Summary
Manhattan Associates opened fiscal 2023 with revenue of $221.0 million in the first quarter, up 23.5% from $179.0 million in the prior-year quarter. Operating income rose 38.6% to $47.1 million from $34.0 million. Operating margin was 21.3%, up 2.3 percentage points from 19.0%. Net income climbed 26.8% to $38.8 million from $30.6 million, and diluted earnings per share came in at $0.62, up from $0.48.
The revenue mix keeps tilting toward cloud. Cloud subscriptions were 26% of total revenue in the quarter, up from 21% a year earlier, while services were 53%, maintenance 16%, software license 2% and hardware 3%. Management said cloud solutions represent 91% of total software revenue. On a non-GAAP basis, adjusted operating income was $63.7 million, up from $48.1 million, and adjusted diluted earnings per share was $0.80, up from $0.60. The gap between GAAP and adjusted results reflects equity-based compensation, which the company strips out of its adjusted measures.
Backlog and cash generation were the standout items. Remaining performance obligations reached $1.20 billion, up 48.2% from $809.5 million a year earlier, and deferred revenue rose 33.8% to $216.3 million from $161.6 million. Operating cash flow was $58.7 million, up 84.7% from $31.8 million, helped by earnings growth and the timing of customer collections. Capital expenditures fell to $0.7 million from $1.2 million. Cash and cash equivalents stood at $181.6 million at March 31, 2023, down from $225.5 million at December 31, 2022, after the company repurchased 514,838 shares for $74.2 million. Days sales outstanding improved to 65 days from 77 days at December 31, 2022, and the board replenished the buyback authorization to $75.0 million in April 2023.
Guidance is for the full fiscal year 2023. Total revenue is guided to $856 million to $864 million, growth of 12% to 13%. Full-year GAAP operating margin is guided to 18.6% to 18.9%, with adjusted operating margin of 26.4% to 26.7%. Full-year GAAP diluted earnings per share is guided to $2.00 to $2.06, a range of -1% to 1%, and adjusted diluted earnings per share to $2.85 to $2.91, growth of 3% to 5%. The company also published guideposts for cloud revenue of $238 million to $242 million for 2023, up 36%, and RPO of $1,300 million to $1,400 million for 2023, up 28%. For 2024, the cloud revenue guidepost is $310 million to $345 million and the RPO guidepost is $1,600 million to $1,800 million.
Management stayed cautious on the macro backdrop. The MD&A flags global economic conditions and inflation, the possibility of extended sales cycles for large cloud subscriptions, competition, and the revenue-recognition drag from the cloud transition, since subscription revenue is recognized ratably rather than up front. The 2017 tax law change that requires research and development costs to be capitalized for tax purposes raised cash tax payments by roughly $26 million in 2022, and the company expects a similar negative impact in 2023. Foreign currency is another swing factor: net foreign currency losses were $0.8 million in the first quarter of 2023 versus $0.7 million of gains a year earlier, driven largely by the Indian Rupee. The company also lists the war in Ukraine among its risk factors.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $221.0M | $198.1M | +11.6% | $179.0M | +23.5% |
| Gross profit | $117.4M | $108.1M | +8.6% | $95.5M | +22.9% |
| Gross margin | 53.1% | 54.6% | -1.5 pp | 53.4% | -0.3 pp |
| Research & development | $30.8M | $27.1M | +13.5% | $27.5M | +12.2% |
| Sales & marketing | $18.1M | $16.7M | +8.5% | $14.4M | +25.5% |
| General & administrative | $20.0M | $18.1M | +10.2% | $18.0M | +11.1% |
| Total operating expenses | $173.9M | $153.4M | +13.4% | $145.0M | +20.0% |
| Operating income (loss) | $47.1M | $44.7M | +5.3% | $34.0M | +38.6% |
| Operating margin | 21.3% | 22.6% | -1.3 pp | 19.0% | +2.3 pp |
| Net income (loss) | $38.8M | $37.9M | +2.4% | $30.6M | +26.8% |
| Net margin | 17.6% | 19.1% | -1.6 pp | 17.1% | +0.5 pp |
| Diluted EPS | $0.62 | $0.60 | +$0.02 | $0.48 | +$0.14 |
Risks
Long sales cycles for large cloud subscriptions, with total pricing often exceeding $1.0 million, combined with extended lead times for developing new business, can cause uncertainty and impact our ability to accurately forecast bookings and revenues from quarter to quarter and over the longer term.
MD&A says we remain cautious about the global economy and that global geopolitical and economic volatility likely will continue to shape customers' and prospects' enterprise software buying decisions. A challenging global macro environment could extend sales cycles for large cloud subscriptions.
As cloud subscriptions become the dominant customer preference, revenue recognition spreads over the subscription period rather than up front and license and maintenance revenue decline. In Q1 2023, cloud subscriptions revenue rose 53% to $57.2 million while software license revenue fell 36% to $5.4 million.
MD&A describes the supply chain and omnichannel software markets as intensely competitive and characterized by rapid technological change. Professional services also face competitive exposure to offshore providers and other consulting companies.
International revenue was approximately $72.7 million, or 33% of total revenue, in Q1 2023. Net foreign currency losses were $0.8 million in Q1 2023 versus $0.7 million of net foreign currency gains in Q1 2022, and other income, net decreased 81% in Q1 2023 vs the prior-year quarter partly due to lower foreign currency gains.
Forward-looking factors include our ability to attract and retain highly skilled employees. Q1 2023 cost increases included higher compensation and other personnel-related expenses across R&D and SG&A.
The effective income tax rate rose to 17.9% in Q1 2023 from 11.9% in Q1 2022, mainly due to a net decrease of excess tax benefits on restricted stock vesting. The income tax provision increased 105% to $8.4 million in Q1 2023.
Our software is often part of customers' larger capital commitments, and MD&A lists risks associated with large system implementations and possible liability to customers if our products fail. These implementations are complex and mission critical.
SaaS KPIs
All quarters →Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from MANHATTAN ASSOCIATES INC's SEC filings for Q1 FY2023 (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 2, 2026.