Manhattan Associates Reports Record Fourth Quarter and Full Year Results

Published: 2025-01-28 16:08:05 ET MANH

RPO Bookings Increase 25% over Prior Year on Strong Demand

Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $255.8 million for the fourth quarter ended December 31, 2024. GAAP diluted earnings per share for Q4 2024 was $0.77 compared to $0.78 in Q4 2023. Non-GAAP adjusted diluted earnings per share for Q4 2024 was $1.17 compared to $1.03 in Q4 2023.

“Manhattan ended the year strong, posting record bookings that exceeded our expectations,” said Manhattan Associates president and CEO Eddie Capel. “In 2024, we surpassed the one billion in total revenue milestone and extended our position as the leading innovator in supply chain and omnichannel retail end-markets.

“We enter 2025 excited about our growing market opportunity and are executing well on our business strategy. While we remain appropriately cautious on the turbulent macro environment, our business momentum is solid, and our team is devoted to our customers’ success,” Mr. Capel concluded.

FOURTH QUARTER 2024 FINANCIAL SUMMARY:

FULL YEAR 2024 FINANCIAL SUMMARY:

2025 GUIDANCE

Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2025:

Guidance Range - 2025 Full Year

($'s in millions, except operating margin and EPS)

$ Range

% Growth Range

Total revenue

$1,060

$1,070

Operating Margin:

GAAP operating margin

22.3%

22.9%

Equity-based compensation

9.5%

9.4%

Unusual health insurance claim(3)

1.0%

Restructuring expense(4)

0.2%

Adjusted operating margin(1)

33.0%

33.5%

Diluted earnings per share (EPS):

GAAP EPS

$3.05

$3.15

-13%

-10%

Equity-based compensation

1.37

Excess tax benefit on stock vesting(2)

(0.12)

Unusual health insurance claim(3)

0.12

Restructuring expense(4)

0.03

Adjusted EPS(1)

$4.45

$4.55

-6%

-4%

(1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation, expense related to an unusual health insurance claim, restructuring expense, and the related income tax effects, if applicable.

(2) Excess tax benefit on stock vesting expected to occur primarily in the first quarter of 2025.

(3) Adjustment represents expense for an unusual health insurance claim. Based on the uncommonly large magnitude and nature of the claim, we do not believe that this expense reflects our normal operating activities, and we have excluded the amount from adjusted non-GAAP results.

(4) In January 2025, the Company eliminated about 100 positions to align our services capacity with customer demand which has been impacted by short-term macro-economic uncertainty. We expect to record a pre-tax restructuring expense in the first quarter of 2025.

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, 2024 financial results will be held today, January 28, 2025, 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 2025 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, 2024.

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 and expense related to an unusual health insurance claim – 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 “2025 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 and transformation in the retail sector and our vertical markets; 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, 2023, 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,

2024

2023

2024

2023

(unaudited)

Revenue:

Cloud subscriptions

$90,330

$71,416

$337,203

$254,612

Software license

5,452

5,239

15,085

18,206

Maintenance

33,568

37,164

138,304

143,936

Services

119,482

119,125

525,517

487,869

Hardware

6,969

5,311

26,243

24,102

Total revenue

255,801

238,255

1,042,352

928,725

Costs and expenses:

Cost of cloud subscriptions, maintenance and services

112,739

106,349

469,659

429,263

Cost of software license

253

384

1,321

1,351

Research and development

32,996

31,327

137,689

126,814

Sales and marketing

20,307

20,212

75,976

74,490

General and administrative

27,187

19,613

89,810

81,174

Depreciation and amortization

1,631

1,505

6,301

5,752

Total costs and expenses

195,113

179,390

780,756

718,844

Operating income

60,688

58,865

261,596

209,881

Other income, net

1,996

867

5,218

3,790

Income before income taxes

62,684

59,732

266,814

213,671

Income tax provision

14,668

10,996

48,450

37,103

Net income

$48,016

$48,736

$218,364

$176,568

Basic earnings per share

$0.79

$3.56

$2.86

Diluted earnings per share

$0.77

$0.78

$3.51

$2.82

Weighted average number of shares:

Basic

60,999

61,566

61,303

61,817

Diluted

62,009

62,555

62,183

62,608

Reconciliation of Selected GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2024

2023

2024

2023

Operating income

$60,688

58,865

$261,596

209,881

Equity-based compensation (a)

22,592

17,973

93,206

71,571

Unusual health insurance claim (c)

7,002

Adjusted operating income (Non-GAAP)

$90,282

$76,838

$361,804

$281,452

Income tax provision

$14,668

10,996

$48,450

37,103

Equity-based compensation (a)

3,160

2,496

14,127

10,563

Tax benefit of stock awards vested (b)

9,120

3,480

Unusual health insurance claim (c)

1,690

Adjusted income tax provision (Non-GAAP)

$19,575

$13,518

$73,387

$51,146

Net income

$48,016

$48,736

$218,364

$176,568

Equity-based compensation (a)

19,432

15,477

79,079

61,008

Tax benefit of stock awards vested (b)

(57)

(26)

(9,120)

(3,480)

Unusual health insurance claim (c)

5,312

Adjusted net income (Non-GAAP)

$72,703

$64,187

$293,635

$234,096

Diluted EPS

$0.77

$0.78

$3.51

$2.82

Equity-based compensation (a)

0.31

0.25

1.27

0.97

Tax benefit of stock awards vested (b)

(0.15)

(0.06)

Unusual health insurance claim (c)

0.09

Adjusted diluted EPS (Non-GAAP)

$1.17

$1.03

$4.72

$3.74

Fully diluted shares

62,009

62,555

62,183

62,608

(a)

Adjusted results exclude all equity-based compensation, as detailed below, 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,

2024

2023

2024

2023

Cost of services

$10,049

$7,234

$41,531

$28,571

Research and development

4,948

3,963

20,760

15,674

Sales and marketing

2,149

1,760

8,444

7,093

General and administrative

5,446

5,016

22,471

20,233

Total equity-based compensation

$22,592

$17,973

$93,206

$71,571

(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.

(c)

Adjustment represents expense for an unusual health insurance claim. Based on the uncommonly large magnitude and nature of the claim, we do not believe that this expense reflects our normal operating activities, and we have excluded the amount from adjusted non-GAAP results.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31, 2024

December 31, 2023

ASSETS

Current Assets:

Cash and cash equivalents

266,230

270,741

Accounts receivable, net

205,475

181,173

Prepaid expenses and other current assets

31,559

27,276

Total current assets

503,264

479,190

Property and equipment, net

13,971

11,795

Operating lease right-of-use assets

47,923

21,645

Goodwill, net

62,226

62,235

Deferred income taxes

94,505

66,043

Other assets

35,662

32,445

Total assets

757,551

673,353

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

26,615

24,508

Accrued compensation and benefits

72,180

73,210

Accrued and other liabilities

22,275

27,374

Deferred revenue

277,970

237,793

Income taxes payable

1,264

3,030

Total current liabilities

400,304

365,915

Operating lease liabilities, long-term

47,794

17,694

Other non-current liabilities

10,327

11,466

Shareholders' equity:

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2024 and December 31, 2023

Common stock, $.01 par value; 200,000,000 shares authorized; 60,921,191 and 61,566,037 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

609

615

Retained earnings

329,439

304,701

Accumulated other comprehensive loss

(30,922

)

(27,038

)

Total shareholders' equity

299,126

278,278

Total liabilities and shareholders' equity

757,551

673,353

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2024

2023

Operating activities:

Net income

218,364

176,568

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

6,301

5,752

Equity-based compensation

93,206

71,571

(Gain) Loss on disposal of equipment

(133

)

Deferred income taxes

(28,689

)

(28,844

)

Unrealized foreign currency loss (gain)

(380

)

1,280

Changes in operating assets and liabilities:

Accounts receivable, net

(26,702

)

(13,084

)

Other assets

(4,157

)

(10,925

)

Accounts payable, accrued and other liabilities

1,248

18,123

Income taxes

(6,242

)

(1,416

)

Deferred revenue

42,187

27,136

Net cash provided by operating activities

295,003

246,218

Investing activities:

Purchases of property and equipment

(8,675

)

(4,730

)

Net cash used in investing activities

(8,675

)

(4,730

)

Financing activities:

Purchase of common stock

(286,366

)

(196,047

)

Net cash used in financing activities

(286,366

)

(196,047

)

Foreign currency impact on cash

(4,473

)

(163

)

Net change in cash and cash equivalents

(4,511

)

45,278

Cash and cash equivalents at beginning of period

270,741

225,463

Cash and cash equivalents at end of period

266,230

270,741

MANHATTAN ASSOCIATES, INC.

SUPPLEMENTAL INFORMATION

1. GAAP and adjusted earnings per share by quarter are as follows:

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

GAAP Diluted EPS

$0.62

$0.63

$0.79

$0.78

$2.82

$0.86

$0.85

$1.03

$0.77

$3.51

Adjustments to GAAP:

Equity-based compensation

0.23

0.25

0.26

0.25

0.97

0.30

0.34

0.33

0.31

1.27

Tax benefit of stock awards vested

(0.05)

(0.06)

(0.13)

(0.01)

(0.15)

Unusual health insurance claim

0.09

Adjusted Diluted EPS

$0.80

$0.88

$1.05

$1.03

$3.74

$1.03

$1.18

$1.35

$1.17

$4.72

Fully Diluted Shares

62,767

62,432

62,310

62,555

62,608

62,493

62,118

61,948

62,009

62,183

2. Revenues and operating income by reportable segment are as follows (in thousands):

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Revenue:

Americas

$170,759

$179,208

$186,564

$182,664

$719,195

$196,312

$205,955

$205,852

$194,367

$802,486

EMEA

39,658

40,902

41,204

44,874

166,638

46,620

46,918

48,082

48,903

190,523

APAC

10,596

10,906

10,673

10,717

42,892

11,620

12,445

12,747

12,531

49,343

$221,013

$231,016

$238,441

$238,255

$928,725

$254,552

$265,318

$266,681

$255,801

$1,042,352

GAAP Operating Income:

Americas

$29,647

$32,326

$34,655

$38,530

$135,158

$36,687

$45,300

$49,033

$36,323

$167,343

EMEA

12,793

13,556

14,415

15,959

56,723

15,884

17,195

20,521

18,896

72,496

APAC

4,645

4,601

4,378

4,376

18,000

5,059

5,693

5,536

5,469

21,757

$47,085

$50,483

$53,448

$58,865

$209,881

$57,630

$68,188

$75,090

$60,688

$261,596

Adjustments (pre-tax):

Americas:

Equity-based comp

$16,640

$17,928

$19,030

$17,973

$71,571

$22,095

$24,666

$23,853

$22,592

$93,206

Unusual health insurance claim

7,002

$16,640

$17,928

$19,030

$17,973

$71,571

$22,095

$24,666

$23,853

$29,594

$100,208

Adjusted non-GAAP Operating Income:

Americas

$46,287

$50,254

$53,685

$56,503

$206,729

$58,782

$69,966

$72,886

$65,917

$267,551

EMEA

12,793

13,556

14,415

15,959

56,723

15,884

17,195

20,521

18,896

72,496

APAC

4,645

4,601

4,378

4,376

18,000

5,059

5,693

5,536

5,469

21,757

$63,725

$68,411

$72,478

$76,838

$281,452

$79,725

$92,854

$98,943

$90,282

$361,804

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):

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Revenue

$(3,084)

$104

$2,755

$2,341

$2,116

$648

$(531)

$936

$316

$1,369

Costs and expenses

(3,616)

(1,133)

1,033

1,212

(2,504)

176

(673)

211

(227)

(513)

Operating income

532

1,237

1,722

1,129

4,620

472

142

725

543

1,882

Foreign currency gains (losses) in other income

(810)

(516)

387

(527)

(1,466)

(564)

(577)

(331)

519

(953)

$(278)

$721

$2,109

$602

$3,154

$(92)

$(435)

$394

$1,062

$929

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):

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Operating income

$1,632

$1,222

$728

$267

$3,849

$185

$307

$261

$302

$1,055

Foreign currency gains (losses) in other income

(283)

(31)

812

(105)

393

164

284

1,283

1,772

Total impact of changes in the Indian Rupee

$1,349

$1,191

$1,540

$162

$4,242

$349

$348

$545

$1,585

$2,827

4. Other income includes the following components (in thousands):

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Interest income

$969

$1,555

$1,371

$1,409

$5,304

$1,414

$1,503

$1,636

$1,476

$6,029

Foreign currency gains (losses)

(810)

(516)

387

(527)

(1,466)

(564)

(577)

(331)

519

(953)

Other non-operating income (expense)

(16)

(19)

(15)

(48)

146

(12)

142

Total other income

$143

$1,041

$1,739

$867

$3,790

$996

$914

$1,312

$1,996

$5,218

5. Capital expenditures are as follows (in thousands):

2023

2024

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Capital expenditures

$666

$1,009

$1,086

$1,969

$4,730

$2,321

$2,217

$1,009

$3,128

$8,675

6. Stock Repurchase Activity (in thousands):

2023

2024

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

515

381

128

1,024

294

343

194

156

987

Shares withheld for taxes due upon vesting of restricted stock

208

222

165

178

Total shares purchased

723

385

136

1,246

459

346

202

158

1,165

Total cash paid for shares purchased under publicly-announced buy-back program

$74,177

$66,769

$25,072

$166,018

$73,411

$74,999

$49,687

$43,539

$241,636

Total cash paid for shares withheld for taxes due upon vesting of restricted stock

27,511

658

1,529

331

30,029

40,423

713

1,917

569

43,622

Total cash paid for excise tax

1,108

Total cash paid for shares repurchased

$101,688

$67,427

$26,601

$331

$196,047

$113,834

$75,712

$51,604

$45,216

$286,366

7. Remaining Performance Obligations

We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Over 98% of our RPO represents cloud native subscriptions with non-cancelable terms 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, 2023

June 30, 2023

September 30, 2023

December 31, 2023

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

Remaining Performance Obligations

$1,153,404

$1,238,672

$1,324,861

$1,427,854

$1,516,430

$1,601,531

$1,686,421

$1,780,400

For the quarter ending December 31, 2024, foreign exchange movements adversely impacted RPO by approximately $33 million compared to the quarter ending September 30, 2024.

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