What Happened:
Shares of supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) jumped 13.1% in the pre-market session after the company reported a "beat and raise" quarter. Fourth quarter results exceeded expectations for revenue, EPS, and free cash flow. Gross margin also improved. Notably, Remaining performance obligations (RPO - leading revenue indicator) grew by 36% at the end of the year. 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. In addition, the company raised the full-year RPO guidance to $1.78 billion at the midpoint (versus the previous guidance of $1.75 billion). Similarly, FY'24 operating margin guidance was raised. Overall, this was a really good quarter that should please shareholders.
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What is the market telling us:
Manhattan Associates's shares are somewhat volatile and over the last year have had 3 moves greater than 5%. But moves this big are very rare even for Manhattan Associates and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock gained 13.6% on the news that the company reported an impressive 'beat-and-raise' quarter. Revenue and profitability in the quarter surpassed analysts' expectations. Revenue and EPS guidance for the current year were raised by 4% and 7.5%, respectively, and the updated guidance topped Consensus estimates. Stocks generally follow the direction of earnings estimates, so this quarter's earnings and raised guidance should result in broad increases in financial projections for the company.
Manhattan Associates is up 16.3% since the beginning of the year. Investors who bought $1,000 worth of Manhattan Associates's shares 5 years ago would now be looking at an investment worth $4,933.
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