Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manhattan Associates Inc (MANH, Financial) surpassed the $1 billion total revenue milestone in 2024, achieving new records in RPO, total revenue, operating profit, free cash flow, and earnings per share.
- Q4 2024 was a record quarter with revenue increasing by 7% to $256 million, highlighted by 26% growth in cloud revenue.
- The company achieved a 25% increase in remaining performance obligation (RPO) to $1.8 billion, indicating strong future revenue potential.
- Manhattan Associates Inc (MANH) has a strong pipeline with a 70% win rate and significant opportunities for sustainable future growth.
- The company is committed to innovation, investing $138 million in research and development in 2024, which is expanding its total addressable market.
Negative Points
- Approximately 10% of customers with in-flight implementations have reduced their planned services work for the upcoming year, impacting services revenue.
- Services revenue is expected to trough in Q1 2025 due to deal pushes, reduced customization, and higher partner utilization.
- Foreign exchange headwinds have impacted RPO growth and are expected to continue affecting financial performance in 2025.
- The company anticipates a reduction in services revenue for 2025, which could create some financial volatility.
- Despite strong software demand, there is sluggishness in the services segment, partly due to budgetary constraints among customers.
Q & A Highlights
Q: Can you provide more insight into the seasonality of your cloud bookings, particularly in Q1?
A: Eddie Capel, President and CEO, stated that there isn't a clear seasonality pattern, except for a slight slowdown in the middle of the year due to vacations. Q4 was a record quarter, and Q1 has started strong, with balanced performance across the product portfolio and geographies.
Q: How are you addressing the sluggishness in services, and is it related to the cloud model?
A: Eddie Capel explained that while they are becoming more efficient in implementing software and leveraging Tier 1 partners, there is pressure on budgets. Customers have reduced their planned services work for 2025, impacting services revenue.
Q: Could you elaborate on the free cash flow expectations for 2025?
A: Dennis Story, CFO, mentioned that they expect a run rate of about $300 million per quarter, targeting $1.2 billion in cash collections for the full year.
Q: Are large customers committing to cloud in phases, similar to SAP's experience?
A: Eddie Capel noted that this has been a common practice for several years, with customers often committing to a few distribution centers initially, leaving room for future expansion. This is not a new dynamic and doesn't impact near-term services.
Q: Can you provide an update on the number of active WMS customers and their transition to the cloud?
A: Eddie Capel stated that there are over 150 live customers with more than 600 facilities globally. Just under 20% of customers have migrated to the cloud, with the majority still on-premise.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
