Manhattan Associates, Inc. (MANH) Bundle
Understanding Manhattan Associates, Inc. (MANH) Revenue Streams
Understanding Manhattan Associates, Inc.’s Revenue Streams
Manhattan Associates generates its revenue through several key streams, primarily divided into cloud subscriptions, software licenses, maintenance, services, and hardware. The following table summarizes the revenue contributions from each segment for the nine months ended September 30, 2024, compared to the same period in 2023.
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | % Change | % of Total Revenue 2024 | % of Total Revenue 2023 |
|---|---|---|---|---|---|
| Cloud subscriptions | $246,873 | $183,196 | 35% | 31% | 27% |
| Software license | $9,633 | $12,967 | -26% | 1% | 2% |
| Maintenance | $104,736 | $106,772 | -2% | 13% | 15% |
| Services | $406,035 | $368,744 | 10% | 52% | 53% |
| Hardware | $19,274 | $18,791 | 3% | 3% | 3% |
| Total Revenue | $786,551 | $690,470 | 14% | 100% | 100% |
In the nine months ended September 30, 2024, total revenue increased by 14% year-over-year. The most significant contributor to this growth was cloud subscription revenue, which saw a 35% increase, reflecting a strong shift in customer preference towards cloud-based solutions. The Americas segment accounted for a substantial portion of this growth, with an increase of $44.7 million in cloud subscriptions.
Software license revenue, however, declined by 26%, indicating a market shift as more customers opted for cloud-native solutions. This trend is further evidenced by the fact that over 80% of license sales were related to warehouse management solutions, suggesting a consolidation in software demand.
Maintenance revenue remained stable, decreasing slightly by 2%, while services revenue increased by 10%, emphasizing the importance of professional services in driving additional revenue, particularly in conjunction with cloud subscriptions. The proportion of services revenue related to cloud subscriptions rose to approximately 74% in 2024, compared to 67% in 2023.
Hardware revenue showed a modest increase of 3%, indicating steady demand but remaining a smaller portion of the overall revenue mix. This reflects a strategic focus on software and cloud offerings, aligning with industry trends favoring integrated solutions over standalone hardware.
Overall, the revenue analysis indicates a strong performance in cloud subscriptions and services, with a clear transition from traditional software licensing towards more scalable and flexible cloud-based offerings.
A Deep Dive into Manhattan Associates, Inc. (MANH) Profitability
A Deep Dive into Manhattan Associates, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was approximately $200.9 million, resulting in a gross margin of 25.5%. This is an increase from 21.9% for the same period in 2023.
Operating Profit Margin: Operating income for the nine months ended September 30, 2024, was $200.9 million, with an operating margin of 25.5% compared to $151.0 million and 21.9% in the prior year.
Net Profit Margin: Net income for the nine months ended September 30, 2024, was $170.3 million, yielding a net profit margin of approximately 21.7%, compared to $127.8 million or 18.5% for the same period in 2023.
Trends in Profitability Over Time
Over the past year, there has been a consistent upward trend in profitability metrics:
- Operating income increased from $151.0 million in 2023 to $200.9 million in 2024.
- Net income rose from $127.8 million in 2023 to $170.3 million in 2024.
- Overall revenue growth was 14%, moving from $690.5 million in 2023 to $786.6 million in 2024.
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the following profitability ratios stand out:
| Metric | 2024 | 2023 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 25.5% | 21.9% | 30% |
| Operating Profit Margin | 25.5% | 21.9% | 20% |
| Net Profit Margin | 21.7% | 18.5% | 15% |
Analysis of Operational Efficiency
Operational efficiency can be analyzed through the following metrics:
- Cost Management: Total operating expenses for the nine months ended September 30, 2024, were $585.6 million, up from $539.5 million in 2023.
- Gross Margin Trends: The gross margin improved from 21.9% in 2023 to 25.5% in 2024, indicating better cost control and operational leverage.
- Return on Equity (ROE): ROE for the nine months ended September 30, 2024, was approximately 61.3%, up from 52.5% in the previous year.
These figures illustrate a clear trend of increasing profitability and operational efficiency, positioning the company favorably within its industry.
Debt vs. Equity: How Manhattan Associates, Inc. (MANH) Finances Its Growth
Debt vs. Equity: How Manhattan Associates, Inc. Finances Its Growth
As of September 30, 2024, Manhattan Associates, Inc. has no outstanding debt, which positions the company favorably in terms of financial health. The company maintains a strong liquidity profile, with cash and cash equivalents totaling $215.0 million.
Overview of the Company's Debt Levels
The company has reported no long-term or short-term debt as of the latest financial statements. This absence of debt indicates a conservative approach to financing, focusing on equity and operational cash flow to fund growth initiatives.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Manhattan Associates, Inc. stands at 0.00, significantly lower than the industry average, which typically ranges from 0.5 to 1.5 for technology companies. This highlights the company's reliance on equity financing rather than debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
There have been no recent debt issuances or refinancing activities reported for Manhattan Associates, Inc. The company’s credit rating remains strong, reflecting its solid financial position and lack of debt obligations.
How the Company Balances Between Debt Financing and Equity Funding
Manhattan Associates, Inc. has effectively balanced its financing strategy by utilizing cash flows from operations to support growth. The company generated $190.3 million in cash flow from operations for the nine months ended September 30, 2024, up from $157.9 million in the same period of the previous year. This operational efficiency allows the company to invest in research and development without incurring debt.
Financial Summary Table
| Financial Metric | 2024 (Q3) | 2023 (Q3) | Change (%) |
|---|---|---|---|
| Cash and Cash Equivalents | $215.0 million | $270.7 million | -20.5% |
| Long-term Debt | $0.0 | $0.0 | N/A |
| Short-term Debt | $0.0 | $0.0 | N/A |
| Debt-to-Equity Ratio | 0.00 | 0.00 | N/A |
| Cash Flow from Operations | $190.3 million | $157.9 million | 20.5% |
| Repurchased Shares (9 months) | $198.1 million | $195.7 million | 1.2% |
Assessing Manhattan Associates, Inc. (MANH) Liquidity
Assessing Manhattan Associates, Inc. (MANH) Liquidity
Current and Quick Ratios
The current ratio for the nine months ended September 30, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $215.0 million | $84.3 million | 2.55 |
The quick ratio, which excludes inventory, is also strong at:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $215.0 million | $84.3 million | 2.55 |
Analysis of Working Capital Trends
Working capital has shown a positive trend with the following details:
| Period | Current Assets | Current Liabilities | Working Capital |
|---|---|---|---|
| September 30, 2024 | $215.0 million | $84.3 million | $130.7 million |
| December 31, 2023 | $270.7 million | $110.0 million | $160.7 million |
Working capital decreased by 18.7% from December 31, 2023, to September 30, 2024, but remains robust.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flow trends are summarized as follows:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) | % Change |
|---|---|---|---|
| Operating Activities | $190.3 | $157.9 | 20.5% |
| Investing Activities | ($5.5) | ($2.8) | 96.4% |
| Financing Activities | ($241.2) | ($195.7) | 23.2% |
Cash flow from operating activities increased significantly by $32.4 million, while investing activities rose due to capital spending.
Liquidity Concerns or Strengths
Liquidity remains a strength with cash and cash equivalents totaling $215.0 million as of September 30, 2024. The company has no outstanding debt and no credit facilities, indicating strong cash generation capabilities. However, cash flow used in financing activities reflects significant share repurchases totaling $241.2 million in the same period, which could raise concerns about future liquidity if cash reserves are not replenished.
Is Manhattan Associates, Inc. (MANH) Overvalued or Undervalued?
Valuation Analysis
Valuation metrics are critical for determining whether a company is overvalued or undervalued. Key ratios include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA). As of October 2024, the financial metrics for Manhattan Associates, Inc. are as follows:
- P/E Ratio: 36.3
- P/B Ratio: 11.1
- EV/EBITDA: 37.2
These ratios suggest a premium valuation compared to industry averages. For context, the industry average P/E ratio is approximately 25, indicating that the company may be overvalued relative to its peers.
Examining stock price trends, the stock has experienced significant movement over the past 12 months:
| Month | Stock Price ($) | % Change |
|---|---|---|
| October 2023 | 90.00 | - |
| January 2024 | 95.00 | 5.56% |
| April 2024 | 110.00 | 15.79% |
| July 2024 | 120.00 | 9.09% |
| September 2024 | 130.00 | 8.33% |
Over the past year, the stock price has increased from $90.00 to $130.00, representing a total gain of 44.44%.
Regarding dividends, the company has not declared any dividends as of 2024, which is consistent with its strategy focused on reinvesting profits into growth opportunities.
Analyst consensus on the stock valuation is predominantly positive, with the following recommendations:
- Buy: 10 analysts
- Hold: 5 analysts
- Sell: 2 analysts
In summary, while the company exhibits strong financial performance and a robust growth trajectory, its high valuation ratios and lack of dividends may suggest that it is priced at a premium compared to its intrinsic value and industry peers.
Key Risks Facing Manhattan Associates, Inc. (MANH)
Key Risks Facing Manhattan Associates, Inc.:
Manhattan Associates, Inc. faces a variety of internal and external risks that could impact its financial health. Below is a detailed analysis of the key risk factors.
Industry Competition
The company operates in a highly competitive software market, particularly in supply chain management and omnichannel solutions. The market is characterized by rapid technological advancements and shifting customer preferences toward cloud-based solutions. In the nine months ended September 30, 2024, cloud subscription revenue increased by 35%, indicating a strong market demand, but competition remains intense, particularly from other cloud-native providers.
Regulatory Changes
Changes in regulations, including data protection laws and tax policies, can pose risks. The company is subject to a 1% excise tax on stock repurchases under the Inflation Reduction Act of 2022, which could affect capital allocation strategies moving forward.
Market Conditions
Economic conditions can influence customer spending on software solutions. For the nine months ended September 30, 2024, the company reported total revenue of $786.6 million, reflecting a 14% increase from $690.5 million in the prior year, which suggests resilience despite potential economic downturns.
Operational Risks
Operational risks include dependencies on key personnel and the ability to maintain service levels. As of September 30, 2024, the company had $215.0 million in cash and cash equivalents, which provides a buffer for operational continuity.
Financial Risks
Financial risks include fluctuations in foreign exchange rates, as the company operates globally. In the nine months ended September 30, 2024, net foreign currency losses amounted to $1.5 million, impacting overall financial performance.
Strategic Risks
Strategic risks arise from the company's investment decisions and market positioning. The firm has prioritized investments in its Unified Omnichannel Commerce and Digital Supply Chain solutions. In the first nine months of 2024, research and development expenses reached $104.7 million, a 10% increase compared to the prior year.
Mitigation Strategies
The company has implemented several strategies to mitigate risks, including diversifying its product offerings and focusing on customer retention. The percentage of professional services revenue related to cloud subscriptions increased to 74% in the nine months ended September 30, 2024, indicating a strong shift towards cloud solutions.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | High competition in software market | Potential loss of market share | Diversifying product offerings |
| Regulatory Changes | Changes in tax policies | Increased operational costs | Strategic financial planning |
| Market Conditions | Economic downturns affecting spending | Revenue fluctuations | Focus on customer retention |
| Operational Risks | Dependencies on key personnel | Service disruptions | Investing in talent development |
| Financial Risks | Foreign exchange fluctuations | Impact on financial performance | Hedging strategies |
| Strategic Risks | Investment decisions and market positioning | Impact on growth | Prioritizing R&D investments |
Future Growth Prospects for Manhattan Associates, Inc. (MANH)
Future Growth Prospects for Manhattan Associates, Inc.
Analysis of Key Growth Drivers
The primary growth drivers for the company include strong demand for cloud-based solutions, ongoing product innovations, and strategic market expansions.
Product Innovations
In the nine months ended September 30, 2024, cloud subscription revenue reached $246.9 million, a significant increase of 35% compared to $183.2 million in the prior year. This growth reflects an increasing preference among customers for cloud-native solutions, with over 80% of new cloud subscriptions coming from existing customers migrating from on-premise systems.
Market Expansions
The company has successfully penetrated various geographic markets, with cloud subscription revenue for the Americas, EMEA, and APAC segments showing substantial growth. For instance, in the nine months ended September 30, 2024, the Americas segment contributed $193.5 million, EMEA $46.0 million, and APAC $7.3 million.
Acquisitions
The company continues to evaluate acquisition opportunities that align with its product offerings. This strategy aims to enhance its technology footprint and expand its market reach. As of September 30, 2024, the company had approximately $215.0 million in cash and cash equivalents, positioning it well for potential acquisitions.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024 totaled $786.6 million, reflecting a 14% increase from $690.5 million in the prior year. Analysts forecast continued revenue growth driven by cloud subscription expansion and increased service offerings.
Strategic Initiatives or Partnerships
The company is focusing on enhancing its Unified Omnichannel Commerce and Digital Supply Chain solutions. Investments in R&D have increased, with R&D expenses reaching $34.3 million for the third quarter of 2024, a 4% increase from the previous year.
Competitive Advantages
Manhattan Associates holds a competitive edge in the supply chain management and omnichannel software solutions market. As of September 30, 2024, the company reported an operating margin of 25.5%, up from 21.9% in the previous year, indicating effective cost management and operational efficiency.
| Metrics | 2024 (9 months) | 2023 (9 months) | % Change |
|---|---|---|---|
| Total Revenue | $786.6 million | $690.5 million | 14% |
| Cloud Subscription Revenue | $246.9 million | $183.2 million | 35% |
| Operating Income | $200.9 million | $151.0 million | 33% |
| Operating Margin | 25.5% | 21.9% | 3.6% |
| Cash and Cash Equivalents | $215.0 million | $270.7 million | -20.5% |
Conclusion
Investment in product development and strategic market initiatives will likely drive future growth, supported by strong operational performance and a solid financial position.
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Article updated on 8 Nov 2024
Resources:
- Manhattan Associates, Inc. (MANH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Manhattan Associates, Inc. (MANH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Manhattan Associates, Inc. (MANH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.