Summary
Manhattan Associates reported second quarter 2022 revenue of $191.9 million, up 15.5% from $166.1 million in the prior-year quarter. Net income was $30.8 million, up 0.8% from $30.6 million. Diluted earnings per share came in at $0.49, up from $0.48. Operating income fell to $37.3 million, down 5.3% from $39.4 million. Operating margin was 19.4%, down from 23.7%. The top line grew at a double-digit pace, but profitability compressed as the company invested in cloud operations, research and development, and consulting capacity.
The demand picture looked strong. Remaining performance obligations were $897.7 million at June 30, 2022, up 83.7% from $488.7 million a year earlier. Deferred revenue was $178.0 million, up 41.3% from $126.0 million. Management said over 97% of RPO represents cloud native subscriptions with non-cancelable terms greater than one year. That mix supports revenue visibility, even if it changes the timing of revenue recognition. The company also noted that cloud solutions are now the dominant customer preference, with more than 95% of the pipeline representing cloud solutions. Days sales outstanding was 63 days at June 30, 2022, compared to 66 days at March 31, 2022.
For the first six months of 2022, revenue was $370.9 million, up 14.8% from $323.0 million. Operating income was $71.2 million, up 9.9% from $64.8 million. Net income was $61.4 million, up 15.4% from $53.2 million. Diluted earnings per share was $0.97, up from $0.83. Operating margin for the six months was 19.2%, down from 20.1%. Operating cash flow was $84.5 million, down 1.1% from $85.4 million. Capital expenditures were $2.2 million, up 91.5% from $1.2 million. In the second quarter alone, operating cash flow was $52.7 million, up 15.8% from $45.5 million, while capital expenditures were $1.1 million, up 80.1% from $0.6 million.
Management raised full-year 2022 guidance. The company guided total revenue growth of 10% to 12% for the full year, with adjusted operating margin of 25.5% to 25.7%. Adjusted earnings per share guidance was raised as well. The company said business fundamentals are strengthening and revenue visibility is increasing. It also plans to update longer-term cloud revenue and RPO guideposts on the third quarter earnings call, and expects to exceed its 2022 RPO guidepost.
Risks remain elevated. Management described a turbulent global macro environment and said it remains cautious about the pace of global economic growth. Inflation, supply chain disruption, the war in Ukraine, and the COVID-19 pandemic could affect customer buying decisions. Foreign currency fluctuations, especially in the Indian Rupee, added volatility to other income. The cloud transition extends sales cycles and spreads revenue recognition over subscription periods. The company is hiring aggressively to meet consulting demand, which pressures operating margin until new resources reach full utilization. A tax law change requiring capitalization of research and development costs for tax purposes is expected to increase 2022 cash tax payments by approximately $25 million to $30 million. The balance sheet has no debt, and the company repurchased $50.1 million of stock in the second quarter and $100.1 million in the first six months. In July 2022, the board raised remaining share repurchase authority to $75.0 million.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $191.9M | $179.0M | +7.2% | $166.1M | +15.5% |
| Gross profit | $103.3M | $95.5M | +8.1% | $95.5M | +8.2% |
| Gross margin | 53.8% | 53.4% | +0.4 pp | 57.5% | -3.7 pp |
| Research & development | $27.9M | $27.5M | +1.7% | $23.2M | +20.3% |
| Sales & marketing | $17.7M | $14.4M | +23.3% | $13.8M | +29.1% |
| General & administrative | $18.6M | $18.0M | +3.6% | $17.1M | +8.9% |
| Total operating expenses | $154.7M | $145.0M | +6.7% | $126.8M | +22.0% |
| Operating income (loss) | $37.3M | $34.0M | +9.7% | $39.4M | -5.3% |
| Operating margin | 19.4% | 19.0% | +0.4 pp | 23.7% | -4.3 pp |
| Net income (loss) | $30.8M | $30.6M | +0.8% | $30.6M | +0.8% |
| Net margin | 16.1% | 17.1% | -1.0 pp | 18.4% | -2.4 pp |
| Diluted EPS | $0.49 | $0.48 | +$0.01 | $0.48 | +$0.01 |
Risks
MD&A states global geopolitical and economic volatility likely will continue to shape customers' and prospects' enterprise software buying decisions, and it remains cautious about a protracted global recovery from COVID-19. Inflation is also listed as a forward-looking risk factor.
MD&A notes that current sales cycles for large cloud subscriptions in target markets could be extended, as total pricing including software and services often exceeds $1.0 million and software is part of customers' larger capital commitments. This can affect the timing of strategic capital expenditures.
The business is shifting to cloud subscriptions, with over 95% of pipeline representing cloud solutions and perpetual license solutions rapidly attritting. Cloud subscription revenue is recognized ratably over the subscription period rather than up front, and extended lead times can cause uncertainty in forecasting bookings and revenues.
Operating margin decreased 4.3 percentage points to 19.4% in FY2022 Q2 and operating income decreased 5.3% to $37.3 million, driven by strategic investments in R&D, cloud operations headcount, infrastructure, and hiring for consulting services until new resources ramp to full utilization.
MD&A lists the ability to attract and retain highly skilled employees as a risk and notes active hiring to fulfill customer demand, with compensation and personnel-related expenses increasing across cost of revenue, R&D, sales and marketing, and G&A.
The supply chain and omnichannel software markets are described as intensely competitive with rapid technological change, and professional services face competitive exposure to offshore providers and other consulting companies.
Approximately 69% of total revenue in FY2022 Q2 and year to date was generated in the United States, and Gartner estimates nearly 75% of supply chain software spend is in North America and Western Europe, making the health of those economies meaningful to financial results.
Operating cash flow for FY2022 year to date decreased 1.1% to $84.5 million, mainly due to an increase in tax payments associated with the U.S. Tax Cuts and Jobs Act that requires capitalization of R&D costs for tax purposes beginning in 2022.
SaaS KPIs
All quarters →Remaining Performance Obligations
RPO Growth (YoY)
Adjusted Operating Income
Cloud Subscription Revenue
Cloud Subscription Revenue Growth
Summary, forecast, risks and KPIs are extracted from MANHATTAN ASSOCIATES INC's SEC filings for Q2 FY2022 (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.