Manhattan Associates(US:MANH)2019-02-06 03:33Financial Data and Key Metrics Changes - The company reported record Q4 total revenue of $144 million, a 6% increase year-over-year, and adjusted EPS of $0.46, up 2% compared to the prior year [11][42] - The operating margin was higher than expected at 27.5%, with a full-year operating margin of 27.6%, reflecting a 250 basis point increase due to the timing of business investments [12][58] - Full-year cloud revenue recognized in 2018 totaled $23 million, exceeding the $20 million goal and growing 141% over 2017 [22][44] Business Line Data and Key Metrics Changes - Consulting services revenue in Q4 2018 was $84.5 million, up 10% year-over-year, driven by strong demand in the Americas and Europe [54] - License revenue for Q4 was $13.3 million, achieving the upper end of the target range, while cloud revenue was $6.8 million, representing a 113% increase over Q4 2017 [25][44] - Maintenance revenue totaled $36 million, down about 2% year-over-year, with strong retention rates above 90% [52] Market Data and Key Metrics Changes - The Americas contributed about 85% of cloud bookings in Q4, indicating strong regional performance [23] - The company noted that over 50% of license and cloud revenues in the quarter came from retail, consumer goods, and food and beverage sectors [19] Company Strategy and Development Direction - The company is focused on transitioning to cloud-based solutions, with significant investments in R&D, which increased by over 24% year-over-year [14] - The strategy includes aggressive recruitment in sales and marketing to enhance market awareness and expand coverage, particularly in the Americas and Europe [20] - The company aims to return to sustainable long-term growth, targeting a 4% to 6% CAGR through 2022 [69] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about 2019, raising guidance for total revenue, operating margin, and earnings per share [13][65] - The company remains focused on customer success and innovation to drive growth, despite global macroeconomic uncertainties [74] - Management anticipates a shift towards subscription models, which may lead to smaller deal sizes but is viewed positively for long-term revenue growth [50] Other Important Information - The remaining performance obligation (RPO) increased to $77 million, a 180% increase over 2017, indicating strong future cloud bookings [49] - The company closed the quarter with cash and investments totaling $101 million and zero debt, reflecting a strong financial position [62] Q&A Session Summary Question: Active Omni referenceability and sales force adeptness - Management indicated that referenceability for Manhattan Active Omni is strong, with a 70% win rate against major competitors and significant success in new customer acquisitions [81][82] Question: Maintenance revenue trends - Maintenance revenue is expected to decline linearly throughout the year, with a gradual trend down as existing customers transition to cloud [84][85] Question: Cloud revenue guidance - The company provided conservative guidance for cloud revenue due to customer evaluations between license and cloud options [92] Question: Services revenue growth drivers - The increase in services revenue was attributed to strong demand across regions and a rise in system upgrades, with positive momentum expected to continue into 2019 [102] Question: Remaining performance obligations and contract duration - Less than one year contracts are not a material portion of cloud contracts, with a trend towards longer-term deals [112] Question: Hiring environment and sales organization changes - The company is focused on hiring the right talent for sales and marketing, particularly in emerging areas, to enhance its competitive position [122]