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Manhattan Associates Reports Record First Quarter 2020 Revenue

ATLANTA , April 21, 2020 (GLOBE NEWSWIRE) — Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported record first quarter revenue of $153.9 million for the first quarter ended March 31, 2020, applying the new revenue recognition standard retrospectively. GAAP diluted earnings per share for Q1 2020 was $0.35 compared to $0.32 in Q1 2019. Non-GAAP adjusted diluted earnings per share for Q1 2020 was $0.40 compared to $0.41 in Q1 2019.
“Q1 was a solid quarter for Manhattan Associates, especially in light of the impact the COVID-19 pandemic is having globally,” said Manhattan Associates president and CEO Eddie Capel. “Our growing cloud business outperformed, with noticeable revenue growth and continued strength in overall bookings. Despite near-term uncertainty, we continue to see growing enthusiasm for our unified supply chain and omnichannel commerce solutions as companies around the world are beginning to realize more than ever that the modern supply chain is absolutely mission-critical and strategically important.”Regarding the COVID-19 pandemic, Mr. Capel added, “We are seeing some shifts in the expected timing of deal closings from Q2 to the second half of the year and delays of some of our services projects. But in general, we are not seeing cancelations and are seeing a larger pipeline of opportunities for the balance of the year versus a quarter ago. During this period of greater uncertainty, we are focusing first and foremost on the health and safety of our employees, while continuing to best serve our customers in a virtual environment. At the same time, we are taking appropriate actions, such as previously announced expense management strategies, that we believe will allow us to manage through this volatile period while ensuring we are best-positioned to capitalize on the market opportunities when we return to a more normal operating environment.”“We remain confident on our long-term growth trajectory,” Mr. Capel concluded, “but we are taking a conservative approach as we position the business in the near term.” Mr. Capel stated that, “As such, we are updating our full-year financial guidance to reflect what we know today and with the visibility we have for the remainder of the year.”FIRST QUARTER 2020 FINANCIAL SUMMARY:Consolidated total revenue was $153.9 million in Q1 2020, compared to $148.4 million in Q1 2019.Cloud subscription revenue was $17.3 million in Q1 2020, compared to $7.9 million in Q1 2019.License revenue was $9.7 million in Q1 2020, compared to $12.4 million in Q1 2019.Service revenue was $87.4 million in Q1 2020, compared to $88.6 million in Q1 2019.GAAP diluted earnings per share was $0.35 in Q1 2020 compared to $0.32 in Q1 2019.Adjusted diluted earnings per share, a non-GAAP measure, was $0.40 in Q1 2020, compared to $0.41 in Q1 2019.GAAP operating income was $24.2 million in Q1 2020, compared to $28.3 million in Q1 2019.Adjusted operating income, a non-GAAP measure, was $31.9 million in Q1 2020, compared to $35.6 million in Q1 2019.Cash flow from operations was $11.6 million for Q1 2020, compared to $35.2 million for Q1 2019. Days Sales Outstanding was 67 days at March 31, 2020, compared to 61 days at December 31, 2019.Cash and investments totaled $75.3 million at March 31, 2020, compared to $110.7 million at December 31, 2019.During the three months ended March 31, 2020, the Company repurchased 337,007 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $25.0 million.In April 2020, our Board authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock but also suspended the Company’s stock repurchase program indefinitely because of Covid-19-related considerations and until conditions improve for the resumption of the program.2020 GUIDANCEManhattan Associates provides the following updated revenue, operating margin and diluted earnings per share guidance for the full year 2020:Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. We note in particular that the severity, duration and ultimate impact of the COVID-19 pandemic are difficult to predict at this time. In addition, those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.CONFERENCE CALLThe Company’s conference call regarding its first quarter 2020 financial results will be held today, April 21, 2020, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of Manhattan Associates’ website at www.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.Those who cannot listen to the live broadcast may access a replay shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number ­­­­­­­­7183662 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ second quarter 2020 earnings release.GAAP VERSUS NON-GAAP PRESENTATIONThe Company provides adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three months ended March 31, 2020.Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization of these costs, (from time to time) restructuring charges – all net of income tax effects. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.ABOUT MANHATTAN ASSOCIATESManhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2020 Guidance,” any statements about the future effect of the COVID-19 pandemic on our business, customers or the global economy, our business prospects following the pandemic statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: the risk that the duration and severity of the COVID-19 pandemic, and its ultimate effects on the global economy, our customers and our business, may be worse than expected; risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-a service/cloud-based model; disruption in the retail sector; the possible effect of new U.S. tariffs on imports from other countries (and possible responsive tariffs on U.S. exports by other countries) on international commerce; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; risks related to our products’ technology and customer implementations; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
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MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
1.    Corporate Response to COVID-19:Our results for the first quarter were in line with our internal expectations due to continued demand for our cloud-based supply chain and omnichannel commerce solutions. However, the impacts of global macroeconomic disruption directly related to coronavirus disease (“COVID-19”) on our business are currently uncertain. Therefore, we are taking a conservative approach and proactive measures to position our company for uncertainty in the near-term while maintaining flexibility to extend our market-leading position when a normalization of business activity resumes. As previously announced, effective April 1, 2020, we reduced the salaries of the chief executive officer and the board of directors by 25%, the chief financial officer by 15%, and other named executive officers by 10%; and suspended our share repurchase program. We are also aggressively reducing operating expenses globally.Importantly, we believe these expense reductions will not materially impact our ability to support our customers or make key investments in research and development to further extend our competitive positioning. We will continue to actively monitor the situation and may take further actions that modify our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, and partners.2.    GAAP and Adjusted earnings per share by quarter are as follows:
3.    Revenues and operating income by reportable segment are as follows (in thousands):
4.    Impact of Currency FluctuationThe following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):
Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

5.    Other income includes the following components (in thousands):
6.    Capital expenditures are as follows (in thousands):
7.    Stock Repurchase Activity (in thousands):
8.     Remaining Performance ObligationsUnder the new revenue recognition standard, we now disclose revenue we expect to recognize from our remaining performance obligations. Our reported performance obligations primarily represent cloud subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Our deferred revenue on the balance sheet primarily relates to our maintenance contracts, which are typically one year in duration and are not included in the remaining performance obligations. Below are our remaining performance obligations as of the end of each period (in thousands):
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