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01/10 20:13
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance, with growth in operating cash flow, free cash flow margin, and deferred revenue. The Q&A section further supports positive sentiment, highlighting confidence in sustaining cloud subscription revenue growth, successful go-to-market investments, and strong RPO bookings. However, the conservative services revenue guide and lack of direct responses on certain growth impacts temper the overall positive outlook slightly. Overall, the sentiment leans positive, with the potential for a 2% to 8% stock price increase.
Total Revenue $272 million, up 3% year-over-year. The increase was driven by better-than-expected performance in cloud revenue and services revenue.
Cloud Revenue $100 million, up 22% year-over-year. Growth was attributed to strong adoption of cloud solutions and top-line outperformance.
Services Revenue $129 million, down 6% year-over-year. The decline was due to customer budgetary constraints that shifted services work to future periods.
Remaining Performance Obligations (RPO) $2.01 billion, up 26% year-over-year. Growth was driven by strength in new customers and contributions from existing customers.
Adjusted Operating Margin 37.1%, up 210 basis points year-over-year. The improvement was due to strong cloud revenue growth and operating leverage.
Adjusted Earnings Per Share (EPS) $1.31, up 11% year-over-year. The increase was driven by better-than-expected financial performance and operating leverage.
Operating Cash Flow $74 million, up 1% year-over-year. Growth was impacted by strong cash collections in the year-ago period.
Free Cash Flow Margin 26%. This was consistent with the company's financial performance and cash flow generation.
Deferred Revenue $300 million, up 16% year-over-year. Growth was attributed to strong customer demand and contract renewals.
Agentic AI: Manhattan Associates announced new capabilities in their forthcoming agent platform, including purpose-built agents for each application and the ability for customers to build their own agents using the Agent Foundry.
Manhattan Assist: Expanded capabilities now allow customers to upload their own operational documentation, enabling more tailored responses and guidance for specific operational preferences.
Unified Product Platform: 80% of customers buying MATM also purchased or had previously purchased MAWM, showcasing the value of unification.
New Customer Growth: Over 70% of new cloud bookings were generated from net new logos, with new logos representing approximately 35% of the current pipeline.
Partnerships with Google and Shopify: Expanded partnerships include Manhattan solutions on Google Cloud Marketplace and a connector app for Shopify, facilitating easier procurement and deployment of solutions.
Sales and Marketing Investments: Strategic increase in sales and marketing investments, including hiring new sales leaders and expanding the sales team.
Cloud Revenue Growth: Achieved 22% growth in cloud revenue, contributing to top-line outperformance.
Leadership Transition: Eddie Capel plans to transition away from executive management responsibilities by January 1, 2026, becoming Chairman of the Board.
Focus on AI and Unified Solutions: Continued investment in AI capabilities and unified product platforms to drive innovation and customer value.
Global macro environment volatility: The global macro environment remains volatile, which could impact the company's performance and cause actual results to differ materially from projections.
Services revenue growth uncertainty: Given the inherent flexibility of time and material contracts, coupled with ongoing tariff and general market uncertainty, the company remains cautious on its services revenue growth.
Customer budgetary constraints: Customer budgetary constraints have shifted services work to future periods, leading to a decline in services revenue.
FX volatility: Foreign exchange (FX) volatility persists, impacting revenue growth and RPO (Remaining Performance Obligation) figures.
Longer ramp timelines for contracts: Some customers are electing longer ramp timelines for contract implementation, which could delay revenue recognition.
Economic uncertainty affecting customer behavior: The uncertain macro environment has resulted in some customers taking a more conservative approach to implementation timelines and budget allocations.
Tax rate increase due to U.S. tax law changes: The acceleration of domestic R&D cost deductions under the July 4 U.S. tax law change has increased the company's annual tax rate, creating a headwind to earnings.
Revenue Expectations: The company has raised its full-year 2025 total revenue guidance to a range of $1.071 billion to $1.075 billion, with a midpoint of $1.073 billion. Q3 revenue is expected to be between $270 million and $272 million, while Q4 revenue is targeted at $267 million.
Operating Margin Projections: The adjusted operating margin midpoint for 2025 has been increased to 35%, up from the prior midpoint of 33.25%. Q3 adjusted operating margin is targeted at 35%, and Q4 at 33.2%.
Earnings Per Share (EPS) Projections: The full-year adjusted EPS midpoint has been raised to $4.80, up from the prior midpoint of $4.59. Q3 adjusted EPS is targeted at $1.17, and Q4 at $1.13. GAAP EPS for the full year is projected to be between $3.23 and $3.31.
Cloud Revenue Growth: Cloud revenue midpoint for 2025 has been increased to $408.5 million. Quarterly cloud revenue is expected to be $104.5 million in Q3 and $109 million in Q4.
Services Revenue Outlook: Services revenue midpoint for 2025 remains at $497 million, with Q3 services revenue expected at $127 million and Q4 at $120 million.
RPO (Remaining Performance Obligations): RPO is targeted at $2.11 billion to $2.15 billion for 2025, excluding FX movements. Approximately 38% of RPO is expected to be recognized as revenue over the next 24 months.
Tax Rate and Cash Flow Impact: The annual tax rate for 2025 has been increased to 22.5%, up from 21%, due to changes in U.S. tax law. This is expected to lower cash taxes paid and benefit operating cash flow by approximately $30 million in 2025.
Share Repurchase: In the quarter, we leveraged our strong cash position and invested $50 million in share repurchases, resulting in $150 million in buybacks year-to-date. Additionally, our Board has approved the replenishment of our $100 million share repurchase authority.
The company's earnings call reflects a positive outlook with raised revenue and EPS guidance, strong cloud and services revenue growth, and a robust pipeline. Management's optimism about achieving 2026 goals, along with positive feedback on AI initiatives and strategic investments in sales and marketing, further supports this sentiment. While there are some uncertainties in AI revenue projections, the overall sentiment is positive, suggesting a likely stock price increase in the short term.
The earnings call summary shows strong financial performance, with growth in operating cash flow, free cash flow margin, and deferred revenue. The Q&A section further supports positive sentiment, highlighting confidence in sustaining cloud subscription revenue growth, successful go-to-market investments, and strong RPO bookings. However, the conservative services revenue guide and lack of direct responses on certain growth impacts temper the overall positive outlook slightly. Overall, the sentiment leans positive, with the potential for a 2% to 8% stock price increase.
The earnings call presents a mixed picture. Positive aspects include strong cloud revenue growth, a robust pipeline, and a significant share repurchase program, which could support the stock price. However, challenges such as macroeconomic risks, customer budget constraints, and potential tariff impacts create uncertainties. The cautious tone in the Q&A, particularly management's avoidance of specific details on tariffs and challenges, adds to the uncertainty. The neutral sentiment reflects the balance between positive growth in cloud services and the risks presented by the macro environment and competitive pressures.
The earnings report shows strong cloud revenue growth and a solid cash position, but concerns about implementation delays, competitive pressures, and customer spending trends affect the overall sentiment. The Q&A reveals cautious optimism but highlights uncertainties in service revenue and cloud transition. The share repurchase program is a positive indicator, yet the lack of specific guidance on certain issues raises caution. Overall, the mixed signals from the financial performance and strategic challenges balance each other out, leading to a neutral outlook.
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