Summary
Manhattan Associates closed fiscal 2023 with strong fourth-quarter and full-year results. Fourth-quarter revenue was $238.26 million, up 20.3% from $198.10 million in the prior-year quarter. Full-year revenue was $928.72 million, up 21.1% from $767.08 million. Fourth-quarter operating income was $58.86 million, up 31.7% from $44.70 million. Full-year operating income was $209.88 million, up 37.4% from $152.70 million. Fourth-quarter net income was $48.74 million, up 28.7% from $37.87 million. Full-year net income was $176.57 million, up 36.9% from $128.96 million. Full-year diluted EPS was $2.82, up 38.9% from $2.03. Fourth-quarter operating margin was 24.7%, up 2.1 percentage points from 22.6%. Full-year operating margin was 22.6%, up 2.7 percentage points from 19.9%.
The company's backlog and cash generation also improved. Remaining performance obligations were $1.40 billion at December 31, 2023, up 33.1% from $1.05 billion a year earlier. Deferred revenue was $237.79 million, up 13.9% from $208.81 million. Fourth-quarter operating cash flow was $88.36 million, up 60.0% from $55.23 million. Full-year operating cash flow was $246.22 million, up 37.1% from $179.63 million. Capital expenditures were $1.97 million in the fourth quarter, down 19.1% from $2.44 million. Full-year capital expenditures were $4.73 million, down 28.2% from $6.59 million. Days sales outstanding was 70 days at December 31, 2023, compared to 71 days at September 30, 2023. Cloud revenue now represents about 93% of total software revenue. Over 98% of RPO are cloud native subscriptions. International revenue was 32% of total revenue. Services revenue was 53% of total revenue, cloud subscriptions 27%, maintenance 15%, hardware 3%, and license 2%.
Non-GAAP results and guidance provide additional context. Fourth-quarter adjusted operating income was $76.8 million, compared to $59.9 million. Fourth-quarter adjusted diluted EPS was $1.03, compared to $0.81. Full-year adjusted operating income was $281.5 million, compared to $212.1 million. Full-year adjusted diluted EPS was $3.74, compared to $2.76. For full year 2024, management guides total revenue growth of 9% to 10%, adjusted operating margin of 28.7% to 29.3%, and adjusted EPS of $3.69 to $3.79. The company also provided GAAP operating margin and GAAP EPS guidance. Management remains cautious about the global economy but sees solid demand for cloud solutions. The company's cloud revenue now represents about 93% of total software revenue, and approximately 34% of the total value of new non-cancelable cloud subscriptions signed during 2023 was with new customers. The remaining 66% was with existing customers.
Several risks and operational items deserve attention. Management cited inflation, disruption in the retail sector, delays in product development, competitive and pricing pressures, software errors and information technology failures, security breaches, product implementation risks, and global instability including the wars in Ukraine and the Middle East. Sales cycles for large cloud subscriptions could be extended. The 2017 U.S. tax law change increased cash tax payments, and maintenance revenue is expected to decline as cloud subscriptions grow. During 2023, the company repurchased 1,024,328 shares for $166.0 million. A $75.0 million repurchase authority remains in effect. The company has no debt on its balance sheet and no credit facilities. Research and development spending increased for the full year, and operating expenses also rose. The company continues to invest in cloud innovation and global sales teams. It employed approximately 4,580 employees worldwide at December 31, 2023. The company does not anticipate any borrowing requirements in 2024 for general corporate purposes.
The company's strategic priorities for 2024 focus on customer success, innovation, expanding the Manhattan Active suite, growing cloud subscription revenue, and expanding global sales and marketing teams. Management believes favorable secular tailwinds, such as digital transformation in manufacturing, wholesale, and retail, align with market demand. The company's solutions are mission critical and support complex global supply chains. The Americas segment remained the largest contributor to revenue and operating income. EMEA and APAC also contributed. The company's RPO provides insight into its contracted backlog of future business. Deferred revenue mainly represents amounts collected prior to completing performance of maintenance, cloud subscriptions, and professional services. The company expects maintenance revenue to decline as it continues to develop cloud offerings, offset by additional cloud revenue from customers converting maintenance contracts to cloud subscriptions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $238.3M | $238.4M | -0.1% | $198.1M | +20.3% |
| Gross profit | $131.5M | $127.0M | +3.6% | $108.1M | +21.7% |
| Gross margin | 55.2% | 53.3% | +1.9 pp | 54.6% | +0.6 pp |
| Research & development | $31.3M | $33.1M | -5.3% | $27.1M | +15.5% |
| Sales & marketing | $20.2M | $17.6M | +14.5% | $16.7M | +21.3% |
| General & administrative | $19.6M | $21.4M | -8.2% | $18.1M | +8.3% |
| Total operating expenses | $179.4M | $185.0M | -3.0% | $153.4M | +16.9% |
| Operating income (loss) | $58.9M | $53.4M | +10.1% | $44.7M | +31.7% |
| Operating margin | 24.7% | 22.4% | +2.3 pp | 22.6% | +2.1 pp |
| Net income (loss) | $48.7M | $49.4M | -1.4% | $37.9M | +28.7% |
| Net margin | 20.5% | 20.7% | -0.3 pp | 19.1% | +1.3 pp |
| Diluted EPS | $0.78 | $0.79 | -$0.01 | $0.60 | +$0.18 |
Risks
Future revenue depends on continuing sales of cloud subscriptions, which in turn drive professional services. MD&A notes cloud revenue rose 44% over 2022 and now represents about 93% of total software revenue, so any customer discontinuation or scope reduction could significantly reduce revenue.
Sales cycles for large cloud subscriptions typically extend nine to twelve months and may take several years. MD&A states that current sales cycles for large cloud subscriptions in target markets could be extended given a challenging global macro environment.
MD&A remains cautious on global economic growth, citing the IMF's January 2024 projection of 3.1% global growth in 2024 and 3.2% in 2025, below the 2000-19 average of 3.8%, with elevated rates and high debt weighing on activity.
The supply chain software market is intensely competitive, with competitors including Oracle, SAP, Infor, Blue Yonder/Panasonic, and Korber. Consolidation among competitors may make them more formidable and cause pricing pressure or loss of market share.
The largest market, retail, is experiencing significant disruption and transformation driven by digital commerce. Traditional retailers facing e-commerce pressure could delay purchase decisions on Manhattan's products, and extended sales cycles for large cloud subscriptions could materially affect revenues.
Success depends on attracting, integrating, and retaining executives, technical personnel, and sales personnel. The company faces significant competition for skilled hires, which may increase compensation costs not offset by revenue, and there can be a significant time lag before technical and sales personnel become fully productive.
Cloud solutions rely on third-party data center hosting facilities. Failures, natural disasters, cyber threats, or capacity constraints could interrupt service, and providers have no obligation to renew agreements on commercially reasonable terms; consolidation may raise costs.
Software implementations are lengthy and complex, requiring modification or customization and integration with customer systems. Delays could result from failure to attract, train, and retain services personnel or from alliance companies not committing sufficient resources, limiting future sales and harming reputation.
SaaS KPIs
All quarters →Remaining Performance Obligations
RPO Growth (YoY)
Adjusted Operating Income
Cloud Subscriptions Revenue
Summary, forecast, risks and KPIs are extracted from MANHATTAN ASSOCIATES INC's SEC filings for Q4 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.