Summary
Manhattan Associates reported record third-quarter 2023 results, with broad growth across revenue, profit and cash flow. Total revenue was $238.44 million, up 20.4% from the prior-year quarter. Year-to-date revenue was $690.47 million, up 21.4%. Operating income was $53.45 million, up 45.4%, and year-to-date operating income was $151.02 million, up 39.8%. Net income was $49.42 million, up 66.5%, while year-to-date net income was $127.83 million, up 40.3%. Diluted EPS was $0.79, up 68.1%, and year-to-date diluted EPS was $2.05, up 43.4%. Operating margin was 22.4%, up 3.9 percentage points from the prior-year quarter, and year-to-date operating margin was 21.9%, up 2.9 percentage points.
The demand backdrop remained strong for cloud solutions. Remaining performance obligations were $1.30 billion, up 34.1% from the prior-year quarter. Deferred revenue was $213.44 million, up 26.0%. Management said approximately 98% of RPO represents cloud native subscriptions with a non-cancelable term greater than one year. Cloud subscriptions were 93% of total cloud and software license revenue in the first nine months of 2023. The company described cloud solutions as its fastest growing revenue line and said customers continue to migrate from on-premise offerings. Services and cloud subscription revenue drove the quarter's operating income and margin expansion, according to the MD&A.
Cash generation improved. Operating cash flow was $58.57 million, up 46.7% from the prior-year quarter, and year-to-date operating cash flow was $157.86 million, up 26.9%. Capital expenditures were $1.09 million, down 43.1%, and year-to-date capital expenditures were $2.76 million, down 33.5%. The company repurchased 128,133 shares for $25.1 million in the quarter and 1,024,328 shares for $166.0 million in the first nine months. In October 2023, the board replenished the remaining share repurchase authority to $75.0 million. Days sales outstanding was 71 days at September 30, 2023, compared with 70 days at June 30, 2023. The balance sheet had no debt, and management said existing cash should meet working capital and capital expenditure needs for at least the next twelve months.
Guidance moved higher. Management raised its full-year 2023 outlook across all metrics and provided preliminary 2024 parameters. For full-year 2023, adjusted diluted EPS guidance is $3.51 to $3.53, and adjusted operating margin guidance is 28.9% to 29.1%. The company also said it remains cautious about the global economy and expects continued volatility. Risks include inflation, extended sales cycles for large cloud subscriptions, competition and pricing pressures, software errors and information technology failures, security breaches, international operations and foreign currency exchange risk, and geopolitical instability including the wars in Ukraine and the Middle East. Management said demand for mission-critical supply chain and omnichannel commerce systems remains solid, and it is optimistic about expanding market opportunities.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $238.4M | $231.0M | +3.2% | $198.1M | +20.4% |
| Gross profit | $127.0M | $122.2M | +3.9% | $101.9M | +24.6% |
| Gross margin | 53.3% | 52.9% | +0.4 pp | 51.5% | +1.8 pp |
| Research & development | $33.1M | $31.6M | +4.7% | $29.4M | +12.7% |
| Sales & marketing | $17.6M | $18.6M | -4.9% | $15.7M | +12.1% |
| General & administrative | $21.4M | $20.2M | +5.6% | $18.4M | +16.2% |
| Total operating expenses | $185.0M | $180.5M | +2.5% | $161.3M | +14.7% |
| Operating income (loss) | $53.4M | $50.5M | +5.9% | $36.8M | +45.4% |
| Operating margin | 22.4% | 21.9% | +0.6 pp | 18.6% | +3.9 pp |
| Net income (loss) | $49.4M | $39.6M | +24.7% | $29.7M | +66.5% |
| Net margin | 20.7% | 17.1% | +3.6 pp | 15.0% | +5.8 pp |
| Diluted EPS | $0.79 | $0.63 | +$0.16 | $0.47 | +$0.32 |
Risks
MD&A warns that current sales cycles for large cloud subscriptions in target markets could be extended given a challenging global macro environment, and notes total pricing including software and services in many cases exceeds $1.0 million, making timing of customer capital expenditures uncertain.
MD&A states the company remains cautious about the global economy and that global geopolitical and economic volatility, including the wars in Ukraine and the Middle East, likely will continue to shape customers' and prospects' enterprise software buying decisions.
MD&A reports net foreign currency losses of $0.9 million in the first nine months of 2023 compared with $4.3 million of net foreign currency gains in the first nine months of 2022, primarily due to U.S. dollar fluctuations relative to the Indian Rupee on intercompany transactions.
MD&A notes approximately 68% of total revenue in both the three and nine months ended September 30, 2023 was generated in the United States, and cites Gartner's estimate that approximately 77% of supply chain software solutions spending occurs in North America and Western Europe, so economic health in those regions meaningfully affects financial results.
MD&A states cloud solutions are the fastest growing revenue line and represented 93% of total software revenue in the first nine months of 2023, while license and maintenance revenue are being reduced in favor of cloud offerings; cloud subscription revenue is recognized ratably over terms typically of five years and more, which can delay revenue recognition.
SaaS KPIs
All quarters →Remaining Performance Obligations
RPO Growth (YoY)
Adjusted Operating Income
Summary, forecast, risks and KPIs are extracted from MANHATTAN ASSOCIATES INC's SEC filings for Q3 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 1, 2026.