Manhattan Associates(US:MANH)2022-04-27 01:34Financial Data and Key Metrics Changes - Total revenue for Q1 2022 increased 14% to $179 million, with adjusted earnings per diluted share rising 40% to $0.60, both exceeding expectations [7][21] - RPO (Remaining Performance Obligations) increased 92% to $810 million, indicating strong future revenue visibility [10][21] - Q1 cloud revenue totaled $37 million, up 40% year-over-year [21] - Operating profit for Q1 was $48 million, with an adjusted operating margin of 26.9%, up 420 basis points year-over-year [22] Business Line Data and Key Metrics Changes - Services revenue set a new Q1 record of $90 million, up 12%, driven by cloud sales [22] - Cloud and services revenue combined represented 71% of total revenue in the quarter [22] - Over 90% of the pipeline consists of cloud opportunities, with net new customers representing about 35% of that demand [11] Market Data and Key Metrics Changes - Demand for cloud offerings remains strong across various products, industry verticals, and geographic locations, with retail, manufacturing, and wholesale driving over 80% of bookings [10] - The company continues to see robust demand from both new and existing customers [10] Company Strategy and Development Direction - The company is focused on increasing its market share and extending its addressable market through strategic hiring, with plans to add about 500 net new employees in 2022 [12] - The company aims to maintain sustainable double-digit top-line growth and top quartile operating margins [24] - The strategic shift towards cloud-native applications is expected to enhance customer integration and cross-selling opportunities [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for future growth despite a turbulent global macro environment [34] - The company is raising its 2022 revenue and earnings guidance due to strong business momentum and improved revenue visibility [11][24] Other Important Information - The company launched its ESG website, highlighting its commitment to environmental sustainability and community support [19] - The company plans to hold its annual customer conference in person for the first time since 2019, emphasizing the theme of unifying applications [18] Q&A Session Summary Question: Is the RPO strength indicative of a WMS replacement cycle? - Management indicated that the current demand reflects both a product innovation theme and a potential WMS replacement cycle [38] Question: What is the profile of new customer logos? - New customer deals do not show a discernible difference in size compared to existing customers, indicating strong cross-selling potential [40] Question: What opportunities exist for migrating on-prem solutions to the cloud? - The transition to cloud-native applications is expected to facilitate easier integration and cross-selling among existing customers [46] Question: How is the company performing in the EMEA region? - Management reported strong performance in EMEA, with a robust pipeline for the remainder of the year despite regional turmoil [54] Question: How is the mix of retail between e-commerce and bricks-and-mortar affecting demand? - There has been a normalization in demand, but overall product demand remains strong across the board [58] Question: What is the outlook for free cash flow given the cash taxes? - Management expects free cash flow to build through the year, aligning closely with operating margin profiles [42]