Stock Story -
Supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) beat Wall Street’s revenue expectations in Q3 CY2024, with sales up 11.8% year on year to $266.7 million. The company expects the full year’s revenue to be around $1.04 billion, close to analysts’ estimates. Its non-GAAP profit of $1.35 per share was also 26.8% above analysts’ consensus estimates.
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Manhattan Associates (MANH) Q3 CY2024 Highlights:
- Revenue: $266.7 million vs analyst estimates of $263.2 million (1.3% beat)
- EPS (non-GAAP): $1.35 vs analyst estimates of $1.06 (26.8% beat)
- The company reconfirmed its revenue guidance for the full year of $1.04 billion at the midpoint
- Management raised its full-year EPS (non-GAAP) guidance to $4.61 at the midpoint, a 8.2% increase
- Gross Margin (GAAP): 55.5%, up from 53.3% in the same quarter last year
- Free Cash Flow Margin: 19.6%, down from 26.8% in the previous quarter
- Billings: $257.6 million at quarter end, up 13.9% year on year
- Market Capitalization: $18.1 billion
Company OverviewBoasting 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
Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Regrettably, Manhattan Associates’s sales grew at a mediocre 17% compounded annual growth rate over the last three years. This shows it couldn’t expand in any major way and is a tough starting point for our analysis.This quarter, Manhattan Associates reported year-on-year revenue growth of 11.8%, and its $266.7 million of revenue exceeded Wall Street’s estimates by 1.3%.
Looking ahead, sell-side analysts expect revenue to grow 9.3% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and illustrates the market believes its products and services will see some demand headwinds.