Manhattan's Q3 Earnings Beat Estimates, Shares Down on Weak View

Manhattan Associates’ MANH third-quarter 2024 adjusted earnings of $1.35 per share beat the Zacks Consensus Estimate by 27.36%. The earnings figure increased 28.6% year over year.

Net sales increased 11.8% year over year to $266.7 million and beat the consensus mark by 1.26%. 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The top-line growth can be attributed to strong cloud and service revenues as well as the solid performance of Manhattan Active Supply Chain Planning offering.

However, MANH shares were down 3.36% in pre-market trading following unimpressive guidance due to the challenging macroeconomic environment and significant deal pushes to 2025.

MANH’s Q3 Top-Line Benefits From Strong Cloud Growth

Cloud Subscriptions (32.4% of net sales) revenues were $86.5 million, up 33% year over year. The figure beat the consensus mark by 1.9%.

Services (51.4% of net sales) sales were $137 million, which increased 7.1% year over year. The figure beat the consensus mark by 0.84%.

Software License (1.4% of net sales) sales were $3.8 million, which declined 2.8% year over year but beat the consensus mark by 94.92%

Maintenance (12.9% of net sales) sales were $34.5 million, down 2.3% year over year. The figure beat the Zacks Consensus Estimate by 1.6%.

Hardware (1.9% of net sales) sales were $4.9 million, which declined 1.9% year over year. The figure missed the consensus mark by 29.51%.

Remaining Performance Obligations (RPO) increased 27.2% on a year-over-year basis to $1.7 billion.

MANH’s Q3 Benefits From Strong Geographical Expansion

Revenues from the Americas (77.2% of net sales) were $205.8 million, up 10.7% year over year. 

Revenues from EMEA (17.6% of net sales) were $48.08 million, up 14.4% year over year. 

Revenues from APAC (4.6% of net sales) were $12.74 million, up 24% year over year.

MANH’s Q3 Expenses Saw a Steady Y/Y Increase

Selling and marketing expenses, as a percentage of revenues, declined 120 basis points (bps) on a year-over-year basis to 6.2%.

Research and Development expenses, as a percentage of revenues, declined 100 bps on a year-over-year basis to 12.9%.

General and Administrative expenses, as a percentage of revenues, declined 130 bps on a year-over-year basis to 7.6%.

Adjusted operating income increased 36.5% on a year-over-year basis to 98.9 million.

Balance Sheet

As of Sept. 30, 2024, Manhattan Associate had cash and cash equivalents worth $214.9 million, up from $202.7 million as of June 30, 2024.

During the reported quarter, the company repurchased 194,712 shares for $49.7 million. The Board of Directors approved the authorization of replenishing the remaining share purchase amounting to $75 million of common stock in October 2024.

Guidance

Manhattan Associates expects fiscal 2024 earnings between $3.47 and $3.49 per share, indicating growth between 23% and 24% year over year. Revenues are anticipated between $1.03 billion and $1.04 billion. 

Manhattan Associates expects fiscal 2024 RPO to be between $1.75 billion and $1.8 billion. 

Manhattan Associates expects fiscal 2024 adjusted operating margin to be in the range of 34% and 34.1%.

The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $1.04 billion, suggesting an 11.96% increase year over year. The consensus estimates for fiscal 2024 earnings is pegged at $4.26 per share, suggesting a 13.9% increase year over year.

Zacks Rank & Stocks to Consider

Currently, Manhattan Associates carries a Zacks Rank #3 (Hold).

Manhattan shares have gained 35.8% year to date compared with the Zacks Computer and Technology sector’s rise of 27.5% year to date.

Arista Networks ANET, Onto Innovation ONTO and Fortinet FTNT are some better-ranked stocks that investors can consider in the broader sector. Each of the three stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks’ shares have gained 68.4% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.

Onto Innovation shares have gained 32.6% year to date. ONTO is set to report its third-quarter fiscal 2024 results on Oct. 31.

Fortinet shares are up 40.8% year to date. FTNT is set to report its third-quarter 2024 results on Nov. 7.

 

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