Manhattan Associates, Inc.

Good afternoon. My name is Jeff and I'll be your conference facilitator for today. At this time, I would like to welcome everyone to the Manhattan Associates first quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Also, as a reminder, ladies and gentlemen, this call is being recorded today, April 27th. I would now like to introduce Mr. Eddie Capel, the CEO, Mr. Dennis Torrey, the CFO, and Mr. Michael Bauer, Head of Investor Relations of Manhattan Associates. Mr. Bauer, you may begin your conference.

Thank you, Jeff, and good afternoon, everyone. Welcome to Manhattan Associates 2021 first quarter earnings call i will review our cautionary language and then turn the call over to eddie cable our ceo during this call including the question and answer session we may make forward-looking statements regarding future events or the future financial performance of manhattan associates he will caution that these forward-looking statements involve risk and uncertainties are not guarantees of future performance and that actual results may differ materially from the projections contained in our forward-looking statements. I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections, particularly our annual report on Form 10-K for fiscal year 2020 and the risk factor discussion in that report, as well as any risk factor updates we provide in our subsequent Form 10-Qs. We note in particular that uncertainty regarding the impact of the COVID-19 pandemic on our performance could cause actual results that differ materially from our projections. We are under no obligation to update these statements. In addition, our comments include certain non-GAAP financial measures in an effort to provide additional information to investors. We have reconciled all non-GAAP measures to the related GAAP measures in accordance with SEC rules. You'll find reconciliation schedules in the form 8K we submitted to the SEC earlier today. and on our website at manh.com. Now, I'll turn the call over to Eddie. Thanks, Mike.

Well, good afternoon, everybody, and thank you for joining us as we review our first quarter results and discuss our updated full year 2021 outlook. Manhattan Associates is off to a strong start for the year, reporting record Q1 total revenue of $157 million and adjusted earnings per diluted share of 43 cents, both exceeding expectations. Our business pace continues to be solid, with broad revenue outperformance across our solutions driving top-line revenue growth and earnings leverage in the quarter, while simultaneously driving our increasing investment in the business. Our team continues to execute well, and our business momentum is accelerating. Underscoring this strength and the growing demand for cloud solutions, we achieved record bookings in Q1, with our RPO increasing 108% over the prior year and 36% sequentially to $421 million. With our forward revenue visibility improving and the inherent leverage in our model, we'll be increasing our 2021 guidance across the board. Equally important, our pipeline continues to grow nicely, with about 90% of the pipe consisting of cloud opportunities, and net new potential customers representing about 40% of that demand. And much of our success is bolstered by delivering the most innovative technological advancements in our industry. Our solutions are mission critical to our customers in our end markets. And now, with the need for modern, adaptable, scalable, and resilient supply chain, inventory, and omni-channel solutions never more apparent, We're in the early stages of extending our mind and wallet share. Additionally, the secular tailwinds are numerous. Digital transformation of businesses, brick and mortar stores shifting to an innovative multifunction facility concept, the insatiable desire to get as close as possible to the end customer, creative inventory management strategies, and shorter fulfillment timelines are are just some of the significant drivers that are aligning customer demand with our product strategy. And our unified platform is industry leading and provides our customers with solutions that are scalable, versionless, and extensible. And this enables our clients to be adaptable and provide unmatched customer experiences. Now with Manhattan Active Omni just entering its fourth year in the market and Manhattan Active Warehouse Management about to reach its first anniversary and on pace for innovation to set, innovation set, our innovation set to accelerate on the heels of nearly $90 million invested in R&D just this year alone. We are strategically positioned for long-term sustainable growth. On the sales front, Competitive win rates remain strong at about 70% as our commitment to innovation keeps Manhattan Associates atop the industry. In Q1, about 25% of our cloud and license deals were from new customers. From a vertical perspective, retail, manufacturing, and wholesale drove more than 80% of our bookings in the quarter. And drilling in a little bit, the sub-verticals are pretty diverse as well. including apparel, department stores, food and beverage, industrial, as well as durable and non-durable goods. Our services group executed extremely well in Q1, conducting over 100 go-lives, and with demand for expertise remaining high, we anticipate our services revenue will return to growth in Q2, and we continue to aggressively hire talent to meet the forecasted demand. Now, let me provide, if I can, just some quick updates on our product portfolio, starting with our point-of-sale solution. Q1 was a pretty positive quarter for POS, both with respect to go-lives and new customer signings. While early, pipeline opportunities are growing following a pretty quiet year in 2020. Now, on the go-live front, we've got a number of implementations currently in flight, including a well-known specialty retailer that during the quarter went live with our point-of-sale application in a pilot store. And feedback from the store associates has been extremely positive, with commentary on its ease of use, speed, and responsiveness. And the retailer has started rolling out the system across their store fleet and will be complete in a few months. Then they'll turn their attention to activating the rest of our Manhattan Active Omni suite, including enterprise order management and store fulfillment. And when it comes to new point-of-sale customer signings, we're happy to announce that we've got three additional projects that have been signed and kicked off in the last quarter. These include a well-known global apparel brand that will first pilot our point-of-sale application here in the U.S. this summer and then plan to roll out the solution to their fleet of stores worldwide. This customer is already live on enterprise order management and saw the true sales and service advantage from having a unified order management and point of sale application. And that same advantage proved attractive for a long time Manhattan active OMS customer in Canada who will roll out a point of sales solution across their fleet of apparel retail stores by early fall. And finally, We've also kicked off a project at a well-known sports apparel and footwear customer. And this global brand will start by using our point of sale to enable endless aisle capabilities in their stores, enabling their store associates to use mobile devices to capture orders for customers when a size or a color isn't available at that particular location. And once again, this point of sale usage will be an extension of an existing Manhattan Active Omni functionality that is already deployed at that particular customer. And while the pandemic seemed to cause many of the store systems or much of the store systems activities to be put on hold, third-party integrators and industry research firms are now beginning to indicate that planned investments in point-of-sale are, again, showing signs of picking up. And because we are able to continue to invest heavily in our point-of-sale application throughout the pandemic, we believe that we're very well-positioned for the inevitable need for a replacement cycle in point of sale and store systems in general. Now, turning to supply chain, Q1 was another good quarter for our transportation management application. Just in recent weeks, we received word from Gartner that for the third year in a row, our application was one of the very few to be included in the leaders quadrant in the recently published Gartner Magic Quadrant for Transportation Management Systems. And we've been able to maintain this important industry designation because of a continued investment in innovation within TMS and also the high levels of customer satisfaction that we garner with our customers. The TMS market continues to be an active one for us as customers either move older on-premise deployments of TMS to the cloud or adopt a new TMS for the very first time. Generally speaking, Cloud TMS allows smaller customers to benefit from the power of a leading TMS solution. Now, speaking of supply chain applications in the cloud, we continue to see very favorable response from our Manhattan Active WM application. Launched almost a year ago now at last year's Momentum Conference, the number of Manhattan Active WM projects has surpassed two dozen a professional services team across North and South America and Europe remain quite busy preparing for a summer full of Manhattan active WM go lives. And additionally, a sales pipeline remains strong across both existing Manhattan WMS on premise customers looking to go cloud native and with opportunities with net new customers. Q1 was also a nice quarter for our demand forecasting and inventory optimization solutions as we continue to see both existing and new customers choose our cloud-based solutions to help them optimize their inventory levels across the enterprise. And finally, our product teams are hard at work preparing for our upcoming Momentum Connect 2021 conference in May. Like last year, we'll be virtual, unfortunately. but we're planning again to make some really important product announcements. For a number of years now, our product strategy has been centered around two key ideas, migrating our best-in-class functional capabilities to a truly cloud-native architecture, and secondly, delivering unified applications within our three main areas of focus, omnichannel, supply chain, and inventory. And at this year's conference, we'll enhance yet another large step forward in making that vision a reality for our customers. So that concludes my business update. And with that, I'll pass it over to Dennis, who will provide you with an update on our financial performance and discuss our outlook for 2021. And I'll close our prepared remarks with a brief summary before moving to Q&A. So, Dennis, take it away.