MANH - Earnings call transcript Q1 2019 | Manhattan Associates, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Deadra, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Q1 2019 earnings call. [Operator Instructions].

As a reminder, ladies and gentlemen, this call is being recorded today, April 23, 2019. to Manhattan Capel, Associates. like Story, and now of CFO would introduce CEO; Eddie Dennis I Mr. Story, may you begin your conference.

Dennis Story

Thank Welcome to CEO. Earnings good call over afternoon, XXXX turn Capel, and and review Quarter our Eddie language will Call. you, First I the cautionary then to Manhattan Deadra, Associates' our everyone.

future Associates. including future financial the call, we this or question-and-answer During may make of Manhattan events session, the forward-looking statements regarding performance

of our and are particularly performance cautioned from forward-looking these actual are may and to with to report. on future You I Form guarantees results our cause statements Associates' SEC and involve factors that you uncertainties, the important not XX-K actual risks reports projections forward-looking for the that fiscal differ refer differ Manhattan the that Risk materially that contained those results statements. in from in XXXX Factor discussion could projections, annual files materially the report for our in

to these We are update statements. under obligation no

our addition, to the provide non-GAAP accordance reconciled financial been comments an investors. have GAAP measures in In measures rules. information non-GAAP to with additional in related effort All to include certain SEC measures

schedules X-K to SEC website we today, the find the our in at and submitted on You'll earlier manh.com. reconciliation Form

call Now over to I'll turn the Eddie.

Eddie Capel

strong demand QX X% services from total QX new QX and all sales. and cloud and revenue grew everyone, a adjusted $X.XX on continue Associates' and EPS fairly XX% services. was license of afternoon, as $XXX demand and That's XXXX thank XXXX good revenue Sequentially, million. versus delivered retrospectively XXXX. and services us XXXX QX up QX comp License, Manhattan products joining of revenue over total weak Well, targets XXXX growth strengthen strong on ASC our revenue and results first to cloud exceeded you for that's We to review for revenue over record quarter results. EPS. applying about XXXX revenue XX% grew XXX

modestly Despite on to and our full bullish continued XXXX per we're still expectations objectives. on the success global exceeded margin long-term investment cautions for our on cloud year our earnings. earmarked goals customers our macro future and we're performance XXXX, appropriate and the We're focus operating whilst our in Our growth early with maintaining total business raising and our in for to margin. driving regarding long-term transition outlook and aggressive revenue deliver share turn, operating guidance and earnings transformative volatility, revenue growth investments in our

our transition to a We growth continue on cloud by innovation. far specifically the and by positive market-leading progress business so momentum areas: be our highlighted X very encouraged Firstly, product following

continue invest QX in to R&D -- prior up with investment XX% aggressively innovation over We over year.

our And market we're in will on and deliver in positive believe transformative industry-leading supply innovation ROI R&D these $XX accelerating generate For R&D we investments inventory more XXXX, than commerce innovation. million spend. and We're omnichannel total committing investments. demand to chain, continuing

us, important which solutions strengthening Our ever, technology market resulting for to to two, pipeline encouraging differentiated number development our in and the competitively pipelines. brings are than product releases bringing are new growth faster me point cycles

pipelines are global trends Our themselves. services services with cloud across cloud license, upward and solid across and

new by select by continue of an revenues potential the offerings, pipeline number we customer to new to the Now our continue new increased and to of half deal customers our opportunities be encouraged concentration license representing year-over-year logos. with we expect about in of decline do customers net but our as cloud signings

services. consulting improving area, growth third The

fairly XX% omnichannel our Chain QX weak operating demand and revenue market-leading comparison, are was consulting services as and XXXX, At near QX strengthen to global capacity from year-over-year. Manhattan Supply this but all up services activities Our demand. continues up teams XXXX. X% inventory I Active fueling upgrade system guess a for sales new Solutions sequentially at with global product

customer services QX to the then global actively world consultants capacity finally, and to drive and in demand continue meet XXXX. over sales marketing. recruit our XXXX, the In investments X% we And sequentially satisfaction. around QX We increased our

and with at we quarter competitive our beverage. Europe sales were total delivered strong that's sales customers. win in our with software in about QX new Our and But growth. comp. reps. as our XX% retail, Verticals aggressively and more combined prior soft revenue Americas remain combined cloud of We consumer against in rates sales we goods revenue, license of up XX% continue and predominantly head-to-head driving were marks sales and teams. marketing the a in quota-carrying of $XX XX% revenues XX% over second and to sales our recruiting about over million our quarter of consecutive finished sales we're marketing cloud XX coverage XXXX on QX QX that's XX% with and our year XX account and awareness driving in XXXX, Sales management than year-over-year competition people for food from coming in the and and up quarter license expansion cloud sales -- focus the pretty performance management investments XXXX In license the

interest implementations growing continue also offering. cloud we're with Omni, our Manhattan We seeing management very Active of be cloud to in busy transportation new and

go early native Importantly, for we transactions two live first point-of-sale customer XXXX. point-of-sale had in closed and additional format recently cloud store large our customers

growth. our scale experience the revenue subscription this as traditional continue for the Active results, interest XX% gaining in Overall million to more in with license the cloud management traction $X.X head-to-head such QX point-of-sale nearly delivering for in pipeline drove in building bookings representing supply while of And early we QX, positive the than slowly competitive deal models subscription Omni Manhattan Americas and early will And a recognized cloud. activity. positive near impact inventory the XX% XX% the in we adopters over of we as growth term, chain cloud we're revenue, solutions, our a year. long-term deals. in Our and is prior view

a to closed and large timing, and X options. X the X healthy, space. turning other in are million-plus deals revenue existing X deals deal continues X for in customers, X We Americas EMEA. flexible million All medical X and $XX.X included significant in in to the to quite in related deals and new. by So performance Tier prospects transactions with is by license and of three technology were retail device the grocery purchase the recognized And the be although with license. impacted total activity customers $X the quarter weighing more reconstitution X primarily

with advances particular transportation application Omni our and progress then short Manhattan QX associates, product serve Active management focus our and on I'll in with our So now I'll we've a provide to store application. the center update cover made contact

So Manhattan Omni. with Active starting

from and As selling frankly, see we the the a mentioned, reviews with helps to cloud positive our native milestone live with store in application this advantages stack to value client terrific customers go us loyalty off staff I went Associates. significant management. our our live go cloud for already are full And getting a point-of-sale This from through live Manhattan offers. fulfillment and our also start the point-of-sale and that showcase showcases both things native and store solutions was

unified contact it allows to across a this deployed out point-of-sale and of every in in fulfillment to on pickup is Manhattan navigation. to omnichannel a all in several keep implementations select store the almost provide single Active our to of all offering of The guided performing is new store a rolled QX, efficiently all center. to suite now product store. management of and a with network in architecture view store. store support And Active Manhattan our their As this further wireless store another the the is new of store store picking fulfillment the of solution can QX, the our via specific in associates our customers with our native and to the nearly order customer channels QX, successfully first application, which Searching customers with data we communicate can than Manhattan fulfillment so to can management, within start portion in-store Also module pickup including also advantage another fulfillment center, this channels. the forth service or And live order We've devices managing cloud associates of customers items this CRM even technology the window, became of and time-consuming managing customer from with for store gather -- in-store store shipments. off market, Manhattan of Omni the through leverages our for in devices intuitive, media a associates In Embedded engagement fulfillment. we done retail area And personalized mobile constantly and myriad X,XXX customer is enhanced kicked and with our Management. engagement reminder, customer social commerce solution for associates engagement in-store and X-week fulfillment single because the And store or front, we customer application develop contact really Manhattan stores industry's deployed application new more RFID more immediately. within to our Omni most with users about products to and assist as recommendations. the we IoT-enabled batch in testament store take which feature needing customer all minimizing item either see that little pickups updated, speed solutions. across be and associate enable we've to in and was fleet the Warehouse

solutions. management to business. QX transportation turning Now supply our progress chain meaningful saw in our

domestic Brazil. expanding our shippers customer very our of to first signed base In the addition also U.S. in cloud we number TMS, using

our also all TMS with pipeline building and EMEA, sales strides We with in marketing deals to yielding make healthy business sales a continue phases. in in our efforts

move effective. be the been Magic as Our of that substantially also recent And finally, by TMS has growing the the a TMS annual Gartner the to customers, we've supported our our our expansion and now at moving partners, faster we'll Momentum. JW May report This both and cloud into in the Scottsdale, come. we're that investment and more business this are TMS pleased I'm and given segment And is reflecting to coming and our and progress hosting and continue satisfied to quadrant customer years in looking the we quarters Gartner launch has leaders is years we And year XX in increased innovative and to in recognized XX. reflection Arizona, theaters press as to -- highly Quadrant to the deploy we'll conference, happy leader that solutions global from ability there, to held a believe that May for base. finally, grow it'll forward additional focus our And in been new user particular Marriott we've our several recognized to analysts.

that the business So update. covers

don't you So guidance? provide I'll cover Dennis, And brief a the our financial prepared why year XXXX update, remarks with then some summary. -- our full

Dennis Story

Thanks, Eddie.

QX of million, revenue we total of mentioned, reported Eddie $XXX versus XXXX. XX% As QX up

revenue Adjusted XXXX. XX% per FX, XX.X%. QX Excluding $X.XX, was earnings was up over total up share

tax Our payroll we of year. R&D performance $X.XX a in EPS this QX receive forecast includes had benefit to an annual from credit

EPS compensation million Our call. the License was between $XX.X in $X.XX compared with exceeding was $X revenue in stock-based adjusted difference QX GAAP. the per target for our quarter share the accounting discussed QX GAAP earnings to in million, XXXX $X.XX and

million million revenue For to over XX%. QX of XX% be remains XXXX. And up are cloud revenue in was gross with targeting million, unchanged $X.X full QX $X for license million about QX our license to XXXX, $XX $XX estimate a XXXX, we year margin recognized.

For XX% we revenue about QX up to estimating over cloud prior XXXX, million, recognizable about be year. are our $X.X

million, year million are For over range a we growth XX% recognized targeting $XX $XX cloud representing XX% of full revenue XXXX. to XXXX, still to

$XX Our remains cloud XXXX for total million, and XX% recognized estimate year revenue XXXX. up combined full license at over

RPO U.S. a disclosure requirement. is the GAAP remaining reminder, or performance As obligation

referred bookings. to required is value or for our cloud leading performed, the disclosure otherwise as performance the represents unearned revenue to of Our contractual RPO bookings be obligations proxy and

quarter for XXX% up the $XXX totaled RPO over XX XXXX. -- up Our XX% over prior year million, sequentially and QX

year amount. bookings For than value under point on Manhattan, noncancelable less of and contracts excluded noncancelable X a year. or with term represents reported Contracts greater our last from this cloud are our revenue unearned cloud. license One disclosed of X value

and number quarter. deals relative continues performance on any the Our to large depend we in of value close

towards large expect in and to to remain While important, deals the we mix continue beyond. subscription shift models XXXX

are revenue subscription to sizes smaller product as While easier this also time maybe components is and enterprise contrast a a positive, time in recognized to bit over over deal deals. one-and-done add

some geopolitical that and some could potential caution decision-making macro slow investment and impact retain cycles. clients around global particularly prospects, business by and also retailers We events

$XX versus Turning to totaled Revenue XXXX quarter maintenance. QX flat essentially for million, the QX comps. and

about rates million to Our We than impacted greater estimate year, deals perpetual be XX-plus existing of percent X% license strong we our $XXX Overall, to $XX QX cloud during $XXX to be down influenced XXXX and cash for are million. XXXX by results retention by the about our collection. about maintenance maintenance over revenue estimating at continue be and XXXX, customer cloud, retention rates transition. timing will closed conversions to million, maintenance

$XX.X prior with of demand. up QX We're revenue totaled QX $XX.X For XX% million. X% improving X% year global of over for targeting the quarter growth midpoint million, a on consulting services, target revenue over XXXX to

half to growth services over pipeline XXXX. raising our midpoint improving and increasing, with are prior tighter, second we year $XXX XXXX comps X% to be X.X% America's of demand full year about growth million. demand exiting a reflecting expect We to year-over-year With estimate value

flat prior growth estimate to Our X%. was

maintenance for head increased by Our investment and services. consolidated was XX.X%, count and driven cloud services the consulting subscription, quarter in margin

margin maintenance For services margin year be and XX.X%. expect to QX XX.X% and XXXX, about to subscription be we about full

Our operations, meet capacity demand. increased cloud reflects gross performance-based and XXXX investment margin compensation to in services our

Turning income an $XX.X to and operating operating of QX margin XX%. income our million operating with margin, totaled

million million, to million full from estimate in are previous income $XXX XXXX, targeting to we million. operating of For $XXX range $XXX the of our year $XXX up

margin operating million in with the $XXX of be XX% XX.X% to nearly at the operating range midpoint. should Our income

operating to income XX% of with For of percent. estimating operating are a and QX margin XX.X%, $XX a XXXX, with to million we of $XX.X two-zero-point-five million XX% midpoint million $XX.X midpoint

sales our driven IT is marketing, across consulting our cloud on forecast business and by and growth focus and facilities, services continued and people, investments margin R&D, Our compensation. ops, making including performance-based

the results. covers So operating that

was XX.X%, estimating effective a effective year. adjusted XX.X% XXXX QX rate and tax income full both Our rate for tax and we're QX

QX Last of Regarding our replenishing XXXX share in week, capital authority structure, we to a million repurchase limit our total approved $XX invested $XX our million. Board buybacks.

estimating million buyback and per shares no full XX.X are which million diluted XX.X year about quarter, about activity. We assumes

Turning closed We to and quarter debt. totaling X investments cash. $XXX and cash the million with

QX maintenance Our cloud XXXX, current deferred primarily revenue by XX% increased balance billings. driven up totaled $XX over and million,

income $XX with year million, expenditures cash on to $XX For bonus estimate payout flow this paid the the in be totaled quarter, from quarter India assumption investments expenditures taxes in operations quarter $XXX,XXX XXXX annual U.S., down we million. for and XXXX. from past approximately cash and of incremental XXXX, totaled capital prior the facilities QX both Capital for the and

his and So guidance, to I'll wrap up it with then I'll XXXX for Eddie our turn back closing remarks. updated

per provide to will continue We margin share. and total revenue, guidance annual on earnings operating

a subscription level results value effectively As masking significant have income we've be, creation. with success our reported adoption, term near more the previously stated, we statement the will short-term underlying weaker of

previous million year $XXX of For XXXX to $XXX XXXX are to million targeting X% our with of estimate to prior million. $XXX X% of total growth our raising over million $XXX $XXX revenue from range we a guidance revenue revenue, to midpoint million

guidance previous X% pegged year-over-year Our to at growth X%.

we're range EPS, our estimate to of to $X.XX For with raising a EPS $X.XX. $X.XX midpoint adjusted

EPS to $X.XX was GAAP Our and $X.XX previous $X.XX. is $X.XX guidance our range to

range XX.X% XX.X% margin of of a year full operating and margin GAAP range a targeting are we XX.X%. margin, operating For XX% to to

growth reflect to long-term of our and related XXXX, driving continuing earnings transition ramp with objectives incremental leverage. margin including growth the investments Our cloud, in to business objective sustainable

of the update update. the financial mentioned we performance. aspirations will back QX Thank And end our long-term our based Eddie. to covers XXXX call, year the our That you. on at in as Lastly, we

Eddie Capel

Thanks, Okay. Dennis.

the summary, So cloud quarter in on progress and pleased we're our our with transition.

supply Our and business remain commerce extending in underlying chain, we solutions. fundamentals our on omnichannel inventory is focused solid market-leading and position

leveraging that customers for Our to driving an delivering our success our also a in and expanded and is driven success XXXX, on start that modernization. driven market, the business significant innovation expertise. the need remain of solid we the be retail our continues anticipates We're confident core by ongoing off focusing opportunity evolution in domain deep needs by chain and the supply to markets evolving in

and continue our market as well differentiation, strategy. addressable is and to competitive invest to and customer market Our the strong extend in position feedback rates investment continue to and we innovation our our leadership as win validate

shareholders. As always, our for growth on we our driving remain customers focused on long-term success sustainable, and

solutions do chain world's we're best very chain innovation, market employees, the With software dynamics the require positioned. commerce that most that we supply customer talented in believe well investment and supply

to be So with questions. Deadra, happy take any we'd that,

Operator

comes question first with our Terry Robinson. SunTrust And from Instructions]. [Operator Tillman

Terrell Tillman

Can okay? you hear me

Eddie Capel

A we can hear but can, muffled, We fine. little you Terry. just

Terrell Tillman

Well All nice and -- the Okay. quarter. right. job in

to, What some point a of it or too? cycle success. the of related Maybe I about business in just that's prior of anything business. capabilities it is was talking just it now type if of you question, in platform. the there? of first the front talked products more of just your Was feels that XX% your an about the closing The year, as and I success business more I'm at thought front little the Active is in an Eddie, Active just relates what Omni versus is, store bit point-of-sale like you're occurring inflection there, and technology upgrade curious to cloud some diversifying store traction think, mostly all in the historically about in on OMS Omni color that additional

Eddie Capel

point-of-sale. that front we of traction mean of enhanced, Terry. solutions, say, a in and recently, should store see been -- is order are with with but is store now, the quarters I the suite very talking the or suite we've to the that customer seeing that we of was point-of-sale but advanced question we fortunately, call beginning several it I inventory Obviously, inventory store very Yes. it's a been it about live management I first solutions. this core At wouldn't are management traction in no diversifying, for so go fulfillment, had helpful.

of counts. Now large early in frankly, mean, large -- another here. we've pretty for deals point-of-sale so footprint stores all couple store closed the and we're year are I these

suite So but still there, we're omni around it's progress the pleased with anchored all of solutions. the

Terrell Tillman

Maybe of and existing Okay. it sales a sales of or the breed kind Do all newer in terms to just report sales maybe on of execution -- a update and doing you have is terms salesperson talk report do where a on And products. maybe of resources? a different of, just them how need maybe, report of Eddie, you are you solutions? cloud you card card cloud selling an are in a are a do you think salespeople getting the terms card on in Just just language activity? more

Eddie Capel

Yes.

very is activity first the think activity of I is Terry. good, -- all,

execute ability is Our to rates -- strong. win still

I along, with a to think doing the the cloud. job company of frankly, sales terrific the the transitioning team is with along rest team the

for of the front are our we as actively the organization sales and store in we newest, looking cloud. very so to are domain mostly transition high But which to members marks We areas additional would frankly, I team in so forth. give sales

for solutions we're only as getting we rates, well. got I think not but win our appropriate the great value

Terrell Tillman

it duration prior on anything Okay. XQ business final just cloud did with side change give relatively sequential change update was I'm What on And it relates the or significant in curious Dennis, constant on terms 'XX. some question, us is, of an quarters? of you to that contract that -- the as rivaled was maybe it turn RPO, I'll over. a can new

Dennis Story

in Relatively volume quarter for Terry. constant the with quarters, very good sure. prior But

Operator

Brian And Peterson next your from comes Raymond James. with question

Brian Peterson

quarter. Congrats on the

been better the or modeled. upside to coming it a now recent this of quarter, few of services wanted coming had are wins lot a more some pool? the hit newer back was curious So delayed versus I'm and than obviously the into ago, much years that is how we that on from had maybe projects

Eddie Capel

frankly. Brian, Good balance. balance, good Yes,

services attach sales. swiftly. for Projects and the off license So great cloud new kicked rate getting

if think it a from that also certainly helping, that, little we I we a some and saw do of seeing call would bit that's XXXX. to of are want sluggishness in rebound little the rebound, So we

as bulk little that say license a say bit I the sales would fueling I new of that. -- of but So and cloud are both, the

Brian Peterson

Yes. point-of-sale Maybe the follow-up on just business. one

terms And how as multiyear, deployments, how management these Active maybe order of So the little about we are of should be more Omni? core to should that? we about upsell of Or X about should update think it should think kind these rollout? versus Omni quarter we versus staggered that in for kind think bit they made in a Active

Eddie Capel

think Yes. Brian. retail evolve. that, Well, so getting upside continues for terrific two business that really just we're pieces We there's started. is, of One as to

years a #X. market between and So as OMS the really continue -- the acquire fantastic for we to over continues transform synergy is but customers, upside several the point-of-sale. And between, to next is us,

I across all think they customer single for the customer point-of-sale, network center. inventory into being management whether able differentiator real our a All of customers. customer-facing us is to get those across a single permeates engagement view a getting through call strategic be frankly, for order view from channels, tools, and that of the all of entire

time pick up to we're this it really going a flywheel for start, So to to but momentum. great take off is some

Operator

from with your Pfau Matt Blair. question comes William And next

Matthew Pfau

guess, total about I Well, could way -- crossover? get idea of us be point-of-sale think terms of another size product most would typically to the deal, products WMS you you're of relative how the just selling to the another a of product can deal the point-of-sale incremental would it we sales. customer, if about potentially to wanted other be so size to WMS the follow point or, think give you compared I up an should to on maybe in

Eddie Capel

retail sizes about and it's right, transactional of store for when the Yes, little store tell for early average base think so point-of-sale been because market, at the kind and specifically to Matt. includes systems a are early in of retail deal talking forth, all that store specific about XXX point-of-sale the a years. the a center and little remember retail the to we think last now has total I the be But addressable that

multi-function to that believe As billion of function the that that frontal stores that to solutions, of a solutions that's we approximately and offer facilities, for facilities those believe calls are store. being offering it we we transition system, and from the a suite to being front With new of single -- the our in addressable somewhere range billion of store able suite being year doubles a market of total from to range $XX year. $X that said, in somewhere

So going it's that after. be is still to little early about a specifically It worth too talking candidly market ASPs a model. evolving, but for

Matthew Pfau

the then deals guess, can talk I what And for signed that up about it. accelerate guys? or the their is to that Got potentially years you of solution reevaluate point-of-sale and drove with potentially, far, there there out for you've anything customers them could increase you that several then so next over bit come maybe number the just a

Eddie Capel

so bringing capability -- in solutions. other last But question -- to our really consolidated Clearly, the know for I customers gravitational around to decision driving we what's driving market. certainly buying able the Frankly, sort suite get able we're of than really invest the our into than know think, increase them, to we I I and forth? new innovation of to it's know pull accelerate that other don't and referenceable can the deliver we're create customers the are of your can and flywheel. the for answer as value an what opportunity us, continuing that I rotational to Yes, in don't question market -- being transition. don't

POS, with engagement selling and strategy So with customer about it's POS just kind not having new that OMS center, and aligned next point-of-sale. multi-channel the reinventing of PMS replacing platform of current it's generation call --

Operator

Instructions]. [Operator

Eddie Capel

Deadra. have It wrap right, more All questions. seems a like no we with

our So excited of I'd forward to afternoon. so. Good sharing on for in about joining and future results or the we'll thank We're everybody just QX with the three be looking months about QX call. that, us

Operator

your call. conference today's conclude does for you participation. This Thank

disconnect. now may You

Manhattan Associates (MANH) 23 Apr 192019 Q1 Earnings call transcript