Manhattan Associates-Manhattan's Q3 Earnings Beat Estimates, Shares Down on Weak View

Core Insights - Manhattan Associates (MANH) reported third-quarter 2024 adjusted earnings of $1.35 per share, exceeding the Zacks Consensus Estimate by 27.36% and reflecting a year-over-year increase of 28.6% [1] - Net sales for the quarter reached$ 266.7 million, marking an 11.8% year-over-year growth and surpassing the consensus estimate by 1.26% [1] - The company experienced strong growth in cloud and service revenues, particularly from its Manhattan Active Supply Chain Planning offering [1] Financial Performance - Cloud subscriptions, accounting for 32.4% of net sales, generated revenues of $86.5 million, up 33% year over year, beating the consensus estimate by 1.9% [2] - Service sales, which made up 51.4% of net sales, totaled$ 137 million, reflecting a 7.1% year-over-year increase and exceeding the consensus estimate by 0.84% [2] - Software license sales, representing 1.4% of net sales, were $3.8 million, down 2.8% year over year but significantly beating the consensus estimate by 94.92% [2] - Maintenance sales, at 12.9% of net sales, were$ 34.5 million, down 2.3% year over year, yet beating the Zacks Consensus Estimate by 1.6% [2] - Hardware sales, comprising 1.9% of net sales, were $4.9 million, down 1.9% year over year and missing the consensus estimate by 29.51% [2] - Remaining Performance Obligations (RPO) increased by 27.2% year over year to$ 1.7 billion [2] Geographical Performance - Revenues from the Americas, which accounted for 77.2% of net sales, were $205.8 million, up 10.7% year over year [3] - Revenues from EMEA, making up 17.6% of net sales, reached$ 48.08 million, up 14.4% year over year [3] - Revenues from APAC, representing 4.6% of net sales, were $12.74 million, reflecting a 24% year-over-year increase [3] Expense Management - Selling and marketing expenses as a percentage of revenues decreased by 120 basis points year over year to 6.2% [4] - Research and Development expenses as a percentage of revenues declined by 100 basis points year over year to 12.9% [4] - General and Administrative expenses as a percentage of revenues fell by 130 basis points year over year to 7.6% [4] - Adjusted operating income increased by 36.5% year over year to$ 98.9 million [4] Balance Sheet and Share Repurchase - As of September 30, 2024, cash and cash equivalents stood at $214.9 million, up from$ 202.7 million as of June 30, 2024 [4] - During the quarter, the company repurchased 194,712 shares for $49.7 million and authorized an additional$ 75 million for share repurchase in October 2024 [4] Guidance - For fiscal 2024, Manhattan Associates expects earnings between $3.47 and$ 3.49 per share, indicating a growth of 23% to 24% year over year [5] - Revenue guidance for fiscal 2024 is projected between $1.03 billion and$ 1.04 billion [5] - RPO for fiscal 2024 is anticipated to be between $1.75 billion and$ 1.8 billion [5] - The adjusted operating margin for fiscal 2024 is expected to be in the range of 34% to 34.1% [5] - The Zacks Consensus Estimate for fiscal 2024 revenues is $1.04 billion, suggesting an 11.96% year-over-year increase [5] Market Performance - Manhattan Associates currently holds a Zacks Rank 3 (Hold) and has seen a year-to-date share price increase of 35.8%, outperforming the Zacks Computer and Technology sector's rise of 27.5% [6] - Comparatively, Arista Networks, Onto Innovation, and Fortinet are better-ranked stocks in the sector, each holding a Zacks Rank 2 (Buy) [6]