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 Fourth Quarter and Full Year Results By: Manhattan Associates Inc. via Business Wire January 30, 2024 at 16:05 PM EST RPO Bookings Increase 36% over Prior Year on Strong Demand Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $238.3 million for the fourth quarter ended December 31, 2023. GAAP diluted earnings per share for Q4 2023 was $0.78 compared to $0.60 in Q4 2022. Non-GAAP adjusted diluted earnings per share for Q4 2023 was $1.03 compared to $0.81 in Q4 2022. “Manhattan’s business fundamentals and momentum are strong. Our fourth quarter results exceeded expectations, capping a very successful year for our company,” said Manhattan Associates president and CEO Eddie Capel. “While appropriately cautious regarding the global economy, Manhattan enters 2024 from a position of strength, and we are optimistic about our growing market opportunity. We remain firmly committed to helping our customers succeed by delivering leading innovation across supply chain execution, omnichannel and retail point of sale markets,” Mr. Capel concluded. FOURTH QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.3 million for Q4 2023, compared to $198.1 million for Q4 2022. Cloud subscription revenue was $71.4 million for Q4 2023, compared to $51.7 million for Q4 2022. License revenue was $5.2 million for Q4 2023, compared to $5.0 million for Q4 2022. Services revenue was $119.1 million for Q4 2023, compared to $99.8 million for Q4 2022. GAAP diluted earnings per share was $0.78 for Q4 2023, compared to $0.60 for Q4 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.03 for Q4 2023, compared to $0.81 for Q4 2022. GAAP operating income was $58.9 million for Q4 2023, compared to $44.7 million for Q4 2022. Adjusted operating income, a non-GAAP measure, was $76.8 million for Q4 2023, compared to $59.9 million for Q4 2022. Cash flow from operations was $88.4 million for Q4 2023, compared to $55.2 million for Q4 2022. Days Sales Outstanding was 70 days at December 31, 2023, compared to 71 days at September 30, 2023. Cash totaled $270.7 million at December 31, 2023, compared to $182.3 million at September 30, 2023. During the three months ended December 31, 2023, the Company did not repurchase shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors. Our $75.0 million repurchase authority replenished by our Board of Directors in October 2023 remains in effect. FULL YEAR 2023 FINANCIAL SUMMARY: Consolidated total revenue for the twelve months ended December 31, 2023, was $928.7 million, compared to $767.1 million for the twelve months ended December 31, 2022. Cloud subscription revenue was $254.6 million for the twelve months ended December 31, 2023, compared to $176.5 million for the twelve months ended December 31, 2022. License revenue was $18.2 million for the twelve months ended December 31, 2023, compared to $24.8 million for the twelve months ended December 31, 2022. Services revenue was $487.9 million for the twelve months ended December 31, 2023, compared to $394.1 million for the twelve months ended December 31, 2022. GAAP diluted earnings per share for the twelve months ended December 31, 2023, was $2.82, compared to $2.03 for the twelve months ended December 31, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $3.74 for the twelve months ended December 31, 2023, compared to $2.76 for the twelve months ended December 31, 2022. GAAP operating income was $209.9 million for the twelve months ended December 31, 2023, compared to $152.7 million for the twelve months ended December 31, 2022. Adjusted operating income, a non-GAAP measure, was $281.5 million for the twelve months ended December 31, 2023, compared to $212.1 million for the twelve months ended December 31, 2022. Cash flow from operations was $246.2 million for the twelve months ended December 31, 2023, compared to $179.6 million for the twelve months ended December 31, 2022. During the twelve months ended December 31, 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 $166.0 million. 2024 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2024: Guidance Range - 2024 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue $1,015 $1,025 9% 10% Operating Margin: GAAP operating margin 21.2% 21.8% Equity-based compensation 7.5% 7.5% Adjusted operating margin(1) 28.7% 29.3% Diluted earnings per share (EPS): GAAP EPS $2.81 $2.91 0% 3% Equity-based compensation 1.02 1.02 Excess tax benefit on stock vesting(2) (0.13) (0.13) Adjusted EPS(1) $3.69 $3.79 -1% 1% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and the related income tax effects, if applicable. (2) Excess tax benefit on stock vesting expected to occur primarily in the first quarter of 2024. 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 fourth quarter and twelve months ended December 31, 2023 financial results will be held today, January 30, 2024, 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’ first quarter 2024 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 twelve months ended December 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. 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 “2024 Guidance” and 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; 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $71,416 $51,691 $254,612 $176,458 Software license 5,239 4,979 18,206 24,848 Maintenance 37,164 35,083 143,936 142,198 Services 119,125 99,812 487,869 394,096 Hardware 5,311 6,538 24,102 29,484 Total revenue 238,255 198,103 928,725 767,084 Costs and expenses: Cost of cloud subscriptions, maintenance and services 106,349 89,629 429,263 356,111 Cost of software license 384 377 1,351 2,126 Research and development 31,327 27,123 126,814 111,877 Sales and marketing 20,212 16,656 74,490 64,537 General and administrative 19,613 18,107 81,174 73,070 Depreciation and amortization 1,505 1,506 5,752 6,663 Total costs and expenses 179,390 153,398 718,844 614,384 Operating income 58,865 44,705 209,881 152,700 Other income, net 867 828 3,790 5,421 Income before income taxes 59,732 45,533 213,671 158,121 Income tax provision 10,996 7,665 37,103 29,162 Net income $48,736 $37,868 $176,568 $128,959 Basic earnings per share $0.79 $0.61 $2.86 $2.05 Diluted earnings per share $0.78 $0.60 $2.82 $2.03 Weighted average number of shares: Basic 61,566 62,327 61,817 62,768 Diluted 62,555 63,028 62,608 63,408 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Operating income $58,865 44,705 $209,881 152,700 Equity-based compensation (a) 17,973 15,152 71,571 59,361 Adjusted operating income (Non-GAAP) $76,838 $59,857 $281,452 $212,061 Income tax provision $10,996 7,665 $37,103 29,162 Equity-based compensation (a) 2,496 2,045 10,563 9,058 Tax benefit of stock awards vested (b) 26 (3) 3,480 4,383 Adjusted income tax provision (Non-GAAP) $13,518 $9,707 $51,146 $42,603 Net income $48,736 $37,868 $176,568 $128,959 Equity-based compensation (a) 15,477 13,107 61,008 50,303 Tax benefit of stock awards vested (b) (26) 3 (3,480) (4,383) Adjusted net income (Non-GAAP) $64,187 $50,978 $234,096 $174,879 Diluted EPS $0.78 $0.60 $2.82 $2.03 Equity-based compensation (a) 0.25 0.21 0.97 0.79 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.03 $0.81 $3.74 $2.76 Fully diluted shares 62,555 63,028 62,608 63,408 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of services $7,234 $5,609 $28,571 $21,876 Research and development 3,963 3,341 15,674 13,081 Sales and marketing 1,760 1,543 7,093 6,003 General and administrative 5,016 4,659 20,233 18,401 Total equity-based compensation $17,973 $15,152 $71,571 $59,361 (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) December 31, 2023 December 31, 2022 ASSETS Current Assets: Cash and cash equivalents $ 270,741 $ 225,463 Accounts receivable, net 181,173 166,767 Prepaid expenses and other current assets 27,276 23,145 Total current assets 479,190 415,375 Property and equipment, net 11,795 12,803 Operating lease right-of-use assets 21,645 17,794 Goodwill, net 62,235 62,230 Deferred income taxes 66,043 37,206 Other assets 32,445 24,770 Total assets $ 673,353 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,508 $ 25,701 Accrued compensation and benefits 73,210 54,469 Accrued and other liabilities 27,374 24,569 Deferred revenue 237,793 208,807 Income taxes payable 3,030 2,049 Total current liabilities 365,915 315,595 Operating lease liabilities, long-term 17,694 14,065 Other non-current liabilities 11,466 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and December 31, 2022 - - Common stock, $.01 par value; 200,000,000 shares authorized; 61,566,037 and 62,191,570 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 615 621 Retained earnings 304,701 253,711 Accumulated other comprehensive loss (27,038 ) (27,532 ) Total shareholders' equity 278,278 226,800 Total liabilities and shareholders' equity $ 673,353 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 Operating activities: Net income $ 176,568 $ 128,959 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,752 6,663 Equity-based compensation 71,571 59,361 Loss (Gain) on disposal of equipment 57 (89 ) Deferred income taxes (28,844 ) (29,711 ) Unrealized foreign currency loss (gain) 1,280 (1,515 ) Changes in operating assets and liabilities: Accounts receivable, net (13,084 ) (44,056 ) Other assets (10,925 ) (10,247 ) Accounts payable, accrued and other liabilities 18,123 11,794 Income taxes (1,416 ) 765 Deferred revenue 27,136 57,706 Net cash provided by operating activities 246,218 179,630 Investing activities: Purchases of property and equipment (4,730 ) (6,587 ) Net cash used in investing activities (4,730 ) (6,587 ) Financing activities: Purchase of common stock (196,047 ) (204,460 ) Net cash used in financing activities (196,047 ) (204,460 ) Foreign currency impact on cash (163 ) (6,826 ) Net change in cash and cash equivalents 45,278 (38,243 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 270,741 $ 225,463 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 4th Qtr Full Year GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $0.78 $2.82 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.25 0.97 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 $1.03 $3.74 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,555 62,608 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 4th Qtr Full Year Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $182,664 $719,195 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 44,874 166,638 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 10,717 42,892 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $238,255 $928,725 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $38,530 $135,158 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $58,865 $209,881 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $56,503 $206,729 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $76,838 $281,452 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 4th Qtr Full Year Revenue ($2,268) ($4,568) ($6,152) ($5,124) ($18,112) ($3,084) $104 $2,755 $2,341 $2,116 Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 1,212 (2,504) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 1,129 4,620 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) $486 $1,350 $829 $583 $3,248 ($278) $721 $2,109 $602 3,154 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 4th Qtr Full Year Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $267 $3,849 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 (105) 393 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $162 $4,242 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 4th Qtr Full Year Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $1,409 5,304 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (15) (48) Total other income $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $867 $3,790 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 4th Qtr Full Year Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $1,969 $4,730 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 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 203 4 8 2 217 208 4 8 2 222 Total shares purchased 586 421 355 208 1,570 723 385 136 2 1,246 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 $0 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock 27,143 528 1,242 197 29,110 27,511 658 1,529 331 30,029 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $331 $196,047 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Over 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 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 $ 1,427,854 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 $24 million and $26 million in 2023 and 2022, respectively, due to this law change. 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/20240130379390/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 Fourth Quarter and Full Year Results By: Manhattan Associates Inc. via Business Wire January 30, 2024 at 16:05 PM EST RPO Bookings Increase 36% over Prior Year on Strong Demand Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $238.3 million for the fourth quarter ended December 31, 2023. GAAP diluted earnings per share for Q4 2023 was $0.78 compared to $0.60 in Q4 2022. Non-GAAP adjusted diluted earnings per share for Q4 2023 was $1.03 compared to $0.81 in Q4 2022. “Manhattan’s business fundamentals and momentum are strong. Our fourth quarter results exceeded expectations, capping a very successful year for our company,” said Manhattan Associates president and CEO Eddie Capel. “While appropriately cautious regarding the global economy, Manhattan enters 2024 from a position of strength, and we are optimistic about our growing market opportunity. We remain firmly committed to helping our customers succeed by delivering leading innovation across supply chain execution, omnichannel and retail point of sale markets,” Mr. Capel concluded. FOURTH QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.3 million for Q4 2023, compared to $198.1 million for Q4 2022. Cloud subscription revenue was $71.4 million for Q4 2023, compared to $51.7 million for Q4 2022. License revenue was $5.2 million for Q4 2023, compared to $5.0 million for Q4 2022. Services revenue was $119.1 million for Q4 2023, compared to $99.8 million for Q4 2022. GAAP diluted earnings per share was $0.78 for Q4 2023, compared to $0.60 for Q4 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.03 for Q4 2023, compared to $0.81 for Q4 2022. GAAP operating income was $58.9 million for Q4 2023, compared to $44.7 million for Q4 2022. Adjusted operating income, a non-GAAP measure, was $76.8 million for Q4 2023, compared to $59.9 million for Q4 2022. Cash flow from operations was $88.4 million for Q4 2023, compared to $55.2 million for Q4 2022. Days Sales Outstanding was 70 days at December 31, 2023, compared to 71 days at September 30, 2023. Cash totaled $270.7 million at December 31, 2023, compared to $182.3 million at September 30, 2023. During the three months ended December 31, 2023, the Company did not repurchase shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors. Our $75.0 million repurchase authority replenished by our Board of Directors in October 2023 remains in effect. FULL YEAR 2023 FINANCIAL SUMMARY: Consolidated total revenue for the twelve months ended December 31, 2023, was $928.7 million, compared to $767.1 million for the twelve months ended December 31, 2022. Cloud subscription revenue was $254.6 million for the twelve months ended December 31, 2023, compared to $176.5 million for the twelve months ended December 31, 2022. License revenue was $18.2 million for the twelve months ended December 31, 2023, compared to $24.8 million for the twelve months ended December 31, 2022. Services revenue was $487.9 million for the twelve months ended December 31, 2023, compared to $394.1 million for the twelve months ended December 31, 2022. GAAP diluted earnings per share for the twelve months ended December 31, 2023, was $2.82, compared to $2.03 for the twelve months ended December 31, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $3.74 for the twelve months ended December 31, 2023, compared to $2.76 for the twelve months ended December 31, 2022. GAAP operating income was $209.9 million for the twelve months ended December 31, 2023, compared to $152.7 million for the twelve months ended December 31, 2022. Adjusted operating income, a non-GAAP measure, was $281.5 million for the twelve months ended December 31, 2023, compared to $212.1 million for the twelve months ended December 31, 2022. Cash flow from operations was $246.2 million for the twelve months ended December 31, 2023, compared to $179.6 million for the twelve months ended December 31, 2022. During the twelve months ended December 31, 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 $166.0 million. 2024 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2024: Guidance Range - 2024 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue $1,015 $1,025 9% 10% Operating Margin: GAAP operating margin 21.2% 21.8% Equity-based compensation 7.5% 7.5% Adjusted operating margin(1) 28.7% 29.3% Diluted earnings per share (EPS): GAAP EPS $2.81 $2.91 0% 3% Equity-based compensation 1.02 1.02 Excess tax benefit on stock vesting(2) (0.13) (0.13) Adjusted EPS(1) $3.69 $3.79 -1% 1% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and the related income tax effects, if applicable. (2) Excess tax benefit on stock vesting expected to occur primarily in the first quarter of 2024. 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 fourth quarter and twelve months ended December 31, 2023 financial results will be held today, January 30, 2024, 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’ first quarter 2024 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 twelve months ended December 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. 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 “2024 Guidance” and 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; 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $71,416 $51,691 $254,612 $176,458 Software license 5,239 4,979 18,206 24,848 Maintenance 37,164 35,083 143,936 142,198 Services 119,125 99,812 487,869 394,096 Hardware 5,311 6,538 24,102 29,484 Total revenue 238,255 198,103 928,725 767,084 Costs and expenses: Cost of cloud subscriptions, maintenance and services 106,349 89,629 429,263 356,111 Cost of software license 384 377 1,351 2,126 Research and development 31,327 27,123 126,814 111,877 Sales and marketing 20,212 16,656 74,490 64,537 General and administrative 19,613 18,107 81,174 73,070 Depreciation and amortization 1,505 1,506 5,752 6,663 Total costs and expenses 179,390 153,398 718,844 614,384 Operating income 58,865 44,705 209,881 152,700 Other income, net 867 828 3,790 5,421 Income before income taxes 59,732 45,533 213,671 158,121 Income tax provision 10,996 7,665 37,103 29,162 Net income $48,736 $37,868 $176,568 $128,959 Basic earnings per share $0.79 $0.61 $2.86 $2.05 Diluted earnings per share $0.78 $0.60 $2.82 $2.03 Weighted average number of shares: Basic 61,566 62,327 61,817 62,768 Diluted 62,555 63,028 62,608 63,408 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Operating income $58,865 44,705 $209,881 152,700 Equity-based compensation (a) 17,973 15,152 71,571 59,361 Adjusted operating income (Non-GAAP) $76,838 $59,857 $281,452 $212,061 Income tax provision $10,996 7,665 $37,103 29,162 Equity-based compensation (a) 2,496 2,045 10,563 9,058 Tax benefit of stock awards vested (b) 26 (3) 3,480 4,383 Adjusted income tax provision (Non-GAAP) $13,518 $9,707 $51,146 $42,603 Net income $48,736 $37,868 $176,568 $128,959 Equity-based compensation (a) 15,477 13,107 61,008 50,303 Tax benefit of stock awards vested (b) (26) 3 (3,480) (4,383) Adjusted net income (Non-GAAP) $64,187 $50,978 $234,096 $174,879 Diluted EPS $0.78 $0.60 $2.82 $2.03 Equity-based compensation (a) 0.25 0.21 0.97 0.79 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.03 $0.81 $3.74 $2.76 Fully diluted shares 62,555 63,028 62,608 63,408 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of services $7,234 $5,609 $28,571 $21,876 Research and development 3,963 3,341 15,674 13,081 Sales and marketing 1,760 1,543 7,093 6,003 General and administrative 5,016 4,659 20,233 18,401 Total equity-based compensation $17,973 $15,152 $71,571 $59,361 (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) December 31, 2023 December 31, 2022 ASSETS Current Assets: Cash and cash equivalents $ 270,741 $ 225,463 Accounts receivable, net 181,173 166,767 Prepaid expenses and other current assets 27,276 23,145 Total current assets 479,190 415,375 Property and equipment, net 11,795 12,803 Operating lease right-of-use assets 21,645 17,794 Goodwill, net 62,235 62,230 Deferred income taxes 66,043 37,206 Other assets 32,445 24,770 Total assets $ 673,353 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,508 $ 25,701 Accrued compensation and benefits 73,210 54,469 Accrued and other liabilities 27,374 24,569 Deferred revenue 237,793 208,807 Income taxes payable 3,030 2,049 Total current liabilities 365,915 315,595 Operating lease liabilities, long-term 17,694 14,065 Other non-current liabilities 11,466 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and December 31, 2022 - - Common stock, $.01 par value; 200,000,000 shares authorized; 61,566,037 and 62,191,570 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 615 621 Retained earnings 304,701 253,711 Accumulated other comprehensive loss (27,038 ) (27,532 ) Total shareholders' equity 278,278 226,800 Total liabilities and shareholders' equity $ 673,353 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 Operating activities: Net income $ 176,568 $ 128,959 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,752 6,663 Equity-based compensation 71,571 59,361 Loss (Gain) on disposal of equipment 57 (89 ) Deferred income taxes (28,844 ) (29,711 ) Unrealized foreign currency loss (gain) 1,280 (1,515 ) Changes in operating assets and liabilities: Accounts receivable, net (13,084 ) (44,056 ) Other assets (10,925 ) (10,247 ) Accounts payable, accrued and other liabilities 18,123 11,794 Income taxes (1,416 ) 765 Deferred revenue 27,136 57,706 Net cash provided by operating activities 246,218 179,630 Investing activities: Purchases of property and equipment (4,730 ) (6,587 ) Net cash used in investing activities (4,730 ) (6,587 ) Financing activities: Purchase of common stock (196,047 ) (204,460 ) Net cash used in financing activities (196,047 ) (204,460 ) Foreign currency impact on cash (163 ) (6,826 ) Net change in cash and cash equivalents 45,278 (38,243 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 270,741 $ 225,463 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 4th Qtr Full Year GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $0.78 $2.82 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.25 0.97 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 $1.03 $3.74 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,555 62,608 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 4th Qtr Full Year Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $182,664 $719,195 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 44,874 166,638 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 10,717 42,892 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $238,255 $928,725 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $38,530 $135,158 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $58,865 $209,881 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $56,503 $206,729 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $76,838 $281,452 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 4th Qtr Full Year Revenue ($2,268) ($4,568) ($6,152) ($5,124) ($18,112) ($3,084) $104 $2,755 $2,341 $2,116 Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 1,212 (2,504) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 1,129 4,620 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) $486 $1,350 $829 $583 $3,248 ($278) $721 $2,109 $602 3,154 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 4th Qtr Full Year Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $267 $3,849 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 (105) 393 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $162 $4,242 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 4th Qtr Full Year Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $1,409 5,304 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (15) (48) Total other income $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $867 $3,790 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 4th Qtr Full Year Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $1,969 $4,730 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 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 203 4 8 2 217 208 4 8 2 222 Total shares purchased 586 421 355 208 1,570 723 385 136 2 1,246 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 $0 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock 27,143 528 1,242 197 29,110 27,511 658 1,529 331 30,029 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $331 $196,047 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Over 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 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 $ 1,427,854 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 $24 million and $26 million in 2023 and 2022, respectively, due to this law change. 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/20240130379390/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 $238.3 million for the fourth quarter ended December 31, 2023. GAAP diluted earnings per share for Q4 2023 was $0.78 compared to $0.60 in Q4 2022. Non-GAAP adjusted diluted earnings per share for Q4 2023 was $1.03 compared to $0.81 in Q4 2022. “Manhattan’s business fundamentals and momentum are strong. Our fourth quarter results exceeded expectations, capping a very successful year for our company,” said Manhattan Associates president and CEO Eddie Capel. “While appropriately cautious regarding the global economy, Manhattan enters 2024 from a position of strength, and we are optimistic about our growing market opportunity. We remain firmly committed to helping our customers succeed by delivering leading innovation across supply chain execution, omnichannel and retail point of sale markets,” Mr. Capel concluded. FOURTH QUARTER 2023 FINANCIAL SUMMARY: Consolidated total revenue was $238.3 million for Q4 2023, compared to $198.1 million for Q4 2022. Cloud subscription revenue was $71.4 million for Q4 2023, compared to $51.7 million for Q4 2022. License revenue was $5.2 million for Q4 2023, compared to $5.0 million for Q4 2022. Services revenue was $119.1 million for Q4 2023, compared to $99.8 million for Q4 2022. GAAP diluted earnings per share was $0.78 for Q4 2023, compared to $0.60 for Q4 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $1.03 for Q4 2023, compared to $0.81 for Q4 2022. GAAP operating income was $58.9 million for Q4 2023, compared to $44.7 million for Q4 2022. Adjusted operating income, a non-GAAP measure, was $76.8 million for Q4 2023, compared to $59.9 million for Q4 2022. Cash flow from operations was $88.4 million for Q4 2023, compared to $55.2 million for Q4 2022. Days Sales Outstanding was 70 days at December 31, 2023, compared to 71 days at September 30, 2023. Cash totaled $270.7 million at December 31, 2023, compared to $182.3 million at September 30, 2023. During the three months ended December 31, 2023, the Company did not repurchase shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors. Our $75.0 million repurchase authority replenished by our Board of Directors in October 2023 remains in effect. FULL YEAR 2023 FINANCIAL SUMMARY: Consolidated total revenue for the twelve months ended December 31, 2023, was $928.7 million, compared to $767.1 million for the twelve months ended December 31, 2022. Cloud subscription revenue was $254.6 million for the twelve months ended December 31, 2023, compared to $176.5 million for the twelve months ended December 31, 2022. License revenue was $18.2 million for the twelve months ended December 31, 2023, compared to $24.8 million for the twelve months ended December 31, 2022. Services revenue was $487.9 million for the twelve months ended December 31, 2023, compared to $394.1 million for the twelve months ended December 31, 2022. GAAP diluted earnings per share for the twelve months ended December 31, 2023, was $2.82, compared to $2.03 for the twelve months ended December 31, 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $3.74 for the twelve months ended December 31, 2023, compared to $2.76 for the twelve months ended December 31, 2022. GAAP operating income was $209.9 million for the twelve months ended December 31, 2023, compared to $152.7 million for the twelve months ended December 31, 2022. Adjusted operating income, a non-GAAP measure, was $281.5 million for the twelve months ended December 31, 2023, compared to $212.1 million for the twelve months ended December 31, 2022. Cash flow from operations was $246.2 million for the twelve months ended December 31, 2023, compared to $179.6 million for the twelve months ended December 31, 2022. During the twelve months ended December 31, 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 $166.0 million. 2024 GUIDANCE Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2024: Guidance Range - 2024 Full Year ($'s in millions, except operating margin and EPS) $ Range % Growth Range Total revenue $1,015 $1,025 9% 10% Operating Margin: GAAP operating margin 21.2% 21.8% Equity-based compensation 7.5% 7.5% Adjusted operating margin(1) 28.7% 29.3% Diluted earnings per share (EPS): GAAP EPS $2.81 $2.91 0% 3% Equity-based compensation 1.02 1.02 Excess tax benefit on stock vesting(2) (0.13) (0.13) Adjusted EPS(1) $3.69 $3.79 -1% 1% (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and the related income tax effects, if applicable. (2) Excess tax benefit on stock vesting expected to occur primarily in the first quarter of 2024. 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 fourth quarter and twelve months ended December 31, 2023 financial results will be held today, January 30, 2024, 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’ first quarter 2024 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 twelve months ended December 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. 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 “2024 Guidance” and 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; 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (unaudited) (unaudited) Revenue: Cloud subscriptions $71,416 $51,691 $254,612 $176,458 Software license 5,239 4,979 18,206 24,848 Maintenance 37,164 35,083 143,936 142,198 Services 119,125 99,812 487,869 394,096 Hardware 5,311 6,538 24,102 29,484 Total revenue 238,255 198,103 928,725 767,084 Costs and expenses: Cost of cloud subscriptions, maintenance and services 106,349 89,629 429,263 356,111 Cost of software license 384 377 1,351 2,126 Research and development 31,327 27,123 126,814 111,877 Sales and marketing 20,212 16,656 74,490 64,537 General and administrative 19,613 18,107 81,174 73,070 Depreciation and amortization 1,505 1,506 5,752 6,663 Total costs and expenses 179,390 153,398 718,844 614,384 Operating income 58,865 44,705 209,881 152,700 Other income, net 867 828 3,790 5,421 Income before income taxes 59,732 45,533 213,671 158,121 Income tax provision 10,996 7,665 37,103 29,162 Net income $48,736 $37,868 $176,568 $128,959 Basic earnings per share $0.79 $0.61 $2.86 $2.05 Diluted earnings per share $0.78 $0.60 $2.82 $2.03 Weighted average number of shares: Basic 61,566 62,327 61,817 62,768 Diluted 62,555 63,028 62,608 63,408 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Operating income $58,865 44,705 $209,881 152,700 Equity-based compensation (a) 17,973 15,152 71,571 59,361 Adjusted operating income (Non-GAAP) $76,838 $59,857 $281,452 $212,061 Income tax provision $10,996 7,665 $37,103 29,162 Equity-based compensation (a) 2,496 2,045 10,563 9,058 Tax benefit of stock awards vested (b) 26 (3) 3,480 4,383 Adjusted income tax provision (Non-GAAP) $13,518 $9,707 $51,146 $42,603 Net income $48,736 $37,868 $176,568 $128,959 Equity-based compensation (a) 15,477 13,107 61,008 50,303 Tax benefit of stock awards vested (b) (26) 3 (3,480) (4,383) Adjusted net income (Non-GAAP) $64,187 $50,978 $234,096 $174,879 Diluted EPS $0.78 $0.60 $2.82 $2.03 Equity-based compensation (a) 0.25 0.21 0.97 0.79 Tax benefit of stock awards vested (b) - - (0.06) (0.07) Adjusted diluted EPS (Non-GAAP) $1.03 $0.81 $3.74 $2.76 Fully diluted shares 62,555 63,028 62,608 63,408 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of services $7,234 $5,609 $28,571 $21,876 Research and development 3,963 3,341 15,674 13,081 Sales and marketing 1,760 1,543 7,093 6,003 General and administrative 5,016 4,659 20,233 18,401 Total equity-based compensation $17,973 $15,152 $71,571 $59,361 (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) December 31, 2023 December 31, 2022 ASSETS Current Assets: Cash and cash equivalents $ 270,741 $ 225,463 Accounts receivable, net 181,173 166,767 Prepaid expenses and other current assets 27,276 23,145 Total current assets 479,190 415,375 Property and equipment, net 11,795 12,803 Operating lease right-of-use assets 21,645 17,794 Goodwill, net 62,235 62,230 Deferred income taxes 66,043 37,206 Other assets 32,445 24,770 Total assets $ 673,353 $ 570,178 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,508 $ 25,701 Accrued compensation and benefits 73,210 54,469 Accrued and other liabilities 27,374 24,569 Deferred revenue 237,793 208,807 Income taxes payable 3,030 2,049 Total current liabilities 365,915 315,595 Operating lease liabilities, long-term 17,694 14,065 Other non-current liabilities 11,466 13,718 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and December 31, 2022 - - Common stock, $.01 par value; 200,000,000 shares authorized; 61,566,037 and 62,191,570 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 615 621 Retained earnings 304,701 253,711 Accumulated other comprehensive loss (27,038 ) (27,532 ) Total shareholders' equity 278,278 226,800 Total liabilities and shareholders' equity $ 673,353 $ 570,178 MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 Operating activities: Net income $ 176,568 $ 128,959 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,752 6,663 Equity-based compensation 71,571 59,361 Loss (Gain) on disposal of equipment 57 (89 ) Deferred income taxes (28,844 ) (29,711 ) Unrealized foreign currency loss (gain) 1,280 (1,515 ) Changes in operating assets and liabilities: Accounts receivable, net (13,084 ) (44,056 ) Other assets (10,925 ) (10,247 ) Accounts payable, accrued and other liabilities 18,123 11,794 Income taxes (1,416 ) 765 Deferred revenue 27,136 57,706 Net cash provided by operating activities 246,218 179,630 Investing activities: Purchases of property and equipment (4,730 ) (6,587 ) Net cash used in investing activities (4,730 ) (6,587 ) Financing activities: Purchase of common stock (196,047 ) (204,460 ) Net cash used in financing activities (196,047 ) (204,460 ) Foreign currency impact on cash (163 ) (6,826 ) Net change in cash and cash equivalents 45,278 (38,243 ) Cash and cash equivalents at beginning of period 225,463 263,706 Cash and cash equivalents at end of period $ 270,741 $ 225,463 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 4th Qtr Full Year GAAP Diluted EPS $0.48 $0.49 $0.47 $0.60 $2.03 $0.62 $0.63 $0.79 $0.78 $2.82 Adjustments to GAAP: Equity-based compensation 0.19 0.20 0.19 0.21 0.79 0.23 0.25 0.26 0.25 0.97 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 $1.03 $3.74 Fully Diluted Shares 63,871 63,419 63,165 63,028 63,408 62,767 62,432 62,310 62,555 62,608 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 4th Qtr Full Year Revenue: Americas $139,540 $151,996 $156,674 $155,674 $603,884 $170,759 $179,208 $186,564 $182,664 $719,195 EMEA 32,151 31,614 31,843 33,330 128,938 39,658 40,902 41,204 44,874 166,638 APAC 7,265 8,314 9,584 9,099 34,262 10,596 10,906 10,673 10,717 42,892 $178,956 $191,924 $198,101 $198,103 $767,084 $221,013 $231,016 $238,441 $238,255 $928,725 GAAP Operating Income: Americas $21,393 $24,507 $22,914 $30,475 $99,289 $29,647 $32,326 $34,655 $38,530 $135,158 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $33,972 $37,253 $36,770 $44,705 $152,700 $47,085 $50,483 $53,448 $58,865 $209,881 Adjustments (pre-tax): Americas: Equity-based compensation $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 $14,138 $15,538 $14,533 $15,152 $59,361 $16,640 $17,928 $19,030 $17,973 $71,571 Adjusted non-GAAP Operating Income: Americas $35,531 $40,045 $37,447 $45,627 $158,650 $46,287 $50,254 $53,685 $56,503 $206,729 EMEA 10,517 9,423 9,851 10,239 40,030 12,793 13,556 14,415 15,959 56,723 APAC 2,062 3,323 4,005 3,991 13,381 4,645 4,601 4,378 4,376 18,000 $48,110 $52,791 $51,303 $59,857 $212,061 $63,725 $68,411 $72,478 $76,838 $281,452 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 4th Qtr Full Year Revenue ($2,268) ($4,568) ($6,152) ($5,124) ($18,112) ($3,084) $104 $2,755 $2,341 $2,116 Costs and expenses (2,043) (3,862) (5,412) (5,354) (16,671) (3,616) (1,133) 1,033 1,212 (2,504) Operating income (225) (706) (740) 230 (1,441) 532 1,237 1,722 1,129 4,620 Foreign currency gains (losses) in other income 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) $486 $1,350 $829 $583 $3,248 ($278) $721 $2,109 $602 3,154 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 4th Qtr Full Year Operating income $470 $710 $1,166 $1,900 $4,246 $1,632 $1,222 $728 $267 $3,849 Foreign currency gains (losses) in other income 809 2,085 1,713 738 5,345 (283) (31) 812 (105) 393 Total impact of changes in the Indian Rupee $1,279 $2,795 $2,879 $2,638 $9,591 $1,349 $1,191 $1,540 $162 $4,242 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 4th Qtr Full Year Interest income $19 $92 $112 $373 $596 $969 $1,555 $1,371 $1,409 5,304 Foreign currency gains (losses) 711 2,056 1,569 353 4,689 (810) (516) 387 (527) (1,466) Other non-operating income (expense) 8 95 (69) 102 136 (16) 2 (19) (15) (48) Total other income $738 $2,243 $1,612 $828 $5,421 $143 $1,041 $1,739 $867 $3,790 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 4th Qtr Full Year Capital expenditures $1,159 $1,084 $1,909 $2,435 $6,587 $666 $1,009 $1,086 $1,969 $4,730 6. Stock Repurchase Activity (in thousands): 2022 2023 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 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 203 4 8 2 217 208 4 8 2 222 Total shares purchased 586 421 355 208 1,570 723 385 136 2 1,246 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 $0 $166,018 Total cash paid for shares withheld for taxes due upon vesting of restricted stock 27,143 528 1,242 197 29,110 27,511 658 1,529 331 30,029 Total cash paid for shares repurchased $77,108 $50,679 $51,242 $25,431 $204,460 $101,688 $67,427 $26,601 $331 $196,047 7. Remaining Performance Obligations We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Over 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 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Remaining Performance Obligations $ 809,540 $ 897,680 $ 969,603 $ 1,051,544 $ 1,153,404 $ 1,238,672 $ 1,324,861 $ 1,427,854 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 $24 million and $26 million in 2023 and 2022, respectively, due to this law change. 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/20240130379390/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