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Here's our initial take on Manhattan Associates' (NASDAQ: MANH) fourth-quarter financial report.
Key Metrics
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $238.3 million | $255.8 million | 7% | Beat |
| Earnings per share | $1.03 | $1.17 | 14% | Beat |
| Cloud subscription revenue | $71.4 million | $90.3 million | 26% | n/a |
| Cash flow from operations | $88.4 million | $104.7 million | 18% | n/a |
Macro Headwinds Eat Into Expected Growth
Manhattan Associates, which provides software for supply chain, inventory, and retail businesses, beat expectations in the fourth quarter, with revenue up 7% year over year. But the company is cautious about the year ahead, forecasting that sales growth will slow to just 2% to 3% in 2025.
That forecast, which calls for revenue of $1.06 billion to $1.07 billion, was short of the $1.1 billion Wall Street consensus.
Manhattan's customers, which include retailers, manufacturers, and logistics companies, are uncertain about the health of the economy (possibly influenced by tariffs), and that is weighing on their spending plans.
On a post-earnings call, CEO Eddie Capel said about 10% of customers with in-flight implementations of Manhattan's software have reduced their planned services work in 2025, causing the company to scale back expectations for the year.
Manhattan is in the process of shifting its business to the cloud. Its cloud subscription revenue, which represents just 35% of total revenue, grew by 26% in the quarter, much faster than overall revenue growth.
CEO Transition
Just days after the earnings announcement, Manhattan delivered a second surprise to investors. Capel, who has been with the company since 2000 and has served as CEO since January 2013, will retire on Feb. 12.
Capel will remain on the board and serve as executive vice chairman, assisting with the CEO transition and helping the company with special projects. He will be replaced by Eric Clark, who is currently CEO of tech consulting firm NTT Data North America.
Capel called it "an ideal time for a CEO transition," noting "our company is in an exceptionally strong position strategically, competitively, operationally, and financially." But the outgoing CEO has a well-earned strong reputation among investors, and the change is adding to the post-earnings uncertainty surrounding the company.
Manhattan Associates has scheduled a live investor webinar for Feb. 12, and investors are likely to hear further context about the CEO transition and more color on management's guidance and business strategy for the upcoming year.