Manhattan Associates Closes 2013 Strong

February 17, 2014 Dan Burger

With a timely gain in fourth quarter software license revenue driven by new customers and a growing consulting services business, the financial scorecard for Manhattan Associates for its fourth quarter and total revenue for its fiscal year looked good with double-digit gains.

In the final quarter of 2013, revenue increased 13 percent to $107.6 million, while for the year revenue increased 10 percent to $414.5 million. Both figures set new records for the supply chain management company.

Manhattan Associates recorded software license revenue of $17.3 million in the fourth quarter, which topped the prior year’s period by 20 percent. New customers accounted for approximately 60 percent of the license revenue in the quarter and approximately 35 percent of license revenue for 2013. The strong Q4 saved the annual license revenue from underperforming 2012, allowing a 1 percent gain in year over year comparisons. That total came to $62.4 million. A year earlier that total was $61.5 million.

Five contracts of $1 million or more factored into the prosperous Q4 results. Four of the five contracts included the company’s warehouse management system. For the full year, the company garnered a total of 14 contracts that topped the $1 million mark.

CFO Dennis Story noted that despite flat license growth during the past two years and the challenges of estimating sales cycles for large deals, the company has a goal for 2014 to achieve a 6 percent to 7 percent license growth rate over 2013.

Consulting services revenue picked up a 12 percent gain in Q4 and for the year it topped 2012 revenue by 14 percent. Annual revenue in this segment was $211 million.

Manhattan also sells consulting services and has a maintenance revenue stream, too. For the fourth quarter, this package showed an 8 percent growth rate and a total of $77.8 million in revenue. For the year, the services package revenue totaled $315.9 million, an increase of 11 percent over 2012. Of that amount, $105 million was received in maintenance revenue, which is a 7 percent gain. Q4 maintenance revenue totaled $26.3 million, with no gain from the quarter one year earlier.

During 2013, Manhattan repurchased 2,831,520 shares of its own common stock under the share repurchase program authorized by the board of directors, for a total investment of $59.2 million. In December 2013, Manhattan’s board of directors approved a four-for-one stock split of the company’s common stock, affected in the form of a stock dividend.

In addition to having a solid customer base of IBM midrange users, Manhattan Associates also develops software for the Unix and Windows .NET platforms.