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MANHATTAN ASSOCIATES INC (MANH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $255.8M, GAAP diluted EPS $0.77, and adjusted diluted EPS $1.17; cloud subscription revenue grew 26% YoY to $90.3M .
  • Record RPO climbed 25% YoY to $1.78B; FX reduced sequential RPO by ~$33M versus Q3, but bookings exceeded expectations .
  • 2025 guidance was set at $1.06–$1.07B revenue, adjusted operating margin 33.0–33.5%, and adjusted EPS $4.45–$4.55, reflecting FX headwinds and near‑term services softness; GAAP EPS $3.05–$3.15 includes ~$0.15 of nonrecurring charges .
  • The stock fell ~24% on Jan 29, 2025 after guidance reset and services commentary; PMs should watch for services trough in Q1 and sequential improvement through mid‑2025 .

What Went Well and What Went Wrong

What Went Well

  • “Q4 was a record quarter that exceeded expectations. Revenue increased 7%… cloud [growth] 26%… adjusted EPS increased 14% to $1.17. RPO… increased 25% to $1.8 billion” — Eddie Capel .
  • Record bookings and strong win rates (~70%) across diversified verticals; R&D intensity remained high with ~$138M invested in 2024 to expand TAM and product innovation (planning, POS “Iris”, execution advancements) .
  • Recognitions bolster unified commerce positioning: leader designations in Forrester POS and OMS Waves, with notable POS wins and deployments (e.g., PacSun) .

What Went Wrong

  • Services revenue was ~$2M below prior expectations in Q4; ~10% of customers with active implementations reduced planned services work for 2025, driving a Q1 2025 services trough and lower FY revenue guide .
  • FX remained a headwind: ~$33M sequential RPO impact in Q4 and ~$20M FY25 revenue headwind versus preliminary parameters; FX also affects guidance framing .
  • GAAP EPS down 1% YoY in Q4 due to a nonrecurring health insurance claim (~$7M; $0.09 impact); management expects ~$0.15 of nonrecurring charges in FY25 GAAP EPS .

Financial Results

Core P&L vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$265.3 $266.7 $255.8
GAAP Diluted EPS ($USD)$0.85 $1.03 $0.77
Adjusted Diluted EPS ($USD)$1.18 $1.35 $1.17
Adjusted Operating Income ($USD Millions)$92.9 $98.9 $90.3
Adjusted Operating Margin (%)35.0% 37.1% 35.3%
Cloud Subscription Revenue ($USD Millions)$82.4 $86.5 $90.3
License Revenue ($USD Millions)$3.1 $3.8 $5.5
Services Revenue ($USD Millions)$136.8 $137.0 $119.5
Maintenance Revenue ($USD Millions)$34.8 $34.5 $33.6

Growth vs Prior Year and Sequential

MetricQ2 2024 YoYQ3 2024 YoYQ4 2024 YoYQ3→Q4 QoQ
Revenue Growth (%)+14.9% vs $231.0M +11.9% vs $238.4M +7.4% vs $238.3M −4.1%
GAAP EPS Growth (%)+34.9% vs $0.63 +30.4% vs $0.79 −1.3% vs $0.78 −25.2%
Adjusted EPS Growth (%)+34.1% vs $0.88 +28.6% vs $1.05 +13.6% vs $1.03 −13.3%

Geographic Segment Revenue

Region Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Americas$205.955 $205.852 $194.367
EMEA$46.918 $48.082 $48.903
APAC$12.445 $12.747 $12.531

KPIs

KPIQ2 2024Q3 2024Q4 2024
RPO ($USD Millions)$1,601.5 $1,686.4 $1,780.4; FX −$33M seq impact
DSO (days)66 69 74
Cash & Cash Equivalents ($USD Millions)$202.7 $215.0 $266.2
Operating Cash Flow ($USD Millions)$73.3 $62.3 $104.7
Share Repurchases (#, $USD Millions)342,807; $75.0 194,712; $49.7 155,444; $43.5; authority to $100M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY 2025Prior preliminary parameters not numerically disclosed$1.060–$1.070 Lowered by ~$70M vs preliminary parameters (FX −$20M; services reduction)
Adjusted Operating Margin (%)FY 2025Prior parameters (FX unchanged)33.0–33.5 Maintained vs prior parameters (FX unchanged)
GAAP EPS ($USD)FY 2025N/A$3.05–$3.15 Includes ~$0.15 nonrecurring charges
Adjusted EPS ($USD)FY 2025N/A$4.45–$4.55 Lowered vs preliminary; reflects FX and services headwinds
Cloud Revenue ($USD Millions)FY 2025Midpoint unchanged vs earlier parameters$405–$410 Maintained midpoint
Services Revenue ($USD Millions)FY 2025N/A$494–$500 Reduced; sequential improvement expected mid‑year
Maintenance ($USD Millions)FY 2025N/A$118–$120 (−14% YoY) Decline on attrition to cloud
License ($USD Millions)FY 2025N/A~$13.5 Flat ~1% of revenue
Hardware ($USD Millions per qtr)FY 2025N/A$6.5–$7.0 per quarter Maintained
Effective Tax Rate (%)FY 2025N/A21% Maintained
Diluted Shares (Millions)FY 2025N/A62.7 (assumes no buybacks) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 2024)Trend
Cloud growth durabilityQ2/Q3 cloud revenue grew to $82.4M/$86.5M; adjusted EPS expansion; RPO +27% YoY in Q3 Targeting 20%+ cloud subscription growth for “next several years”; cloud expected to surpass services by end of 2026 Sustained growth emphasis
Services demand & efficiencyRecord pipeline; services revenue $136.8M (Q2) / $137.0M (Q3) ~10% of customers clipped services budgets; services trough in Q1 2025, then sequential recovery with YOY growth resuming in Q4 Near‑term headwind, medium‑term normalization
Product innovation (planning, POS, execution)Ongoing innovation cited; leadership in OMS First planning customer signed ~65 days after launch; POS “leader” recognition; notable POS wins and deployments; TMS competitive wins Broadening TAM and solution adoption
Macro/FXCaution on global economy; providing responsible parameters FX headwinds to RPO and FY25 guide; macro choppiness impacting services budgets Persistent FX/macro caution
Tariffs/macro policyN/A“No tariffs really we expect on our business” given focus on finished‑goods supply chain; monitoring customer impacts Limited direct impact
AI initiativesN/AGenAI chatbot (Maven) deployed at AAFES to elevate service; rapid deployment and efficiency Emerging AI commercialization

Management Commentary

  • Eddie Capel: “Q4 was a record quarter… adjusted EPS increased 14% to $1.[17]. RPO… increased 25%… win rates were strong at about 70%” .
  • Eddie Capel: “We… surpassed the $1 billion total revenue milestone… achieved new records in RPO, total revenue, operating profit, free cash flow and earnings per share” .
  • Dennis Story: “Q4 adjusted operating profit was $90 million with an operating margin of 35.3%… Full year adjusted operating profit totaled $362 million… 440 bps improvement over 2023” .
  • Eddie Capel on services: “About 10% of our customers… reduced their planned services work… services revenue to trough in the first quarter of 2025… before returning to year‑over‑year growth in Q4” .
  • Eddie Capel on POS/OMS leadership: “Named a leader in the Forrester omnichannel order management wave… and… one of the most significant point‑of‑sale opportunities… in the Americas in 2024” .

Q&A Highlights

  • Bookings cadence/seasonality: Q4 record; Q1 off to strong start; minimal seasonality outside mid‑year vacation effects .
  • Services dynamics: Efficiency gains, higher partner utilization; budget pullbacks clipped scope (fewer DCs/brands implemented in CY2025) but no cancellations; sequential recovery expected .
  • Cloud migrations: ~80% of on‑prem customers yet to begin migration; ~150 live Active WM customers across >600 facilities .
  • RPO/product mix: Preponderance from WMS, then OMS, then TMS; similar services attach rate across portfolio .
  • Free cash collections: Targeting ~$1.2B FY25 cash collections; ~$300M run‑rate per quarter .
  • Tariffs: Limited direct impact due to finished‑goods supply chain focus .
  • Margin guide: Continued investment in R&D and S&M; FX/top‑line composition shape margin trajectory .

Estimates Context

  • S&P Global consensus estimates could not be retrieved due to access limits; therefore, explicit comparisons vs Wall Street consensus are unavailable at this time. Values retrieved from S&P Global were unavailable due to system limit.
  • Management indicated Q4 services revenue was ~$2M below prior expectations; GAAP EPS was impacted by a ~$7M ($0.09) unusual health insurance claim; FY25 GAAP EPS includes ~$0.15 nonrecurring charges .

Key Takeaways for Investors

  • Strong structural drivers intact: cloud growth, record RPO, competitive wins in WMS/OMS/TMS and rising POS momentum support the medium‑term thesis despite near‑term services softness .
  • Near‑term setup: Services revenue troughs in Q1 2025 with sequential improvement mid‑year; watch services bookings and partner utilization as indicators of recovery; weakness here was a key stock reaction catalyst .
  • FY25 guide reset: Revenue $1.06–$1.07B and adjusted EPS $4.45–$4.55 reflect FX (~$20M) and services scope reductions; monitor FX and pipeline conversion, particularly large deals and on‑prem conversions .
  • Margin discipline: Adjusted operating margin guide 33.0–33.5% underscores operating leverage from scaling cloud; continued R&D and S&M investment may temper upside near term but should expand TAM .
  • Cash returns: Zero debt, strong OCF ($104.7M in Q4), and increased repurchase authorization to $100M provide buyback flexibility; watch execution vs diluted share guidance (62.7M) .
  • Product cycle tailwinds: Planning, POS “Iris” and unified execution suite broaden wallet share; customer enthusiasm (NRF) and recognition (Forrester) should aid bookings mix over 2025–2026 .
  • Trading implications: Expect volatility around Q1 print as services troughs; positive inflection in services plus sustained cloud/RPO momentum are potential catalysts for estimate revisions and multiple stabilization .