Manhattan Associates(US:MANH)2021-02-03 02:03Financial Data and Key Metrics Changes - Manhattan reported Q4 revenue of $147 million, adjusted earnings per diluted share of $0.45, both exceeding expectations [11][29] - Full year 2020 total revenue was $586 million, down 5% compared to 2019, primarily due to COVID-19 [29] - Q4 adjusted operating income totaled $38 million, with an adjusted operating margin of 25.6% [40] - Cloud revenue for Q4 was $23 million, up 46% year-over-year, and for the full year 2020, cloud revenue increased 70% to $80 million [30][31] - Remaining performance obligation (RPO) for the quarter totaled $309 million, up 20% sequentially and 80% year-over-year [32] Business Line Data and Key Metrics Changes - Cloud revenue is expected to account for approximately 85% of total software revenue in 2021, up from less than 50% in 2019 [31] - License revenue for Q4 was approximately $10 million, with a full year total of $38 million, down 22% year-over-year [35] - Maintenance revenue for Q4 totaled $39 million, up 2% year-over-year, while full year maintenance revenue declined 1% to $148 million [36] - Professional Services revenue for Q4 was $71 million, down 18% year-over-year, but expected to return to growth in 2021 [37] Market Data and Key Metrics Changes - Competitive win rates remained strong at about 70%, with retail, consumer goods, food and beverage, and grocery driving over 50% of cloud and license revenue in Q4 [18] - The demand for supply chain and omnichannel products has been solid, with a growing market need for modern solutions [14][16] Company Strategy and Development Direction - The company is transitioning to a cloud-first model, with a focus on innovation and customer success, aiming for long-term sustainable growth [15][53] - The company plans to invest nearly $90 million in research and development in 2021 [16] - The objective is to exit 2023 with approximately $1 billion in remaining performance obligation, representing a 3-year CAGR of about 45% [17][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales capacity to meet growth rates and emphasized the strong demand for cloud solutions [60] - The company raised its 2021 full-year total revenue and adjusted EPS guidance, reflecting encouraging signs of economic recovery [16] - Management noted that the ongoing pandemic has created a unique opportunity for growth in supply chain solutions [12][53] Other Important Information - The company closed the quarter with cash and investments of $205 million and zero debt [44] - The Board of Directors lifted the suspension of the share repurchase program, authorizing the repurchase of up to $50 million [43] Q&A Session Summary Question: Conversations with Tier 1 companies regarding Active Omni - Management noted that conversations have elevated to C-level discussions as the suite drives revenue for customers [56][58] Question: Sales capacity to achieve RPO growth - Management expressed confidence in sales capacity and ongoing selective hiring to meet growth demands [60] Question: RPO progression throughout the year - Management indicated that RPO updates will be provided quarterly, targeting strong growth rates [62] Question: RPO growth drivers and product mix - Management stated that RPO growth is driven by strong demand across the full suite of solutions, but specific product line breakdowns are not provided [72][74] Question: Acquisition strategy moving forward - Management reiterated a focus on intrinsic innovation and R&D, with acquisitions considered only if they fill gaps in the current offerings [76] Question: Interest in omnichannel POS segment post-holiday season - Management noted increased interest in omnichannel capabilities as consumer demand for these services has grown [79][80]