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 First Quarter Results By: Manhattan Associates Inc. via Business Wire April 25, 2023 at 16:05 PM EDT RPO Bookings Increase 42% 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 $221.0 million for the first quarter ended March 31, 2023. GAAP diluted earnings per share for Q1 2023 was $0.62 compared to $0.48 in Q1 2022. Non-GAAP adjusted diluted earnings per share for Q1 2023 was $0.80 compared to $0.60 in Q1 2022. “Manhattan Associates is off to a great start to 2023. Demand is strong, customer satisfaction is solid, and our consistent investment in R&D continues to extend our leadership position. Cloud and services revenue growth exceeded our expectations. This drove better than expected top-line and earnings growth in the quarter,” said Manhattan Associates president and CEO Eddie Capel. “While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals that are aligned to best help our customers digitally transform their businesses,” Mr. Capel concluded. FIRST QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $221.0 million for Q1 2023, compared to $179.0 million for Q1 2022. Cloud subscription revenue was $57.2 million for Q1 2023, compared to $37.3 million for Q1 2022. License revenue was $5.4 million for Q1 2023, compared to $8.4 million for Q1 2022. Services revenue was $116.2 million for Q1 2023, compared to $89.9 million for Q1 2022. GAAP diluted earnings per share was $0.62 for Q1 2023, compared to $0.48 for Q1 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $0.80 for Q1 2023, compared to $0.60 for Q1 2022. GAAP operating income was $47.1 million for Q1 2023, compared to $34.0 million for Q1 2022. Adjusted operating income, a non-GAAP measure, was $63.7 million for Q1 2023, compared to $48.1 million for Q1 2022. Cash flow from operations was $58.7 million for Q1 2023, compared to $31.8 million for Q1 2022. Days Sales Outstanding was 65 days at March 31, 2023, compared to 77 days at December 31, 2022. Cash totaled $181.6 million at March 31, 2023, compared to $225.5 million at December 31, 2022. During the three months ended March 31, 2023, the Company repurchased 514,838 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $74.2 million. In April 2023, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $856 $864 12% 13% Operating margin: GAAP operating margin - current guidance 18.6% 18.9% Equity-based compensation 7.8% 7.8% Adjusted operating margin(1) - current guidance 26.4% 26.7% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.00 $2.06 -1% 1% Equity-based compensation, net of tax 0.90 0.90 Excess tax benefit on stock vesting(2) (0.05) (0.05) Adjusted EPS(1) - current guidance $2.85 $2.91 3% 5% (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 expected to occur 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 and guideposts in the supplemental information below, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release. 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 and guideposts, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its first quarter financial results will be held today, April 25, 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’ second 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 months ended March 31, 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. 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 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” and “Guideposts,” 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 war in Ukraine; 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 March 31, 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $57,220 $37,297 Software license 5,352 8,358 Maintenance 35,650 35,302 Services 116,170 89,918 Hardware 6,621 8,081 Total revenue 221,013 178,956 Costs and expenses: Cost of cloud subscriptions, maintenance and services 103,327 83,025 Cost of software license 302 402 Research and development 30,794 27,455 Sales and marketing 18,065 14,390 General and administrative 19,953 17,965 Depreciation and amortization 1,487 1,747 Total costs and expenses 173,928 144,984 Operating income 47,085 33,972 Other income, net 143 738 Income before income taxes 47,228 34,710 Income tax provision 8,437 4,118 Net income $38,791 $30,592 Basic earnings per share $0.62 $0.48 Diluted earnings per share $0.62 $0.48 Weighted average number of shares: Basic 62,211 63,213 Diluted 62,767 63,871 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended March 31, 2023 2022 Operating income $47,085 $33,972 Equity-based compensation (a) 16,640 14,138 Adjusted operating income (Non-GAAP) $63,725 $48,110 Income tax provision $8,437 $4,118 Equity-based compensation (a) 2,409 2,182 Tax benefit of stock awards vested (b) 2,955 4,375 Adjusted income tax provision (Non-GAAP) $13,801 $10,675 Net income $38,791 $30,592 Equity-based compensation (a) 14,231 11,956 Tax benefit of stock awards vested (b) (2,955) (4,375) Adjusted net income (Non-GAAP) $50,067 $38,173 Diluted EPS $0.62 $0.48 Equity-based compensation (a) 0.23 0.19 Tax benefit of stock awards vested (b) (0.05) (0.07) Adjusted diluted EPS (Non-GAAP) $0.80 $0.60 Fully diluted shares 62,767 63,871 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include that expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended March 31, 2023 2022 Cost of services $6,516 $5,137 Research and development 3,655 3,189 Sales and marketing 1,648 1,406 General and administrative 4,821 4,406 Total equity-based compensation $16,640 $14,138 (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) March 31, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 181,595 $ 225,463 Accounts receivable, net of allowance of $6,140 and $6,009, at March 31, 2023 and December 31, 2022, respectively 160,568 166,767 Prepaid expenses and other current assets 29,341 23,145 Total current assets 371,504 415,375 Property and equipment, net 12,049 12,803 Operating lease right-of-use assets 16,973 17,794 Goodwill, net 62,233 62,230 Deferred income taxes 39,743 37,206 Other assets 28,341 24,770 Total assets $ 530,843 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,357 $ 25,701 Accrued compensation and benefits 45,802 54,469 Accrued and other liabilities 24,452 24,569 Deferred revenue 216,312 208,807 Income taxes payable 10,830 2,049 Total current liabilities 322,753 315,595 Operating lease liabilities, long-term 13,044 14,065 Other non-current liabilities 13,974 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; 62,026,840 and 62,191,570 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 620 621 Retained earnings 207,176 253,711 Accumulated other comprehensive loss (26,724 ) (27,532 ) Total shareholders' equity 181,072 226,800 Total liabilities and shareholders' equity $ 530,843 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 38,791 $ 30,592 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,487 1,747 Equity-based compensation 16,640 14,138 Loss on disposal of equipment 16 - Deferred income taxes (2,523 ) (3,985 ) Unrealized foreign currency loss (gain) 1,167 (494 ) Changes in operating assets and liabilities: Accounts receivable, net 6,730 (8,077 ) Other assets (8,760 ) (10,934 ) Accounts payable, accrued and other liabilities (10,009 ) (6,177 ) Income taxes 7,850 6,175 Deferred revenue 7,327 8,807 Net cash provided by operating activities 58,716 31,792 Investing activities: Purchase of property and equipment (666 ) (1,159 ) Net cash used in investing activities (666 ) (1,159 ) Financing activities: Repurchase of common stock (101,688 ) (77,108 ) Net cash used in financing activities (101,688 ) (77,108 ) Foreign currency impact on cash (230 ) (914 ) Net change in cash and cash equivalents (43,868 ) (47,389 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 181,595 $ 216,317 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 GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 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 Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 APAC 7,265 8,314 9,584 9,099 34,262 10,596 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 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 Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) Operating income (225) (706) (740) 230 (1,441) 532 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) $486 $1,350 $829 $583 $3,248 $(278) 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 Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Interest income $19 $92 $112 $373 $596 $969 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) Other non-operating income (expense) 8 95 (69) 102 136 (16) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 Total shares purchased 586 421 355 208 1,570 723 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 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 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 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 are 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 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 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 $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation will be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. 9. Guideposts The following table shows our (i) actual 2022 cloud revenue and remaining performance obligations (“RPO”) results, (ii) revised 2023 cloud revenue guidepost, (iii) 2023 RPO guidepost published as of October 25, 2022, and (iv) guideposts published as of February 1, 2022, for cloud revenue and RPO for 2024. Current Guideposts ($'s in millions) Cloud Revenue Year Low Mid High % Growth(1) 2022⁽²⁾ $176 $176 $176 44% 2023⁽³⁾ $238 $240 $242 36% 2024⁽⁵⁾ $310 $328 $345 37% Remaining Performance Obligations Year Low Mid High % Growth(1) 2022⁽²⁾ $1,052 $1,052 $1,052 50% 2023⁽⁴⁾ $1,300 $1,350 $1,400 28% 2024⁽⁵⁾ $1,600 $1,700 $1,800 26% (1) Year-over-year percentage growth is calculated based on the actual or forecasted mid-points. (2) Amounts reflect actual results for 2022. (3) Amounts reflect revised range as of April 25, 2023. (4) Amounts remain unchanged from October 25, 2022. (5) Amounts remain unchanged from February 1, 2022. These guideposts are forward-looking statements and are subject to all the risks and uncertainties applicable to our shorter-term 2023 Guidance, as stated above. In addition, the further into the future we project our financial expectations, the greater the risk that actual results will differ materially; consequently, our guideposts for the following fiscal year may be inherently more uncertain than our guideposts for this fiscal year, or than our 2023 Guidance published above. View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005409/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 First Quarter Results By: Manhattan Associates Inc. via Business Wire April 25, 2023 at 16:05 PM EDT RPO Bookings Increase 42% 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 $221.0 million for the first quarter ended March 31, 2023. GAAP diluted earnings per share for Q1 2023 was $0.62 compared to $0.48 in Q1 2022. Non-GAAP adjusted diluted earnings per share for Q1 2023 was $0.80 compared to $0.60 in Q1 2022. “Manhattan Associates is off to a great start to 2023. Demand is strong, customer satisfaction is solid, and our consistent investment in R&D continues to extend our leadership position. Cloud and services revenue growth exceeded our expectations. This drove better than expected top-line and earnings growth in the quarter,” said Manhattan Associates president and CEO Eddie Capel. “While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals that are aligned to best help our customers digitally transform their businesses,” Mr. Capel concluded. FIRST QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $221.0 million for Q1 2023, compared to $179.0 million for Q1 2022. Cloud subscription revenue was $57.2 million for Q1 2023, compared to $37.3 million for Q1 2022. License revenue was $5.4 million for Q1 2023, compared to $8.4 million for Q1 2022. Services revenue was $116.2 million for Q1 2023, compared to $89.9 million for Q1 2022. GAAP diluted earnings per share was $0.62 for Q1 2023, compared to $0.48 for Q1 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $0.80 for Q1 2023, compared to $0.60 for Q1 2022. GAAP operating income was $47.1 million for Q1 2023, compared to $34.0 million for Q1 2022. Adjusted operating income, a non-GAAP measure, was $63.7 million for Q1 2023, compared to $48.1 million for Q1 2022. Cash flow from operations was $58.7 million for Q1 2023, compared to $31.8 million for Q1 2022. Days Sales Outstanding was 65 days at March 31, 2023, compared to 77 days at December 31, 2022. Cash totaled $181.6 million at March 31, 2023, compared to $225.5 million at December 31, 2022. During the three months ended March 31, 2023, the Company repurchased 514,838 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $74.2 million. In April 2023, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $856 $864 12% 13% Operating margin: GAAP operating margin - current guidance 18.6% 18.9% Equity-based compensation 7.8% 7.8% Adjusted operating margin(1) - current guidance 26.4% 26.7% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.00 $2.06 -1% 1% Equity-based compensation, net of tax 0.90 0.90 Excess tax benefit on stock vesting(2) (0.05) (0.05) Adjusted EPS(1) - current guidance $2.85 $2.91 3% 5% (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 expected to occur 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 and guideposts in the supplemental information below, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release. 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 and guideposts, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its first quarter financial results will be held today, April 25, 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’ second 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 months ended March 31, 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. 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 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” and “Guideposts,” 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 war in Ukraine; 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 March 31, 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $57,220 $37,297 Software license 5,352 8,358 Maintenance 35,650 35,302 Services 116,170 89,918 Hardware 6,621 8,081 Total revenue 221,013 178,956 Costs and expenses: Cost of cloud subscriptions, maintenance and services 103,327 83,025 Cost of software license 302 402 Research and development 30,794 27,455 Sales and marketing 18,065 14,390 General and administrative 19,953 17,965 Depreciation and amortization 1,487 1,747 Total costs and expenses 173,928 144,984 Operating income 47,085 33,972 Other income, net 143 738 Income before income taxes 47,228 34,710 Income tax provision 8,437 4,118 Net income $38,791 $30,592 Basic earnings per share $0.62 $0.48 Diluted earnings per share $0.62 $0.48 Weighted average number of shares: Basic 62,211 63,213 Diluted 62,767 63,871 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended March 31, 2023 2022 Operating income $47,085 $33,972 Equity-based compensation (a) 16,640 14,138 Adjusted operating income (Non-GAAP) $63,725 $48,110 Income tax provision $8,437 $4,118 Equity-based compensation (a) 2,409 2,182 Tax benefit of stock awards vested (b) 2,955 4,375 Adjusted income tax provision (Non-GAAP) $13,801 $10,675 Net income $38,791 $30,592 Equity-based compensation (a) 14,231 11,956 Tax benefit of stock awards vested (b) (2,955) (4,375) Adjusted net income (Non-GAAP) $50,067 $38,173 Diluted EPS $0.62 $0.48 Equity-based compensation (a) 0.23 0.19 Tax benefit of stock awards vested (b) (0.05) (0.07) Adjusted diluted EPS (Non-GAAP) $0.80 $0.60 Fully diluted shares 62,767 63,871 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include that expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended March 31, 2023 2022 Cost of services $6,516 $5,137 Research and development 3,655 3,189 Sales and marketing 1,648 1,406 General and administrative 4,821 4,406 Total equity-based compensation $16,640 $14,138 (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) March 31, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 181,595 $ 225,463 Accounts receivable, net of allowance of $6,140 and $6,009, at March 31, 2023 and December 31, 2022, respectively 160,568 166,767 Prepaid expenses and other current assets 29,341 23,145 Total current assets 371,504 415,375 Property and equipment, net 12,049 12,803 Operating lease right-of-use assets 16,973 17,794 Goodwill, net 62,233 62,230 Deferred income taxes 39,743 37,206 Other assets 28,341 24,770 Total assets $ 530,843 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,357 $ 25,701 Accrued compensation and benefits 45,802 54,469 Accrued and other liabilities 24,452 24,569 Deferred revenue 216,312 208,807 Income taxes payable 10,830 2,049 Total current liabilities 322,753 315,595 Operating lease liabilities, long-term 13,044 14,065 Other non-current liabilities 13,974 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; 62,026,840 and 62,191,570 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 620 621 Retained earnings 207,176 253,711 Accumulated other comprehensive loss (26,724 ) (27,532 ) Total shareholders' equity 181,072 226,800 Total liabilities and shareholders' equity $ 530,843 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 38,791 $ 30,592 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,487 1,747 Equity-based compensation 16,640 14,138 Loss on disposal of equipment 16 - Deferred income taxes (2,523 ) (3,985 ) Unrealized foreign currency loss (gain) 1,167 (494 ) Changes in operating assets and liabilities: Accounts receivable, net 6,730 (8,077 ) Other assets (8,760 ) (10,934 ) Accounts payable, accrued and other liabilities (10,009 ) (6,177 ) Income taxes 7,850 6,175 Deferred revenue 7,327 8,807 Net cash provided by operating activities 58,716 31,792 Investing activities: Purchase of property and equipment (666 ) (1,159 ) Net cash used in investing activities (666 ) (1,159 ) Financing activities: Repurchase of common stock (101,688 ) (77,108 ) Net cash used in financing activities (101,688 ) (77,108 ) Foreign currency impact on cash (230 ) (914 ) Net change in cash and cash equivalents (43,868 ) (47,389 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 181,595 $ 216,317 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 GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 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 Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 APAC 7,265 8,314 9,584 9,099 34,262 10,596 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 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 Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) Operating income (225) (706) (740) 230 (1,441) 532 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) $486 $1,350 $829 $583 $3,248 $(278) 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 Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Interest income $19 $92 $112 $373 $596 $969 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) Other non-operating income (expense) 8 95 (69) 102 136 (16) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 Total shares purchased 586 421 355 208 1,570 723 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 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 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 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 are 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 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 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 $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation will be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. 9. Guideposts The following table shows our (i) actual 2022 cloud revenue and remaining performance obligations (“RPO”) results, (ii) revised 2023 cloud revenue guidepost, (iii) 2023 RPO guidepost published as of October 25, 2022, and (iv) guideposts published as of February 1, 2022, for cloud revenue and RPO for 2024. Current Guideposts ($'s in millions) Cloud Revenue Year Low Mid High % Growth(1) 2022⁽²⁾ $176 $176 $176 44% 2023⁽³⁾ $238 $240 $242 36% 2024⁽⁵⁾ $310 $328 $345 37% Remaining Performance Obligations Year Low Mid High % Growth(1) 2022⁽²⁾ $1,052 $1,052 $1,052 50% 2023⁽⁴⁾ $1,300 $1,350 $1,400 28% 2024⁽⁵⁾ $1,600 $1,700 $1,800 26% (1) Year-over-year percentage growth is calculated based on the actual or forecasted mid-points. (2) Amounts reflect actual results for 2022. (3) Amounts reflect revised range as of April 25, 2023. (4) Amounts remain unchanged from October 25, 2022. (5) Amounts remain unchanged from February 1, 2022. These guideposts are forward-looking statements and are subject to all the risks and uncertainties applicable to our shorter-term 2023 Guidance, as stated above. In addition, the further into the future we project our financial expectations, the greater the risk that actual results will differ materially; consequently, our guideposts for the following fiscal year may be inherently more uncertain than our guideposts for this fiscal year, or than our 2023 Guidance published above. View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005409/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 $221.0 million for the first quarter ended March 31, 2023. GAAP diluted earnings per share for Q1 2023 was $0.62 compared to $0.48 in Q1 2022. Non-GAAP adjusted diluted earnings per share for Q1 2023 was $0.80 compared to $0.60 in Q1 2022. “Manhattan Associates is off to a great start to 2023. Demand is strong, customer satisfaction is solid, and our consistent investment in R&D continues to extend our leadership position. Cloud and services revenue growth exceeded our expectations. This drove better than expected top-line and earnings growth in the quarter,” said Manhattan Associates president and CEO Eddie Capel. “While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals that are aligned to best help our customers digitally transform their businesses,” Mr. Capel concluded. FIRST QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $221.0 million for Q1 2023, compared to $179.0 million for Q1 2022. Cloud subscription revenue was $57.2 million for Q1 2023, compared to $37.3 million for Q1 2022. License revenue was $5.4 million for Q1 2023, compared to $8.4 million for Q1 2022. Services revenue was $116.2 million for Q1 2023, compared to $89.9 million for Q1 2022. GAAP diluted earnings per share was $0.62 for Q1 2023, compared to $0.48 for Q1 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $0.80 for Q1 2023, compared to $0.60 for Q1 2022. GAAP operating income was $47.1 million for Q1 2023, compared to $34.0 million for Q1 2022. Adjusted operating income, a non-GAAP measure, was $63.7 million for Q1 2023, compared to $48.1 million for Q1 2022. Cash flow from operations was $58.7 million for Q1 2023, compared to $31.8 million for Q1 2022. Days Sales Outstanding was 65 days at March 31, 2023, compared to 77 days at December 31, 2022. Cash totaled $181.6 million at March 31, 2023, compared to $225.5 million at December 31, 2022. During the three months ended March 31, 2023, the Company repurchased 514,838 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $74.2 million. In April 2023, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock. 2023 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023: Guidance Range - 2023 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue - current guidance $856 $864 12% 13% Operating margin: GAAP operating margin - current guidance 18.6% 18.9% Equity-based compensation 7.8% 7.8% Adjusted operating margin(1) - current guidance 26.4% 26.7% Diluted earnings per share (EPS): GAAP EPS - current guidance $2.00 $2.06 -1% 1% Equity-based compensation, net of tax 0.90 0.90 Excess tax benefit on stock vesting(2) (0.05) (0.05) Adjusted EPS(1) - current guidance $2.85 $2.91 3% 5% (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 expected to occur 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 and guideposts in the supplemental information below, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release. 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 and guideposts, should be considered historical only, and Manhattan Associates disclaims any obligation to update them. CONFERENCE CALL Manhattan Associates’ conference call regarding its first quarter financial results will be held today, April 25, 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’ second 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 months ended March 31, 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. 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 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” and “Guideposts,” 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 war in Ukraine; 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 March 31, 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $57,220 $37,297 Software license 5,352 8,358 Maintenance 35,650 35,302 Services 116,170 89,918 Hardware 6,621 8,081 Total revenue 221,013 178,956 Costs and expenses: Cost of cloud subscriptions, maintenance and services 103,327 83,025 Cost of software license 302 402 Research and development 30,794 27,455 Sales and marketing 18,065 14,390 General and administrative 19,953 17,965 Depreciation and amortization 1,487 1,747 Total costs and expenses 173,928 144,984 Operating income 47,085 33,972 Other income, net 143 738 Income before income taxes 47,228 34,710 Income tax provision 8,437 4,118 Net income $38,791 $30,592 Basic earnings per share $0.62 $0.48 Diluted earnings per share $0.62 $0.48 Weighted average number of shares: Basic 62,211 63,213 Diluted 62,767 63,871 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended March 31, 2023 2022 Operating income $47,085 $33,972 Equity-based compensation (a) 16,640 14,138 Adjusted operating income (Non-GAAP) $63,725 $48,110 Income tax provision $8,437 $4,118 Equity-based compensation (a) 2,409 2,182 Tax benefit of stock awards vested (b) 2,955 4,375 Adjusted income tax provision (Non-GAAP) $13,801 $10,675 Net income $38,791 $30,592 Equity-based compensation (a) 14,231 11,956 Tax benefit of stock awards vested (b) (2,955) (4,375) Adjusted net income (Non-GAAP) $50,067 $38,173 Diluted EPS $0.62 $0.48 Equity-based compensation (a) 0.23 0.19 Tax benefit of stock awards vested (b) (0.05) (0.07) Adjusted diluted EPS (Non-GAAP) $0.80 $0.60 Fully diluted shares 62,767 63,871 (a) Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include that expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. Three Months Ended March 31, 2023 2022 Cost of services $6,516 $5,137 Research and development 3,655 3,189 Sales and marketing 1,648 1,406 General and administrative 4,821 4,406 Total equity-based compensation $16,640 $14,138 (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) March 31, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 181,595 $ 225,463 Accounts receivable, net of allowance of $6,140 and $6,009, at March 31, 2023 and December 31, 2022, respectively 160,568 166,767 Prepaid expenses and other current assets 29,341 23,145 Total current assets 371,504 415,375 Property and equipment, net 12,049 12,803 Operating lease right-of-use assets 16,973 17,794 Goodwill, net 62,233 62,230 Deferred income taxes 39,743 37,206 Other assets 28,341 24,770 Total assets $ 530,843 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,357 $ 25,701 Accrued compensation and benefits 45,802 54,469 Accrued and other liabilities 24,452 24,569 Deferred revenue 216,312 208,807 Income taxes payable 10,830 2,049 Total current liabilities 322,753 315,595 Operating lease liabilities, long-term 13,044 14,065 Other non-current liabilities 13,974 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; 62,026,840 and 62,191,570 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 620 621 Retained earnings 207,176 253,711 Accumulated other comprehensive loss (26,724 ) (27,532 ) Total shareholders' equity 181,072 226,800 Total liabilities and shareholders' equity $ 530,843 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2023 2022 (unaudited) (unaudited) Operating activities: Net income $ 38,791 $ 30,592 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,487 1,747 Equity-based compensation 16,640 14,138 Loss on disposal of equipment 16 - Deferred income taxes (2,523 ) (3,985 ) Unrealized foreign currency loss (gain) 1,167 (494 ) Changes in operating assets and liabilities: Accounts receivable, net 6,730 (8,077 ) Other assets (8,760 ) (10,934 ) Accounts payable, accrued and other liabilities (10,009 ) (6,177 ) Income taxes 7,850 6,175 Deferred revenue 7,327 8,807 Net cash provided by operating activities 58,716 31,792 Investing activities: Purchase of property and equipment (666 ) (1,159 ) Net cash used in investing activities (666 ) (1,159 ) Financing activities: Repurchase of common stock (101,688 ) (77,108 ) Net cash used in financing activities (101,688 ) (77,108 ) Foreign currency impact on cash (230 ) (914 ) Net change in cash and cash equivalents (43,868 ) (47,389 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 181,595 $ 216,317 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 GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 Tax benefit of stock awards vested (0.07) - - - (0.07) (0.05) Adjusted Diluted EPS $0.60 $0.69 $0.66 $0.81 $2.76 $0.80 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 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 Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 APAC 7,265 8,314 9,584 9,099 34,262 10,596 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 APAC 2,062 3,323 4,005 3,991 13,381 4,645 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 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 Revenue $(2,268) $(4,568) $(6,152) $(5,124) $(18,112) $(3,084) Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) Operating income (225) (706) (740) 230 (1,441) 532 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) $486 $1,350 $829 $583 $3,248 $(278) 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 Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 4. Other income includes the following components (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Interest income $19 $92 $112 $373 $596 $969 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) Other non-operating income (expense) 8 95 (69) 102 136 (16) Total other income (loss) $738 $2,243 $1,612 $828 $5,421 $143 5. Capital expenditures are as follows (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr Shares purchased under publicly announced buy-back program 383 417 347 206 1,353 515 Shares withheld for taxes due upon vesting of restricted stock units 203 4 8 2 217 208 Total shares purchased 586 421 355 208 1,570 723 Total cash paid for shares purchased under publicly announced buy-back program $49,965 $50,151 $50,000 $25,234 $175,350 $74,177 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 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 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 are 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 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 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 $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation will be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow. 9. Guideposts The following table shows our (i) actual 2022 cloud revenue and remaining performance obligations (“RPO”) results, (ii) revised 2023 cloud revenue guidepost, (iii) 2023 RPO guidepost published as of October 25, 2022, and (iv) guideposts published as of February 1, 2022, for cloud revenue and RPO for 2024. Current Guideposts ($'s in millions) Cloud Revenue Year Low Mid High % Growth(1) 2022⁽²⁾ $176 $176 $176 44% 2023⁽³⁾ $238 $240 $242 36% 2024⁽⁵⁾ $310 $328 $345 37% Remaining Performance Obligations Year Low Mid High % Growth(1) 2022⁽²⁾ $1,052 $1,052 $1,052 50% 2023⁽⁴⁾ $1,300 $1,350 $1,400 28% 2024⁽⁵⁾ $1,600 $1,700 $1,800 26% (1) Year-over-year percentage growth is calculated based on the actual or forecasted mid-points. (2) Amounts reflect actual results for 2022. (3) Amounts reflect revised range as of April 25, 2023. (4) Amounts remain unchanged from October 25, 2022. (5) Amounts remain unchanged from February 1, 2022. These guideposts are forward-looking statements and are subject to all the risks and uncertainties applicable to our shorter-term 2023 Guidance, as stated above. In addition, the further into the future we project our financial expectations, the greater the risk that actual results will differ materially; consequently, our guideposts for the following fiscal year may be inherently more uncertain than our guideposts for this fiscal year, or than our 2023 Guidance published above. View source version on businesswire.com: https://www.businesswire.com/news/home/20230425005409/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