MANHATTAN ASSOCIATES INC Q3 FY2024 earnings call

• Q3 and year-to-date results set all-time records on both bottom- and top-lines. Total revenue up 12% to $267 million, adjusted earnings per share up 29% to $1.35.
• Solid cloud and services revenue growth across all geographies, with cloud subscription revenue up 33% in Q3. RPO increased 27% to ~$1.7 billion.
• Product updates: Manhattan Active Supply Chain Planning launched, Manhattan Active Omni has Fulfillment Experience Insights and Postgame Spotlight capabilities, and generative AI efforts with Manhattan Assist are ongoing.
• Global services team completed over 100 go lives in Q3.

For the quarter, total revenue increased 12% to $267 million. Cloud subscription revenue posted 33% growth in the quarter. RPO increased 27% to roughly $1.7 billion. Global services team completed over 100 go lives. Cloud revenue totaled $86 million, up 33%. Adjusted operating profit was $99 million, with adjusted operating margin of 37.1%, which is 670 basis points year-over-year up. Q3 adjusted earnings per share was $1.35, up 29%, and GAAP earnings per share was $1.03, up 30%. Q3 operating cash flow increased 6% to $62 million, resulting in 23% free cash flow margin and 38% adjusted EBITDA margin. Total deferred revenue increased 18% to $253 million. $215 million in cash and zero debt at quarter end, with $50 million in share repurchases in the quarter.

• 2024: Tightening revenue guidance, increasing operating margin and EPS guidance. Full year total revenue expected $1.039 billion to $1.041 billion (12% growth), operating margin midpoint 34%, EPS midpoint $4.61 (23% growth). Q4 total revenue ~$253.5 million, cloud revenue $89.5 million, maintenance revenue $33.5 million, operating margin 32.5%.
• 2025: Preliminary targets include total revenue $1.13 billion to $1.14 billion (9%-10% growth), cloud revenue $415 million (23% growth), RPO $2.15 billion (21% growth), services revenue $570 million midpoint (8% growth), operating margin ~33.5%.

• Turbulent global macro environment could impact performance and cause actual results to differ materially from projections. - RPO bookings can be lumpy due to large, complex deals closing in different quarters.

Q: Terry Tillman asked about Q4 start and budget flush.

A: Eddie Capel said Q4 start is a mix of deals slipping from Q3 and early Q4 deals closing, and no expectation of budget flush.

Q: Joe Vruwink asked about net new bookings share and product mix.

A: Eddie Capel said net new bookings share was low but expected to return to norms, and there's a nice product mix in Q4 including WMS, OMS, and Point of Sale deals.

Q: Brian Peterson asked about delayed deals and demand environment.

A: Eddie Capel said delayed deals are due to customer confidence, and Dennis Story said no change in demand environment.

Q: George Kurosawa asked about cloud migrations, contract duration, and margin upside.

A: Eddie Capel said cloud migrations are up a couple of points, contract duration is ~5.5 years, and margin upside is due to mix and scaling.

Q: Mark Schappel asked about Point of Sale deals and sales motion.

A: Eddie Capel said no Point of Sale deals in Q3 but near-term pipeline is encouraging, and cross-sells and conversions are strong.

Q: Dylan Becker asked about Insight offerings and services ecosystem.

A: Eddie Capel said land-and-expand strategy, and services efficiency is due to experienced team and less customization.