Most of the key financial benchmarks in the second quarter report of Manhattan Associates were down from a year ago, but the reported numbers beat key projections.
The supply chain software provider’s non-GAAP earnings per share (EPS) of $0.40 was $0.06 more than consensus forecasts, according to SeekingAlpha. The GAAP EPS of $0.30 per share beat consensus by $0.04 per share.
Revenue of $135.6 million, though down 12.1%, beat forecasts by almost $8 million.
In the company’s prepared statement accompanying the earnings release, president and CEO Eddie Capel talked about the landscape the company was facing. “There is no doubt that near-term impacts to global economic activity continue to manifest themselves due to the COVID-19 pandemic,” he said. “Specifically, we have seen sales cycles lengthen as customers and prospects simultaneously contend with the pandemic while evaluating our solutions. Additionally, we have seen delays in services-related project work, leading to a year-over-year decline in services revenue.”
That could be seen in the company’s days sales outstanding figure, which was 73 days at the end of the quarter. It was 61 days a year earlier. And service revenue took a hit, dropping to $71.8 million from $94 million a year ago.
But the company is confident enough in the future that it has increased its revenue and earnings guidance. Many companies suspended those forecasts when the pandemic hit; Manhattan Associates did not.
“Our growing cloud business continues to outperform, with continued strength in both revenue and bookings,” Capel said in citing the reason for the higher guidance.
Most of the numbers were higher. The new guidance on annual revenue is $554 million to $570 million. It was $541 million to $565 million, with that forecast released alongside the company’s first quarter earnings. But before that number was put in place as revenue guidance, it had been $644 to $656 million.
The new forecast on GAAP earnings per share is $1.17 to $1.23. At the end of the first quarter, it was $1.16 to $1.24. At the start of the year, that figure was $1.12 to $1.19.
However, the new forecast operating margin under GAAP principles is down to 17.3% to 17.7%. It had been 17.5% to 17.9%.
The company’s revenue numbers saw a continuing shift to cloud services. Cloud revenue more than doubled to $18.5 million in the second quarter from $9 million a year ago. License revenue was down to $5.7 million from $11.7 million.
Although the earnings numbers may have beaten estimates, they were still down from a year ago. GAAP diluted earnings per share fell to $0.30 from $0.32 a year ago. Adjusted diluted EPS, which is a non-GAAP measure, also declined $0.02, to $0.30 per share from $0.32 per share.
Adjusted GAAP operating income declined to $26.7 million from $27.6 million.
Manhattan Associates appears to be in a strong cash position. Its second quarter cash flow from operations was $48.8 million, up from $37.2 million in the second quarter of 2019. Its cash and investments on hand were $123.6 million at the end of the quarter, up from $75.3 million a year ago.
