Summary
Manhattan Associates reported first quarter fiscal 2021 results for the period ended March 31, 2021. Total revenue rose 1.9% to $156.9 million. Operating income rose 5.1% to $25.4 million. Net income rose 0.5% to $22.6 million. GAAP diluted earnings per share was $0.35, flat with the prior-year quarter. Operating margin was 16.2%, up 0.5 percentage points. On a non-GAAP basis, adjusted diluted earnings per share was $0.43 compared with $0.40. Adjusted operating income was $35.6 million compared with $31.9 million. Management called the quarter a record first quarter for revenue and earnings per share.
Operational momentum centered on cloud demand. Remaining performance obligations rose 107.7% to $421.2 million. Deferred revenue rose 16.6% to $122.9 million. Management said first quarter bookings were a record and that RPO more than doubled from the prior year. Cloud subscriptions represented 77% of the total cloud and software license revenue mix. The company also said 90% of its pipeline represented cloud. Demand was notably strong for Manhattan Active Warehouse Management, which management said is fueling services demand and increasing visibility into future revenue growth. Cloud subscriptions were 17% of total revenue, while services were 51%. International revenue represented approximately 31% of total revenue. The company continues to transition from perpetual licenses to cloud subscriptions, a shift that spreads revenue recognition over subscription periods that typically run 36 to 60 months.
Cash generation improved sharply. Operating cash flow rose 244.2% to $39.9 million. Capital expenditures fell 54.3% to $0.6 million. Days sales outstanding was 61 days at March 31, 2021, compared with 68 days at December 31, 2020. During the quarter, the company repurchased 214,422 shares for $27.0 million. In April 2021, the board authorized repurchases of up to $50 million. The company reported no debt on its balance sheet and no credit facilities. Management said it funded the business through cash generated from operations. The company employed approximately 3,500 people worldwide at March 31, 2021.
Guidance was raised for the full fiscal year 2021. Revenue guidance moved to $625 million to $640 million, or 7% to 9% growth, from previous guidance of $595 million to $625 million. Adjusted operating margin guidance is 21.0% to 22.0%. Adjusted diluted earnings per share guidance is $1.60 to $1.70. The company said the guidance reflects a strong start to the year. Risks remain. Management remains cautious about the global recovery from COVID-19, which it expects to be slow and protracted. The cloud transition creates uncertainty around bookings and revenue timing. Large deals have long sales cycles, and delays can hurt results. Competition and pricing pressure are persistent. Foreign currency fluctuations, especially in the Indian Rupee, can affect operating income and other income. The company also faces execution risks around product development, customer implementations, and information technology security. It has cloud infrastructure obligations of approximately $70 million over the next 5 years and internal software subscription obligations of approximately $10 million over the next 3 years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $156.8M | $147.1M | +6.6% | $153.9M | +1.9% |
| Gross profit | $82.8M | $80.3M | +3.2% | $79.1M | +4.7% |
| Gross margin | 52.8% | 54.6% | -1.8 pp | 51.4% | +1.4 pp |
| Research & development | $24.3M | $20.6M | +18.0% | $23.3M | +4.0% |
| Sales & marketing | $13.4M | $13.6M | -1.2% | $13.1M | +2.4% |
| General & administrative | $17.6M | $15.8M | +11.4% | $16.1M | +9.0% |
| Total operating expenses | $131.4M | $118.9M | +10.5% | $129.7M | +1.3% |
| Operating income (loss) | $25.4M | $28.2M | -9.8% | $24.2M | +5.1% |
| Operating margin | 16.2% | 19.2% | -3.0 pp | 15.7% | +0.5 pp |
| Net income (loss) | $22.6M | $20.5M | +10.2% | $22.5M | +0.5% |
| Net margin | 14.4% | 14.0% | +0.5 pp | 14.6% | -0.2 pp |
| Diluted EPS | $0.35 | $0.32 | +$0.03 | $0.35 | ±$0.00 |
Risks
Management remains cautious about the global recovery from COVID-19, which it expects to be slow and protracted, and believes global geopolitical and economic volatility associated with the pandemic will continue to shape customers' and prospects' enterprise software buying decisions. Total revenue rose only 1.9% in the quarter ended March 31, 2021 versus the prior-year quarter, and roughly 70% of revenue is generated in the United States, tying results closely to U.S. economic health.
The shift from perpetual licenses to cloud subscriptions spreads revenue recognition over the subscription period rather than up front, which management says creates uncertainty for future expectations and impairs its ability to accurately forecast bookings and revenues from quarter to quarter and over the longer term. Software license revenue fell 19% in the quarter ended March 31, 2021 versus the prior-year quarter as customers shifted to SaaS, while cloud subscriptions revenue rose 54% to $26.6 million.
Given the mission critical nature of the software and a challenging macro environment including COVID-19 and geopolitical uncertainty, sales cycles for large cloud subscriptions and, to a lesser degree, license sales of $1.0 million or greater could be extended. Delays in customers' and prospects' strategic capital expenditure decisions can have a material adverse impact on the business and may further intensify competition.
Management expects continued increased competition from Enterprise Resource Planning and Supply Chain Management application vendors and business application software vendors that may broaden their offerings by internally developing or acquiring or partnering with independent developers. Increased competition could result in price reductions, fewer customer orders, reduced gross margins and loss of market share.
Services revenue was 51% of total revenue in the quarter ended March 31, 2021 and declined $7.0 million versus the prior-year quarter, driven by reduced professional services hiring in 2020 and lower billed-travel revenue due to COVID-19. Management notes that the large services mix may keep the consolidated operating margin profile lower than those of competitors.
The company cites its ability to attract and retain highly skilled employees as a factor that could cause actual results to differ materially, and the services revenue decline in the quarter ended March 31, 2021 was partly attributed to a reduction in professional services hiring in 2020. The company employed approximately 3,500 people worldwide at March 31, 2021.
SaaS KPIs
All quarters →Remaining Performance Obligations
Cloud Subscription Revenue
Summary, forecast, risks and KPIs are extracted from MANHATTAN ASSOCIATES INC's SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.