Supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) announced better-than-expected revenue in Q1 CY2025, with sales up 3.2% year on year to $262.8 million. The company’s full-year revenue guidance of $1.07 billion at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP profit of $1.19 per share was 15.7% above analysts’ consensus estimates.

Is now the time to buy Manhattan Associates? Find out in our full research report.

Company Overview

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Vertical Software

Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Manhattan Associates grew its sales at a 15.3% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.

This quarter, Manhattan Associates reported modest year-on-year revenue growth of 3.2% but beat Wall Street’s estimates by 2.3%.

Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will face some demand challenges.

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Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Manhattan Associates’s billings came in at $279.9 million in Q1, and over the last four quarters, its growth was underwhelming as it averaged 3.6% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth.

Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

Manhattan Associates is very efficient at acquiring new customers, and its CAC payback period checked in at 23.3 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.

Key Takeaways from Manhattan Associates’s Q1 Results

We were impressed by how significantly Manhattan Associates blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also glad it raised its full-year EPS guidance. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 6% to $172.05 immediately after reporting.

Manhattan Associates put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.