Big Deals Spark Q1 At Manhattan Associates

April 28, 2014 Dan Burger

Propelled by the evolution of multi-channel retailing called omni-channel, the supply chain software company Manhattan Associates turned in a quarterly financial report with better than expected gains. Compared to one year ago, revenue in Q1 2014 surged 15 percent to $113.6 million and license revenue climbed 17 percent to $17.1 million. License revenue was flat for the past two years. After paying all the bills, net income at the company rose 40 percent to $18.7 million.

About 60 percent of license fees come from the company’s warehouse management solutions and 30 percent of license revenue was attributed to net new customers. Around the globe, Manhattan increased its business 14 percent in the Americas, 37 percent in EMEA, and 22 percent in APAC. License revenue from those regions amounted to $11.5 million in the Americas, $4.4 million in EMEA, and $1.2 million in APAC.

Four $1 million-plus license deals in the quarter led the way. The impact of these deals happening when they did pushed the 17 percent license revenue gain mentioned above. The company anticipates an annual license revenue growth rare in the 6 percent to 8 percent range.

Each of those large contracts was closed with an existing customer–two located in the United States, one in Europe, and one in Latin America. Omni-channel priorities fueled three of the retail supply chain initiatives and three of the deals included Manhattan’s platform-based warehouse management system. One of the contracts involved the replacement of a legacy distribution management system. Manhattan executives noted that even though all four contracts were with existing customers, two were successful despite head-to-head battles with strong competition. Overall, the company’s winning percentage in head-to-head competition is 75 percent, according to the company.

Services revenue increased 16 percent to $86.9 million. This revenue stream includes consulting and maintenance. Consulting contributed $59.4 million, an increase of 21 percent. Maintenance kicked in $27.5 million and was up 7 percent. The retention rate for customers on maintenance was 90 percent.

“A meaningful portion of our WMS and non-WMS license and services revenue activity continues to be driven by existing and new customer omni-channel initiatives and reinventing their supply chains for the new world that we all live in,” noted Manhattan CFO Eddie Capel.

Manhattan hosts its annual user conference, Momentum 2014, May 5 through 8 in Hollywood, Florida. An estimated 1,000 supply chain professionals are expected to attend. Sessions pertaining to flexible fulfilment and helping retailers improve supply chain efficiencies and inventory investments, along with insights into Manhattan’s go forward strategy, are on the agenda.

The employee count at Manhattan Associates during Q1 was 2,570, an increase of about 150 people compared to a year ago. More than 95 of those folks are in professional services. During Q1, the company repurchased 695,000 shares of Manhattan common stock totaling $25.5 million.

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