Manhattan Associates, Inc. :MANH-US: Earnings Analysis: Q1, 2017 By the Numbers : April 25, 2017

Manhattan Associates, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Manhattan Associates, Inc. – Descartes Systems Group Inc. and International Business Machines Corporation (DSGX-US and IBM-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 143.49 million, Net Earnings of USD 28.22 million.
  • Gross margins widened from 55.28% to 55.48% compared to the same period last year, operating (EBITDA) margins now 30.65% from 30.23%.
  • Year-on-year change in operating cash flow of 51.58% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 143.49 147.59 152.21 154.89 149.86
Revenue Growth (%YOY) -4.25 4.35 6.96 11.35 12.24
Earnings (mil) 28.22 29.92 33.5 33.34 27.48
Earnings Growth (%YOY) 2.71 13.45 20.07 28.21 18.43
Net Margin (%) 19.67 20.27 22.01 21.53 18.34
EPS 0.4 0.42 0.47 0.46 0.38
Return on Equity (%) 71.18 67.15 74.02 76.22 59.34
Return on Assets (%) 38.63 39.03 43.93 44.67 34.29

Access our Ratings and Scores for Manhattan Associates, Inc.

Market Share Versus Profits

Revenues History
Earnings History

MANH-US‘s change in revenue this period compared to the same period last year of -4.25% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MANH-US is holding onto its market share. Also, for comparison purposes, revenues changed by -2.78% and earnings by -5.66% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 55.28% to 55.48% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 30.23% to 30.65% compared to the same period last year. For comparison, gross margins were 57.21% and EBITDA margins were 32.28% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

MANH-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 50.63 days from 64.08 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MANH-US‘s change in operating cash flow of 51.58% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The expansion in operating (EBIT) margins from 28.76% to 29.08% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from 29.11% to 28.82%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Manhattan Associates, Inc.

Company Profile

Manhattan Associates, Inc. designs, builds and delivers supply chain commerce solutions that drive top line growth by converging front-end sales with back-end supply chain execution and efficiency. It operates through three geographically segmented areas which include The Americas, Europe, Middle East and Africa and Asia Pacific. Its solutions consist of software, services and hardware, which coordinate people, workflows, assets, events and tasks holistically across the functions linked in a supply chain from planning through execution. The company was founded by Deepak Raghavan in October 1990 and is headquartered in Atlanta, GA.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of MANH-US.