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Manhattan Associates Reports Second Quarter 2020 Results

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Manhattan Associates reported Q2 2020 revenue of $135.6 million, down from $154.3 million in Q2 2019. GAAP diluted EPS was $0.30, compared to $0.32 in the previous year. The company raised its full-year revenue and earnings guidance due to strong cloud business growth, with cloud subscription revenue increasing to $18.5 million from $9.0 million YoY. However, services revenue fell to $71.8 million from $94.0 million, attributed to delays linked to the COVID-19 pandemic. Manhattan's cash flow improved to $48.8 million from $37.2 million in Q2 2019.

Positive
  • Cloud subscription revenue grew to $18.5 million in Q2 2020, up from $9.0 million YoY.
  • Raised full-year revenue and EPS guidance due to strong performance in cloud business.
  • Cash flow from operations was $48.8 million, compared to $37.2 million in Q2 2019.
Negative
  • Total revenue decreased to $135.6 million from $154.3 million YoY.
  • GAAP diluted EPS fell to $0.30 from $0.32 in Q2 2019.
  • Service revenue declined to $71.8 million from $94.0 million YoY due to project delays.

ATLANTA, July 23, 2020 (GLOBE NEWSWIRE) -- Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $135.6 million for the second quarter ended June 30, 2020. GAAP diluted earnings per share for Q2 2020 was $0.30 compared to $0.32 in Q2 2019. Non-GAAP adjusted diluted earnings per share for Q2 2020 was $0.40 compared to $0.42 in Q2 2019.

“Manhattan Associates reported solid second quarter financial results,” said Manhattan Associates president and CEO Eddie Capel. “Our growing cloud business continues to outperform, with continued strength in both revenue and bookings. As a result, we are raising our full-year revenue and earnings guidance. Furthermore, while early, we are seeing strong interest in our recently released Manhattan Active® Warehouse Management solution, which should continue to provide momentum for our cloud business in the years to come.”

“There is no doubt that near-term impacts to global economic activity continue to manifest themselves due to the COVID-19 pandemic,” Mr. Capel continued. “Specifically, we have seen sales cycles lengthen as customers and prospects simultaneously contend with the pandemic while evaluating our solutions. Additionally, we have seen delays in services-related project work, leading to a year-over-year decline in services revenue.”

“However, we remain very confident in the long-term outlook for our business, driven by the continued need for innovative solutions within the supply chain and omnichannel commerce markets,” Mr. Capel concluded. “We will continue to position the company to capitalize on these evolving trends while driving long-term sustainable growth for all of our stakeholders globally.”

SECOND QUARTER 2020 FINANCIAL SUMMARY:

  • Consolidated total revenue was $135.6 million in Q2 2020, compared to $154.3 million in Q2 2019.

o   Cloud subscription revenue was $18.5 million in Q2 2020, compared to $9.0 million in Q2 2019.

o   License revenue was $5.7 million in Q2 2020, compared to $11.7 million in Q2 2019.

o   Service revenue was $71.8 million in Q2 2020, compared to $94.0 million in Q2 2019.

  • GAAP diluted earnings per share was $0.30 in Q2 2020, compared to $0.32 in Q2 2019.

  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.40 in Q2 2020, compared to $0.42 in Q2 2019.

  • GAAP operating income was $26.7 million in Q2 2020, compared to $27.6 million in Q2 2019.

  • Adjusted operating income, a non-GAAP measure, was $34.3 million in Q2 2020, compared to $36.2 million in Q2 2019.

  • Cash flow from operations was $48.8 million for Q2 2020, compared to $37.2 million for Q2 2019. Days Sales Outstanding was 73 days at June 30, 2020, compared to 61 days at December 31, 2019.

  • Cash and investments totaled $123.6 million at June 30, 2020, compared to $75.3 million at March 31, 2020.

  • In April 2020, the Company suspended its share repurchase program because of COVID-19-related considerations. Accordingly, during the three months ended June 30, 2020, the Company did not repurchase any shares of Manhattan Associates common stock under the share repurchase program. The Company’s authorized repurchase limit remains at $50 million.

SIX MONTH 2020 FINANCIAL SUMMARY:

  • Consolidated revenue for the six months ended June 30, 2020, was $289.5 million, compared to $302.7 million for the six months ended June 30, 2019.

o   Cloud subscription revenue was $35.8 million for the six months ended June 30, 2020, compared to $16.9 million for the six months ended June 30, 2019.

o   License revenue was $15.4 million for the six months ended June 30, 2020, compared to $24.1 million for the six months ended June 30, 2019. 

o   Service revenue was $159.2 million for the six months ended June 30, 2020, compared to $182.6 million for the six months ended June 30, 2019.

  • GAAP diluted earnings per share for the six months ended June 30, 2020, was $0.65, compared to $0.64 for the six months ended June 30, 2019.

  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.80 for the six months ended June 30, 2020, compared to $0.83 for the six months ended June 30, 2019.

  • GAAP operating income was $50.9 million for the six months ended June 30, 2020, compared to $55.9 million for the six months ended June 30, 2019.

  • Adjusted operating income, a non-GAAP measure, was $66.2 million for the six months ended June 30, 2020, compared to $71.7 million for the six months ended June 30, 2019.

  • Cash flow from operations was $60.4 million in the six months ended June 30, 2020, compared to $72.4 million in the six months ended June 30, 2019.

  • During the six months ended June 30, 2020, the Company repurchased 337,007 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $25.0 million. However, as noted above, the Company’s share repurchase program is currently suspended.

2020 GUIDANCE

Manhattan Associates provides the following updated revenue, operating margin and diluted earnings per share guidance for the full year 2020:

100%; border-collapse:collapse !important;">
          
  Guidance Range - 2020 Full Year
 ($'s in millions, except operating margin and EPS)$ Range % Growth Range 
          
1%; width:1%; min-width:1%;"> 57%; width:57%; min-width:57%;">Total revenue - current guidance1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">  5541%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$9%; width:9%; min-width:9%;">  5701%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;">-10%1%; width:1%; min-width:1%;"> 9%; width:9%; min-width:9%;">-8%1%; width:1%; min-width:1%;"> 
          
 Total revenue - previous guidance$  541 $  565 -12% -9% 
          
 Operating Margin:        
 GAAP operating margin - current guidance17.3% 17.7%     
 Equity-based compensation5.6% 5.4%     
 Adjusted operating margin(1) - current guidance22.9% 23.1%     
          
 GAAP operating margin - previous guidance17.5% 17.9%     
 Equity-based compensation5.4% 5.2%     
 Adjusted operating margin(1) - previous guidance22.9% 23.1%     
          
 Diluted earnings per share (EPS):        
 GAAP EPS - current guidance$  1.17 $  1.23 -11% -7% 
 Equity-based compensation, net of tax  0.42   0.42     
 Excess tax benefit on stock vesting  (0.06)   (0.06)     
 Adjusted EPS(1) - current guidance$  1.53 $  1.59 -12% -9% 
          
 GAAP EPS - previous guidance$  1.16 $  1.24 -12% -6% 
 Equity-based compensation, net of tax  0.40   0.40     
 Excess tax benefit on stock vesting  (0.06)   (0.06)     
 Adjusted EPS(1) - previous guidance$  1.50 $  1.58 -14% -9% 
          
          
 (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and acquisition-related costs, and the related income tax effects of these items if applicable. 
          


Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. We note in particular that the severity, duration and ultimate impact of the COVID-19 pandemic are difficult to predict at this time. In addition, those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its second quarter 2020 financial results will be held today, July 23, 2020, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.

Those who cannot listen to the live broadcast may access a replay shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number ­­­­­­­­9264558 or via the web at ir.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ third quarter 2020 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and six months ended June 30, 2020.

Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization of these costs, and (from time to time) restructuring charges – all net of income tax effects. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. 

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc.  Forward-looking statements in this press release include, without limitation, the information set forth under “2020 Guidance,” any statements about the future effect of the COVID-19 pandemic on our business, customers or the global economy, our business prospects following the pandemic statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: the risk that the duration and severity of the COVID-19 pandemic, and its ultimate effects on the global economy, our customers and our business, may be worse than expected; risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-a service/cloud-based model; disruption in the retail sector; the possible effect of new U.S. tariffs on imports from other countries (and possible responsive tariffs on U.S. exports by other countries) on international commerce; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; risks related to our products’ technology and customer implementations; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

100%; border-collapse:collapse !important;">
9%; width:9%; min-width:9%;">Contact:1%; width:1%; min-width:1%;"> 38%; width:38%; min-width:38%;">Matt Humphries, CFA1%; width:1%; min-width:1%;"> 51%; width:51%; min-width:51%;">Rick Fernandez
  Senior Director,
Investor Relations		 Senior Manager, 
Corporate Communications
  Manhattan Associates, Inc. Manhattan Associates, Inc.
  678-597-6574 678-597-6988
  mhumphries@manh.com rfernandez@manh.com

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)

100%; border-collapse:collapse !important;">
  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
  (unaudited)  (unaudited)  (unaudited)  (unaudited) 
43%; width:43%; min-width:43%;">Revenue:2%; width:2%; min-width:2%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 
Cloud subscriptions $18,503  $9,009  $35,763  $16,868 
Software license  5,681   11,721   15,416   24,135 
Maintenance  35,898   37,323   71,642   73,422 
Services  71,778   93,951   159,184   182,582 
Hardware  3,770   2,337   7,528   5,738 
Total revenue  135,630   154,341   289,533   302,745 
Costs and expenses:                
Cost of software license  591   623   1,146   1,215 
Cost of cloud subscriptions, maintenance and services  62,434   70,955   136,710   137,533 
Research and development  19,931   21,997   43,259   43,210 
Sales and marketing  9,709   14,520   22,797   29,301 
General and administrative  14,016   16,805   30,130   31,855 
Depreciation and amortization  2,257   1,859   4,603   3,773 
Total costs and expenses  108,938   126,759   238,645   246,887 
Operating income  26,692   27,582   50,888   55,858 
Other (loss) income, net  (158)  (71)  1,262   (442)
Income before income taxes  26,534   27,511   52,150   55,416 
Income tax provision  7,330   6,586   10,416   13,519 
Net income $19,204  $20,925  $41,734  $41,897 
                 
Basic earnings per share $0.30  $0.32  $0.66  $0.65 
Diluted earnings per share $0.30  $0.32  $0.65  $0.64 
                 
Weighted average number of shares:                
Basic  63,509   64,623   63,550   64,765 
Diluted  64,126   65,093   64,234   65,148 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)

100%; border-collapse:collapse !important;">
  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
44%; width:44%; min-width:44%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 
Operating income $26,692  $27,582  $50,888  $55,858 
Equity-based compensation (a)  7,492   8,462   15,056   15,644 
Purchase amortization (c)  110   107   217   215 
Adjusted operating income (Non-GAAP) $34,294  $36,151  $66,161  $71,717 
                 
                 
Income tax provision $7,330  $6,586  $10,416  $13,519 
Equity-based compensation (a)  759   2,073   1,649   3,833 
Tax benefit of stock awards vested (b)  60   154   3,742   58 
Purchase amortization (c)  27   26   54   53 
Adjusted income tax provision (Non-GAAP) $8,176  $8,839  $15,861  $17,463 
                 
                 
Net income $19,204  $20,925  $41,734  $41,897 
Equity-based compensation (a)  6,733   6,389   13,407   11,811 
Tax benefit of stock awards vested (b)  (60)  (154)  (3,742)  (58)
Purchase amortization (c)  82   81   163   162 
Adjusted net income (Non-GAAP) $25,959  $27,241  $51,562  $53,812 
                 
                 
Diluted EPS $0.30  $0.32  $0.65  $0.64 
Equity-based compensation (a)  0.10   0.10   0.21   0.18 
Tax benefit of stock awards vested (b)  -   -   (0.06)  - 
Purchase amortization (c)  -   -   -   - 
Adjusted diluted EPS (Non-GAAP) $0.40  $0.42  $0.80  $0.83 
                 
Fully diluted shares  64,126   65,093   64,234   65,148 

 

100%; border-collapse:collapse !important;">
2%; width:2%; min-width:2%;">(a)98%; width:98%; min-width:98%;">Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include this expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. The Tax Cuts and Jobs Act further increased those limitations. Thus, in the fourth quarter of 2019, we changed from applying an overall effective rate in our tax adjustment to using the actual tax benefit for equity-based compensation included in our GAAP results after considering the impact of non-deductible equity-based compensation. 

 

100%; border-collapse:collapse !important;">
  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
43%; width:43%; min-width:43%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 2%; width:2%; min-width:2%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 
Cost of services $2,326  $2,448  $4,611  $4,545 
Research and development  1,522   1,603   3,063   2,979 
Sales and marketing  756   976   1,559   1,795 
General and administrative  2,888   3,435   5,823   6,325 
Total equity-based compensation $7,492  $8,462  $15,056  $15,644 

 

100%; border-collapse:collapse !important;">
2%; width:2%; min-width:2%;">(b)98%; width:98%; min-width:98%;">Adjustments represent the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.
(c)Adjustments represent purchased intangibles amortization from a prior acquisition. We exclude that amortization from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)

100%; border-collapse:collapse !important;">
  June 30, 2020  December 31, 2019 
  (unaudited)     
74%; width:74%; min-width:74%;">ASSETS1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 10%; width:10%; min-width:10%;"> 1%; width:1%; min-width:1%;"> 
Current assets:        
Cash and cash equivalents $123,638  $110,678 
Accounts receivable, net of allowance of $4,078 and $2,826, at June 30, 2020 and December 31, 2019, respectively  108,099   100,937 
Prepaid expenses and other current assets  20,022   20,426 
Total current assets  251,759   232,041 
         
Property and equipment, net  19,458   22,725 
Operating lease right-of-use assets  31,791   35,896 
Goodwill, net  62,237   62,237 
Deferred income taxes  2,529   6,814 
Other assets  12,615   12,566 
Total assets $380,389  $372,279 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $16,262  $20,561 
Accrued compensation and benefits  27,779   45,991 
Accrued and other liabilities  19,184   19,325 
Deferred revenue  118,795   94,371 
Income taxes payable  1,401   1,348 
Total current liabilities  183,421   181,596 
         
Operating lease liabilities, long-term  28,431   32,416 
Other non-current liabilities  15,759   15,989 
         
Shareholders' equity:        
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2020 and 2019  -   - 
Common stock, $0.01 par value; 200,000,000 shares authorized; 63,518,968 and 63,456,986 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively  635   635 
Retained earnings  173,125   159,490 
Accumulated other comprehensive loss  (20,982)  (17,847)
Total shareholders' equity  152,778   142,278 
Total liabilities and shareholders' equity $380,389  $372,279 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)

100%; border-collapse:collapse !important;">
  Six Months Ended June 30, 
  2020  2019 
  (unaudited)  (unaudited) 
Operating activities:        
Net income $41,734  $41,897 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  4,603   3,773 
Equity-based compensation  15,056   15,644 
Loss (gain) on disposal of equipment  10   (121)
Deferred income taxes  4,234   272 
Unrealized foreign currency (gain) loss  (741)  156 
Changes in operating assets and liabilities:        
Accounts receivable, net  (7,469)  (312)
Other assets  (619)  (6,144)
Accounts payable, accrued and other liabilities  (21,787)  4,238 
Income taxes  568   (3,145)
Deferred revenue  24,799   16,149 
Net cash provided by operating activities  60,388   72,407 
         
Investing activities:        
Purchase of property and equipment  (1,752)  (3,305)
Net maturities of investments  -   1,439 
Net cash used in investing activities  (1,752)  (1,866)
         
Financing activities:        
Purchase of common stock  (43,155)  (50,238)
Net cash used in financing activities  (43,155)  (50,238)
         
Foreign currency impact on cash  (2,521)  (28)
         
Net change in cash and cash equivalents  12,960   20,275 
Cash and cash equivalents at beginning of period  110,678   99,126 
Cash and cash equivalents at end of period $123,638  $119,401 

 

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

1.    Corporate Response to COVID-19:

Regarding the COVID-19 pandemic, we remain cautious about the global recovery, which we expect to be slow and protracted. At mid-year, we are experiencing solid demand for our cloud-based supply chain and omnichannel commerce solutions and our competitive win rates remain strong. In May, we launched Manhattan Active Warehouse Management, the next generation of Warehouse Management. We have rearchitected our warehouse management solution from the ground up as a cloud native, microservices based, versionless application. The reception has exceeded our expectations and pipeline opportunities are building. Our solutions are mission critical, supporting large and complex, global supply chains. While we expect demand to continue to grow for our Cloud solutions, sales cycles will likely extend as customers and prospects contend with the COVID-19 pandemic while evaluating our solutions. Our Professional Services business revenue through the first half of 2020 is down approximately 13%, and excluding billed travel, is down approximately 11%, as clients delay projects due to COVID-19. We have had no notable cancellations in 2020. For the second half, we expect Services revenue to decline, driven by COVID-19 impacts to customers, as well as our traditional retail peak season impact, which typically occurs in the fourth quarter.

2.    GAAP and Adjusted earnings per share by quarter are as follows:

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 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
29%; width:29%; min-width:29%;">GAAP Diluted EPS1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.321%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.321%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.421%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.261%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1.321%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.351%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.301%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">0.651%; width:1%; min-width:1%;"> 
Adjustments to GAAP:                               
Equity-based compensation 0.08   0.10   0.09   0.14   0.42   0.10   0.10   0.21 
Tax benefit of stock awards vested -   -   -   -   -   (0.06)  -   (0.06)
Purchase amortization -   -   -   -   -   -   -   - 
Adjusted Diluted EPS$0.41  $0.42  $0.51  $0.40  $1.74  $0.40  $0.40  $0.80 
Fully Diluted Shares 65,204   65,093   64,992   64,807   65,103   64,342   64,126   64,234 

3.    Revenues and operating income by reportable segment are as follows (in thousands):

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 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
Revenue: 
29%; width:29%; min-width:29%;">Americas1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">114,8731%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">121,7781%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">132,0281%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">121,1551%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">489,8341%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">123,1461%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">107,3681%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">230,5141%; width:1%; min-width:1%;"> 
EMEA 26,288   25,043   22,978   23,964   98,273   24,313   21,558   45,871 
APAC 7,243   7,520   7,269   7,810   29,842   6,444   6,704   13,148 
 $148,404  $154,341  $162,275  $152,929  $617,949  $153,903  $135,630  $289,533 
                                
GAAP Operating Income: 
Americas$18,051  $16,826  $26,310  $17,437  $78,624  $16,282  $18,984  $35,266 
EMEA 7,734   8,057   6,371   4,772   26,934   6,313   5,515   11,828 
APAC 2,491   2,699   2,316   2,860   10,366   1,601   2,193   3,794 
 $28,276  $27,582  $34,997  $25,069  $115,924  $24,196  $26,692  $50,888 
                                
Adjustments (pre-tax): 
Americas:                               
Equity-based
  compensation		$7,182  $8,462   8,002  $8,195  $31,841  $7,564  $7,492  $15,056 
Purchase amortization 108   107   108   107   430   107   110   217 
 $7,290  $8,569  $8,110  $8,302  $32,271  $7,671  $7,602  $15,273 
                                
                                
Adjusted non-GAAP Operating Income: 
Americas$25,341  $25,395  $34,420  $25,739  $110,895  $23,953  $26,586  $50,539 
EMEA 7,734   8,057   6,371   4,772   26,934   6,313   5,515   11,828 
APAC 2,491   2,699   2,316   2,860   10,366   1,601   2,193   3,794 
 $35,566  $36,151  $43,107  $33,371  $148,195  $31,867  $34,294  $66,161 
                                

4.    Impact of Currency Fluctuation

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):

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28%; width:28%; min-width:28%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 2%; width:2%; min-width:2%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;"> 1%; width:1%; min-width:1%;"> 
 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
Revenue$(2,419) $(1,906) $(1,352) $(670) $(6,347) $(988) $(777) $(1,765)
Costs and expenses (2,686)  (1,696)  (988)  (346)  (5,716)  (996)  (1,430)  (2,426)
Operating income 267   (210)  (364)  (324)  (631)  8   653   661 
Foreign currency (losses)
  gains in other income		 (590)  (377)  298   (325)  (994)  1,348   (193)  1,155 
 $(323) $(587) $(66) $(649) $(1,625) $1,356  $460  $1,816 


Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

100%; border-collapse:collapse !important;">
 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
29%; width:29%; min-width:29%;">Operating income1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">9811%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">4381%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">511%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">(1401%; width:1%; min-width:1%;">)1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1,3301%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">3081%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">8951%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1,2031%; width:1%; min-width:1%;"> 
Foreign currency (losses)
  gains in
  other income		 (182)  (127)  437   284   412   1,450   262   1,712 
Total impact of
  changes in the
  Indian Rupee		$799  $311  $488  $144  $1,742  $1,758  $1,157  $2,915 

5.    Other income includes the following components (in thousands):

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 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
29%; width:29%; min-width:29%;">Interest income1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">2311%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1781%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1911%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1151%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">7151%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">681%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">281%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">961%; width:1%; min-width:1%;"> 
Foreign currency (losses) gains (590)  (377)  298   (325)  (994)  1,348   (193)  1,155 
Other non-operating
  (expense) income		 (12)  128   321   (5)  432   4   7   11 
Total other (loss) income$(371) $(71) $810  $(215) $153  $1,420  $(158) $1,262 

6.    Capital expenditures are as follows (in thousands):

100%; border-collapse:collapse !important;">
 2019  2020         
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
29%; width:29%; min-width:29%;">Capital expenditures1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">6161%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">2,6891%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">8,0531%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">3,8351%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">15,1931%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1,2451%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">5071%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">1,7521%; width:1%; min-width:1%;"> 

7.    Stock Repurchase Activity (in thousands):

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 2019  2020 
 1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr  YTD 
29%; width:29%; min-width:29%;">Shares purchased under publicly announced buy-back program1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">4641%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">3021%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">4291%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">4451%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">1,6401%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">3371%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">-1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 6%; width:6%; min-width:6%;">3371%; width:1%; min-width:1%;"> 
Shares withheld for taxes due upon vesting of restricted stock units 106   1   4   1   112   219   2   221 
Total shares purchased 570   303   433   446   1,752   556   2   558 
                                
Total cash paid for shares purchased under publicly announced buy-back program$24,927  $19,993  $35,955  $34,992  $115,867  $25,000  $-  $25,000 
Total cash paid for shares withheld for taxes due upon vesting of restricted stock units 5,233   85   266   36   5,620   18,032   123   18,155 
Total cash paid for shares repurchased$30,160  $20,078  $36,221  $35,028  $121,487  $43,032  $123  $43,155 

8.     Remaining Performance Obligations

Under the new revenue recognition standard, we now disclose revenue we expect to recognize from our remaining performance obligations. Our reported performance obligations primarily represent cloud subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Our deferred revenue on the balance sheet primarily relates to our maintenance contracts, which are typically one year in duration and are not included in the remaining performance obligations. Below are our remaining performance obligations as of the end of each period (in thousands):

100%; border-collapse:collapse !important;">
 March 31, 2019  June 30, 2019  September 30, 2019  December 31, 2019  March 31, 2020  June 30, 2020 
44%; width:44%; min-width:44%;">Remaining Performance Obligations1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">100,5321%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$7%; width:7%; min-width:7%;">120,4031%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">152,0431%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">171,6651%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">202,7931%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;"> 1%; width:1%; min-width:1%;">$6%; width:6%; min-width:6%;">225,4701%; width:1%; min-width:1%;"> 

FAQ

What revenue did Manhattan Associates report for Q2 2020?

Manhattan Associates reported revenue of $135.6 million for Q2 2020.

How did the earnings per share change for MANH in Q2 2020?

GAAP diluted earnings per share for MANH in Q2 2020 was $0.30, down from $0.32 in Q2 2019.

What factors impacted Manhattan Associates' services revenue in Q2 2020?

Services revenue fell due to delays in project work related to the COVID-19 pandemic.

What is Manhattan Associates' updated guidance for 2020?

The updated guidance for 2020 is total revenue between $554 million and $570 million.

How did cash flow from operations perform in Q2 2020 for MANH?

Cash flow from operations was $48.8 million in Q2 2020, up from $37.2 million in Q2 2019.

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Manhattan Associates Inc

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MANH Stock Data

16.76B
61.08M
1.2%
104.5%
3.48%
Software - Application
Services-prepackaged Software
Link
United States of America
ATLANTA