800 Total liabilities and shareholders' equity $ 572,995 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 127,832 $ 91,091 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,247 5,157 Equity-based compensation 53,598 44,209 Loss (gain) on disposal of equipment 42 (20 ) Deferred income taxes (18,359 ) (20,736 ) Unrealized foreign currency loss (gain) 922 (2,933 ) Changes in operating assets and liabilities: Accounts receivable, net (17,168 ) (23,384 ) Other assets (7,747 ) (9,190 ) Accounts payable, accrued and other liabilities 13,477 20,743 Income taxes (4,347 ) (730 ) Deferred revenue 5,362 20,195 Net cash provided by operating activities 157,859 124,402 Investing activities: Purchase of property and equipment (2,761 ) (4,152 ) Net cash used in investing activities (2,761 ) (4,152 ) Financing activities: Repurchase of common stock (195,716 ) (179,029 ) Net cash used in financing activities (195,716 ) (179,029 ) Foreign currency impact on cash (2,533 ) (7,872 ) Net change in cash and cash equivalents (43,151 ) (66,651 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 182,312 $ 197,055 MANHATTAN ASSOCIATES, INC. SUPPLEMENTAL INFORMATION 1. GAAP and adjusted earnings per share by quarter are as follows: 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $2.05 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.73 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) - - (0.06) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 $0.88 $1.05 $2.72 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,501 2. Revenues and operating income by reportable segment are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $536,531 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 121,764 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 32,175 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $690,470 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $96,628 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $151,016 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $150,226 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $204,614 3. Impact of Currency Fluctuation The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) $104 $2,755 $(225) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 (3,716) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 3,491 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (939) $486 $1,350 $829 $583 $3,248 $(278) $721 $2,109 $2,552 Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $3,582 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 498 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $4,080 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $3,895 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (939) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (33) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $2,923 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $2,761 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 381 128 1,024 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 4 8 220 Total shares purchased 586 421 355 208 1,570 723 385 136 1,244 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 $66,769 $25,072 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock units 27,143 528 1,242 197 29,110 27,511 658 1,529 29,698 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $195,716 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Approximately 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Maintenance contracts are typically one year and not included in the RPO. Our RPO as of the end of each period appears below (in thousands): March 31, 2022 June 30, 2022 September 30, 2022 December 30, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 8. The 2017 U.S. Tax Cuts and Jobs Act eliminated the expensing of research and development costs as incurred for tax purposes beginning in 2022. This law changes the timing of cash tax payments, increasing near-term taxable income and payments, but normalizing over time as these expenses are amortized. Our income tax payments increased by approximately $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation may be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. View source version on businesswire.com: https://www.businesswire.com/news/home/20231024452925/en/Contacts Michael Bauer Senior Director, Investor Relations Manhattan Associates, Inc. 678-597-7538 mbauer@manh.com Rick Fernandez Director, Corporate Communications Manhattan Associates, Inc. 678-597-6988 rfernandez@manh.com
Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $238.4 million for the third quarter ended September 30, 2023. GAAP diluted earnings per share for Q3 2023 was $0.79 compared to $0.47 in Q3 2022. Non-GAAP adjusted diluted earnings per share for Q3 2023 was $1.05 compared to $0.66 in Q3 2022. “We are pleased with our quarterly and year-to-date results. Solid demand for our industry leading cloud solutions and services drove record results on the top and bottom lines,” said Manhattan Associates president and CEO Eddie Capel. “Manhattan’s business fundamentals are strong, and our commitment to delivering innovation to our customers across mission-critical commerce and supply chain systems remains resolute. While we remain appropriately cautious and anticipate continued volatility, we are very optimistic about our expanding market opportunities. We are raising our 2023 outlook across all metrics and are providing preliminary solid 2024 parameters,” Mr. Capel concluded. THIRD QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.4 million for Q3 2023, compared to $198.1 million for Q3 2022. Cloud subscription revenue was $65.0 million for Q3 2023, compared to $45.3 million for Q3 2022. License revenue was $3.9 million for Q3 2023, compared to $6.4 million for Q3 2022. Services revenue was $128.0 million for Q3 2023, compared to $103.4 million for Q3 2022. GAAP diluted earnings per share was $0.79 for Q3 2023, compared to $0.47 for Q3 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.05 for Q3 2023, compared to $0.66 for Q3 2022. GAAP operating income was $53.4 million for Q3 2023, compared to $36.8 million for Q3 2022. Adjusted operating income, a non-GAAP measure, was $72.5 million for Q3 2023, compared to $51.3 million for Q3 2022. Cash flow from operations was $58.6 million for Q3 2023, compared to $39.9 million for Q3 2022. Days Sales Outstanding was 71 days at September 30, 2023, compared to 70 days at June 30, 2023. Cash totaled $182.3 million at September 30, 2023, compared to $153.3 million at June 30, 2023. During the three months ended September 30, 2023, the Company repurchased 128,133 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $25.1 million. In October 2023, our Board of Directors approved replenishing our remaining share repurchase authority to an aggregate of $75.0 million of our common stock. NINE MONTH 2023 FINANCIAL SUMMARY: Consolidated total revenue for the nine months ended September 30, 2023, was $690.5 million, compared to $569.0 million for the nine months ended September 30, 2022. Cloud subscription revenue was $183.2 million for the nine months ended September 30, 2023, compared to $124.8 million for the nine months ended September 30, 2022. License revenue was $13.0 million for the nine months ended September 30, 2023, compared to $19.9 million for the nine months ended September 30, 2022. Services revenue was $368.7 million for the nine months ended September 30, 2023, compared to $294.3 million for the nine months ended September 30, 2022. GAAP diluted earnings per share for the nine months ended September 30, 2023, was $2.05, compared to $1.43 for the nine months ended September 30, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $2.72 for the nine months ended September 30, 2023, compared to $1.95 for the nine months ended September 30, 2022. GAAP operating income was $151.0 million for the nine months ended September 30, 2023, compared to $108.0 million for the nine months ended September 30, 2022. Adjusted operating income, a non-GAAP measure, was $204.6 million for the nine months ended September 30, 2023, compared to $152.2 million for the nine months ended September 30, 2022. Cash flow from operations was $157.9 million for the nine months ended September 30, 2023, compared to $124.4 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company repurchased 1,024,328 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $166.0 million. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $912 $916 19% 19% Operating margin: GAAP operating margin - current guidance 21.0% 21.3% Equity-based compensation 7.9% 7.8% Adjusted operating margin(1) - current guidance 28.9% 29.1% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.59 $2.61 28% 29% Equity-based compensation, net of tax 0.98 0.98 Excess tax benefit on stock vesting(2) (0.06) (0.06) Adjusted EPS(1) - current guidance $3.51 $3.53 27% 28% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and related income tax effects. (2) Excess tax benefit on stock vesting occurred primarily in the first quarter of 2023. Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Manhattan Associates will make this earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its third quarter 2023 financial results will be held today, October 24, 2023, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software. The Internet webcast will be available until Manhattan Associates’ fourth quarter 2023 earnings release. GAAP VERSUS NON-GAAP PRESENTATION Manhattan Associates provides adjusted operating income and margin, adjusted income tax provision, adjusted net income, and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and nine months ended September 30, 2023. Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation – net of income tax effects. They also exclude the tax benefits or deficiencies of vested stock awards caused by differences in the amount deductible for tax purposes from the compensation expense recorded for financial reporting purposes. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release. ABOUT MANHATTAN ASSOCIATES Manhattan Associates is a global technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. Manhattan Associates designs, builds and delivers leading edge cloud solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com. This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2023 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: economic conditions, including inflation; disruption in the retail sector; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; disruption in the retail sector; risks related to our products’ technology and customer implementations; global instability, including the wars in Ukraine and the Middle East; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Cloud subscriptions $65,033 $45,267 $183,196 $124,767 Software license 3,870 6,386 12,967 19,869 Maintenance 35,296 35,820 106,772 107,115 Services 127,965 103,425 368,744 294,284 Hardware 6,277 7,203 18,791 22,946 Total revenue 238,441 198,101 690,470 568,981 Costs and expenses: Cost of cloud subscriptions, maintenance and services 111,142 95,691 322,914 266,482 Cost of software license 297 467 967 1,749 Research and development 33,093 29,375 95,487 84,754 Sales and marketing 17,650 15,742 54,278 47,881 General and administrative 21,371 18,392 61,561 54,963 Depreciation and amortization 1,440 1,664 4,247 5,157 Total costs and expenses 184,993 161,331 539,454 460,986 Operating income 53,448 36,770 151,016 107,995 Other income, net 1,739 1,612 2,923 4,593 Income before income taxes 55,187 38,382 153,939 112,588 Income tax provision 5,766 8,708 26,107 21,497 Net income $49,421 $29,674 $127,832 $91,091 Basic earnings per share $0.80 $0.47 $2.07 $1.45 Diluted earnings per share $0.79 $0.47 $2.05 $1.43 Weighted average number of shares: Basic 61,639 62,592 61,902 62,917 Diluted 62,310 63,165 62,501 63,483 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating income $53,448 $36,770 $151,016 $107,995 Equity-based compensation (a) 19,030 14,533 53,598 44,209 Adjusted operating income (Non-GAAP) $72,478 $51,303 $204,614 $152,204 Income tax provision $5,766 $8,708 $26,107 $21,497 Equity-based compensation (a) 3,030 2,265 8,067 7,013 Tax benefit of stock awards vested (b) 218 3 3,454 4,386 Adjusted income tax provision (Non-GAAP) $9,014 $10,976 $37,628 $32,896 Net income $49,421 $29,674 $127,832 $91,091 Equity-based compensation (a) 16,000 12,268 45,531 37,196 Tax benefit of stock awards vested (b) (218) (3) (3,454) (4,386) Adjusted net income (Non-GAAP) $65,203 $41,939 $169,909 $123,901 Diluted EPS $0.79 $0.47 $2.05 $1.43 Equity-based compensation (a) 0.26 0.19 0.73 0.59 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.05 $0.66 $2.72 $1.95 Fully diluted shares 62,310 63,165 62,501 63,483 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly because of Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of services $7,643 $5,308 $21,337 $16,267 Research and development 4,141 3,126 11,711 9,740 Sales and marketing 1,878 1,508 5,333 4,460 General and administrative 5,368 4,591 15,217 13,742 Total equity-based compensation $19,030 $14,533 $53,598 $44,209 (b) Adjustments represent the excess tax benefits and tax deficiencies of the equity awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible on our tax return for an equity award is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we exclude equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also exclude the related tax benefit (expense) generated upon their vesting. MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except share and per share data) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 182,312 $ 225,463 Accounts receivable, net of allowance of $5,367 and $6,009, at September 30, 2023 and December 31, 2022, respectively 183,377 166,767 Prepaid expenses and other current assets 27,170 23,145 Total current assets 392,859 415,375 Property and equipment, net 11,266 12,803 Operating lease right-of-use assets 19,976 17,794 Goodwill, net 62,228 62,230 Deferred income taxes 55,523 37,206 Other assets 31,143 24,770 Total assets $ 572,995 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,253 $ 25,701 Accrued compensation and benefits 67,187 54,469 Accrued and other liabilities 26,429 24,569 Deferred revenue 213,440 208,807 Income taxes payable 517 2,049 Total current liabilities 332,826 315,595 Operating lease liabilities, long-term 16,237 14,065 Other non-current liabilities 13,827 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2023 and 2022 - - Common stock, $0.01 par value; 200,000,000 shares authorized; 61,562,480 and 62,191,570 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 616 621 Retained earnings 238,315 253,711 Accumulated other comprehensive loss (28,826 ) (27,532 ) Total shareholders' equity 210,105 226,800 Total liabilities and shareholders' equity $ 572,995 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 127,832 $ 91,091 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,247 5,157 Equity-based compensation 53,598 44,209 Loss (gain) on disposal of equipment 42 (20 ) Deferred income taxes (18,359 ) (20,736 ) Unrealized foreign currency loss (gain) 922 (2,933 ) Changes in operating assets and liabilities: Accounts receivable, net (17,168 ) (23,384 ) Other assets (7,747 ) (9,190 ) Accounts payable, accrued and other liabilities 13,477 20,743 Income taxes (4,347 ) (730 ) Deferred revenue 5,362 20,195 Net cash provided by operating activities 157,859 124,402 Investing activities: Purchase of property and equipment (2,761 ) (4,152 ) Net cash used in investing activities (2,761 ) (4,152 ) Financing activities: Repurchase of common stock (195,716 ) (179,029 ) Net cash used in financing activities (195,716 ) (179,029 ) Foreign currency impact on cash (2,533 ) (7,872 ) Net change in cash and cash equivalents (43,151 ) (66,651 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 182,312 $ 197,055 MANHATTAN ASSOCIATES, INC. SUPPLEMENTAL INFORMATION 1. GAAP and adjusted earnings per share by quarter are as follows: 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $2.05 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.73 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) - - (0.06) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 $0.88 $1.05 $2.72 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,501 2. Revenues and operating income by reportable segment are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $536,531 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 121,764 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 32,175 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $690,470 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $96,628 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $151,016 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $53,598 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $150,226 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 40,764 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 13,624 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $204,614 3. Impact of Currency Fluctuation The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) $104 $2,755 $(225) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 (3,716) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 3,491 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (939) $486 $1,350 $829 $583 $3,248 $(278) $721 $2,109 $2,552 Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $3,582 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 498 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $4,080 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $3,895 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (939) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (33) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $2,923 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $2,761 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 381 128 1,024 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 4 8 220 Total shares purchased 586 421 355 208 1,570 723 385 136 1,244 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 $66,769 $25,072 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock units 27,143 528 1,242 197 29,110 27,511 658 1,529 29,698 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $195,716 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Approximately 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Maintenance contracts are typically one year and not included in the RPO. Our RPO as of the end of each period appears below (in thousands): March 31, 2022 June 30, 2022 September 30, 2022 December 30, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 8. The 2017 U.S. Tax Cuts and Jobs Act eliminated the expensing of research and development costs as incurred for tax purposes beginning in 2022. This law changes the timing of cash tax payments, increasing near-term taxable income and payments, but normalizing over time as these expenses are amortized. Our income tax payments increased by approximately $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation may be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. View source version on businesswire.com: https://www.businesswire.com/news/home/20231024452925/en/
Michael Bauer Senior Director, Investor Relations Manhattan Associates, Inc. 678-597-7538 mbauer@manh.com Rick Fernandez Director, Corporate Communications Manhattan Associates, Inc. 678-597-6988 rfernandez@manh.com