Manhattan Associates ((MANH)) has held its Q1 earnings call. Read on for the main highlights of the call.
Manhattan Associates’ latest earnings call reveals a promising start to 2025, marked by robust cloud revenue growth and an increase in remaining performance obligations (RPO). Despite these positive indicators, the call also highlighted concerns over declining services revenue and macroeconomic challenges, including tariffs and foreign exchange (FX) volatility.
Strong Cloud Revenue Growth
Manhattan Associates reported a 21% year-over-year increase in cloud revenue, significantly contributing to the company’s top-line performance and earnings leverage. This growth underscores the increasing demand for cloud-based solutions and positions the company well in the competitive landscape.
Significant Increase in RPO
The company’s RPO rose by 25% to approximately $1.9 billion, reflecting robust demand for Manhattan’s mission-critical solutions. This increase is a positive indicator of future revenue streams and customer commitment.
High Win Rates and New Logo Activity
Manhattan Associates maintained competitive win rates of about 70%, with around 50% of new cloud bookings coming from net new logos. This demonstrates the company’s strong market position and ability to attract new business.
Google Cloud Partnership Recognition
The company was recognized as Google Cloud’s Partner of the Year for Supply Chain and Logistics. This accolade highlights Manhattan Associates’ innovation and leadership in the sector, enhancing its reputation and potential for future collaborations.
Successful Service Delivery
In the first quarter, the Services team completed over 100 go-lives, showcasing the company’s robust service delivery capabilities. This success is crucial for maintaining customer satisfaction and long-term partnerships.
Innovation in Product Offerings
Manhattan Associates launched Enterprise Promise and Fulfill, new solutions designed to optimize B2B order promising and fulfillment. This innovation reflects the company’s commitment to enhancing its product offerings and meeting evolving customer needs.
Decline in Services Revenue
Services revenue saw an 8% decline year-over-year, attributed to customer budgetary constraints and the deferral of services work to future periods. This decline is a concern, highlighting potential challenges in the services segment.
Macroeconomic Uncertainty
The earnings call emphasized the risks posed by the turbulent global macro environment, particularly uncertainties around tariffs. These factors could impact the company’s future performance and strategic planning.
FX Volatility
FX volatility posed a $2 million headwind to Q1 total revenue, although it contributed a $14 million tailwind to sequential RPO growth. This volatility presents both challenges and opportunities for the company’s financial performance.
Forward-Looking Guidance
Despite the challenging macroeconomic environment, Manhattan Associates provided optimistic guidance for the year. The company expects total revenue between $1.06 billion and $1.07 billion, with cloud revenue projected to reach $405 million to $410 million. The adjusted operating margin is anticipated to be 33.25%, and the full-year adjusted EPS outlook has been increased to a range of $4.54 to $4.64. The company remains confident in its growth opportunities, driven by strong demand for cloud solutions and strategic investments.
In summary, Manhattan Associates’ earnings call reflects a positive outlook for 2025, with strong cloud revenue growth and increased RPO signaling robust demand. However, challenges such as declining services revenue and macroeconomic uncertainties remain. The company’s strategic focus on innovation and partnerships, along with its optimistic guidance, positions it well for future growth.