• Total Revenue: $256 million in Q4, up 7% year-over-year; $1.04 billion for the full year, up 12%.
• Cloud Revenue: $90 million in Q4, up 26%; $337 million for the full year, up 32%.
• RPO (Remaining Performance Obligation): $1.8 billion, up 25% year-over-year.
• Adjusted Earnings Per Share: $1.17 in Q4, up 14%; $4.72 for the full year, up 26%.
• GAAP Earnings Per Share: $3.51 for the full year, up 24%.
• Operating Margin: 35.3% in Q4; 34.7% for the full year, a 440 basis point improvement over 2023.
• Operating Cash Flow: $105 million in Q4, up 18%; $295 million for the full year.
• Free Cash Flow Margin: 39.7% in Q4; 27.5% for the full year.
• Deferred Revenue: $279 million, up 17% year-over-year.
• Cash and Cash Equivalents: $266 million with zero debt.
• Share Repurchases: $44 million in Q4; $242 million for the full year.

• Warning! GuruFocus has detected 7 Warning Sign with VLVLY.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Manhattan Associates Inc (NASDAQ:MANH) surpassed the $1 billion total revenue milestone in 2024, achieving new records in RPO, total revenue, operating profit, free cash flow, and earnings per share.
• Q4 2024 was a record quarter with revenue increasing by 7% to $256 million, highlighted by 26% growth in cloud revenue.
• The company achieved a 25% increase in remaining performance obligation (RPO) to $1.8 billion, indicating strong future revenue potential.
• Manhattan Associates Inc (NASDAQ:MANH) has a strong pipeline with a 70% win rate and significant opportunities for sustainable future growth.
• The company is committed to innovation, investing $138 million in research and development in 2024, which is expanding its total addressable market.

Negative Points

• Approximately 10% of customers with in-flight implementations have reduced their planned services work for the upcoming year, impacting services revenue.
• Services revenue is expected to trough in Q1 2025 due to deal pushes, reduced customization, and higher partner utilization.
• Foreign exchange headwinds have impacted RPO growth and are expected to continue affecting financial performance in 2025.
• The company anticipates a reduction in services revenue for 2025, which could create some financial volatility.
• Despite strong software demand, there is sluggishness in the services segment, partly due to budgetary constraints among customers.

Q & A Highlights

Q: Can you provide more insight into the seasonality of your cloud bookings, particularly in Q1? A: Eddie Capel, President and CEO, stated that there isn't a clear seasonality pattern, except for a slight slowdown in the middle of the year due to vacations. Q4 was a record quarter, and Q1 has started strong, with balanced performance across the product portfolio and geographies.

Q: How are you addressing the sluggishness in services, and is it related to the cloud model? A: Eddie Capel explained that while they are becoming more efficient in implementing software and leveraging Tier 1 partners, there is pressure on budgets. Customers have reduced their planned services work for 2025, impacting services revenue.

Q: Could you elaborate on the free cash flow expectations for 2025? A: Dennis Story, CFO, mentioned that they expect a run rate of about $300 million per quarter, targeting $1.2 billion in cash collections for the full year.

Q: Are large customers committing to cloud in phases, similar to SAP's experience? A: Eddie Capel noted that this has been a common practice for several years, with customers often committing to a few distribution centers initially, leaving room for future expansion. This is not a new dynamic and doesn't impact near-term services.

Q: Can you provide an update on the number of active WMS customers and their transition to the cloud? A: Eddie Capel stated that there are over 150 live customers with more than 600 facilities globally. Just under 20% of customers have migrated to the cloud, with the majority still on-premise.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.