Earnings call: Manhattan Associates reports record Q3 2023 results, raises full-year outlook

Manhattan Associates (NASDAQ:) announced a record-breaking third quarter of 2023, with a 20% surge in total revenue to $238 million and a 59% increase in adjusted earnings per share to $1.05. The company also reported substantial growth in its Cloud and Services revenue, which rose by 44% and 24% respectively. These figures align with the InvestingPro data that shows a revenue growth of 19.21% and a 25.04% EBITDA growth in the last 12 months up to Q2 2023.

Key takeaways from the call include:

• The company’s Remaining Performance Obligations (RPO), a key indicator of growth, climbed 37% to over $1.3 billion. This is reflective of the company’s high return on invested capital, as noted in the InvestingPro Tips.
• Manhattan Associates added over 400 new team members year-to-date, reflecting its continued investment in organic innovation.
• The company’s point-of-sale business and customer engagement solution, Manhattan Active, are both showing positive momentum.
• Manhattan Associates recently launched Fulfillment Insights, a new feature providing live omnichannel fulfillment performance benchmark data to customers.
• The company raised its full-year 2023 outlook, expecting RPO to exceed the high end of the $1.3 billion to $1.4 billion range, and total revenue to increase by 19% to $914 million.

Manhattan Associates’ earnings call revealed a healthy mix of sales across various categories, with notable strength from new logos. The company’s global services teams contributed to the record revenue of $128 million, a 24% increase driven by robust cloud sales. The adjusted operating profit stood at $72 million, with an adjusted operating margin of 30.4%, up 450 basis points YoY.

For 2024, the company forecasts total revenue to increase by 16%, cloud revenue to rise by 31%, and RPO to grow by 25%. The operating margin is expected to exceed 28%. The company remains optimistic about its market position and product offerings, even in the face of volatile macro conditions. This aligns with the InvestingPro Tip that Manhattan Associates’ stock generally trades with low price volatility.

CEO Eddie Capel spoke about the company’s growth targets and optimistic outlook, expressing confidence in their market leadership, product range, technology, and geographic reach. He also discussed the company’s new Fulfillment Insights feature and the potential for cross-selling within their platform. Capel highlighted the strong RPO billings quarter and noted that the transition from RPO to revenue remains consistent but accelerates once the software is rolled out. He also mentioned the well-balanced distribution of the new logo business across solutions and geographies.

Capel also touched on the company’s expansion into the contact center, emphasizing how their solutions can manage a broad set of customer engagement activities. The call ended with Capel wishing everyone a happy holiday season and expressing anticipation for the next discussion in January.

For more insights and tips like these, check out InvestingPro. The platform offers 20 additional tips for Manhattan Associates and many other companies, providing a wealth of information for savvy investors.

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