Manhattan Associates, Inc. :MANH-US: Earnings Analysis: Q2, 2017 By the Numbers : July 25, 2017

Manhattan Associates, Inc. reports financial results for the quarter ended June 30, 2017.

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


  • Summary numbers: Revenues of USD 154.14 million, Net Earnings of USD 31.14 million.
  • Gross margins narrowed from 58.18% to 58.07% compared to the same period last year, operating (EBITDA) margins now 35.43% from 35.21%.
  • Year-on-year change in operating cash flow of -40.68% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from 33.74% to 33.92%.

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

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 154.14 143.49 147.59 152.21 154.89
Revenue Growth (%YOY) -0.48 -4.25 4.35 6.96 11.35
Earnings (mil) 31.14 28.22 29.92 33.5 33.34
Earnings Growth (%YOY) -6.59 2.71 13.45 20.07 28.21
Net Margin (%) 20.2 19.67 20.27 22.01 21.53
EPS 0.45 0.4 0.42 0.47 0.46
Return on Equity (%) 20.39 17.79 16.79 18.51 19.05
Return on Assets (%) 43.55 38.63 39.03 43.93 44.67

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Market Share Versus Profits

Revenues History
Earnings History

MANH-US‘s change in revenue this period compared to the same period last year of -0.48% 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 7.42% and earnings by 10.35% 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 year-on-year earnings decline was driven by the drop in gross margins from 58.18% to 58.07%. This drop in earnings would have been worse were in not for operational cost control activities, which helped the operating margins (EBITDA margins) improve from 35.21% to 35.43%. For comparison purposes, gross margins were 55.48% and EBITDA margins were 30.65% in the previous 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 decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 44.05 days from 53.16 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

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 -40.68% 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


Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from 33.74% to 33.92%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 34.17% to 31.91%.

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

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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.

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