Manhattan Associates (NASDAQ:MANH) Q4: Beats On Revenue, Provides Optimistic Full-Year Guidance

Jabin Bastian /
2024/01/30 4:28 pm EST

Supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) announced better-than-expected results in Q4 FY2023, with revenue up 20.3% year on year to $238.3 million. The company's full-year revenue guidance of $1.02 billion at the midpoint also came in 1.3% above analysts' estimates. It made a non-GAAP profit of $1.03 per share, improving from its profit of $0.81 per share in the same quarter last year.

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Manhattan Associates (MANH) Q4 FY2023 Highlights:

  • Market Capitalization: $13.91 billion
  • Revenue: $238.3 million vs analyst estimates of $223.9 million (6.4% beat)
  • EPS (non-GAAP): $1.03 vs analyst estimates of $0.80 (29.2% beat)
  • Management's revenue guidance for the upcoming financial year 2024 is $1.02 billion at the midpoint, beating analyst estimates by 1.3% and implying 9.8% growth (vs 21.1% in FY2023)
  • Free Cash Flow of $86.39 million, up 50.3% from the previous quarter
  • Gross Margin (GAAP): 55.2%, up from 54.6% in the same quarter last year

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Vertical Software

Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.

Sales Growth

As you can see below, Manhattan Associates's revenue growth has been solid over the last two years, growing from $171.5 million in Q4 FY2021 to $238.3 million this quarter.

Manhattan Associates Total Revenue

This quarter, Manhattan Associates's quarterly revenue was up a very solid 20.3% year on year, above the company's historical trend. However, the company's revenue actually decreased by $186,000 in Q4 compared to the $7.43 million increase in Q3 2023.

For the upcoming financial year, management expects revenue to be $1.02 billion at the midpoint, growing 9.8% year on year compared to the 21.1% increase in FY2023.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Manhattan Associates's free cash flow came in at $86.39 million in Q4, up 63.6% year on year.

Manhattan Associates Free Cash Flow

Manhattan Associates has generated $241.5 million in free cash flow over the last 12 months, an impressive 25.9% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.

Key Takeaways from Manhattan Associates's Q4 Results

We enjoyed seeing Manhattan Associates exceed analysts' revenue expectations this quarter. We were also glad its gross margin improved. However, its revenue guidance for next year suggests a significant slowdown in demand, but we can't be too negative because it exceeded Wall Street analysts' expectations. Overall, we think this was a really good quarter that should please shareholders. The stock is up 4.1% after reporting and currently trades at $233 per share.

So should you invest in Manhattan Associates right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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