Manhattan Associates, Inc.

Good afternoon. My name is Angie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associate Q4 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, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, February 1st, 2022. I would now like to introduce Dennis Story, CFO of Manhattan Associates. Mr. Story, you may begin your conference.

Thank you, Angie, and good afternoon, everyone. Welcome to Manhattan Associates' 2021 Fourth Quarter Earnings Call. I will review our cautionary language and then turn the call over to Eddie Capel, 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. Your 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 on 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 10Qs. We note in particular that uncertainty regarding the impact of the COVID-19 pandemic on our performance could cause actual results to 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.

Well, thanks, Dennis. Good afternoon, everyone, and thank you for joining us as we review our fourth quarter and full year 2021 results, as well as our outlook for 2022. Well, 2021 was a very successful year for Manhattan Associates, setting all-time records in total revenue, RPO, cash flow, and earnings per share. In February of 2018, we announced our goal to become a cloud-first company within five years. And four years into this transition, we've exceeded our own expectations and are well ahead of our initial timing and economic projections, with cloud solutions representing 90% of our pipeline opportunities. And despite the pandemic, in the midst of this cloud transition, we delivered record revenue in two of the four years and a guiding to a third in 2022. Proudly, our associates continue to execute extremely well, serving both customers and our end markets. Demand for a unified commerce and supply chain cloud solutions is very strong, creating great visibility for us as we enter 2022. And to help drive growth and serve our customers, we plan to add about 500 net new employees globally, and we remain committed to significantly investing in innovation to meet the future needs of our customers, grow our market share, and extend our addressable market. And while global ebbs and flows certainly persist, we remain very encouraged by our near-term and long-term growth opportunities. So pivoting to results, Q4 was a record quarter that, again, exceeded our expectations. Total revenue increased 17% to $171 million. An adjusted earnings per diluted share of 48 cents was up 7%, as we invested significantly in employee compensation. Regarding RPO, the leading indicator of that growth, in Q4, we added a record 126 million of RPO bookings, setting new highs in Americas, in EMEA, and in APEC. Our global sales team continue to execute well on robust demand for our cloud offerings across products, industry verticals, and geographic locations. Demand also remains solid from both new and existing customers, with 20% of 2021 contracted bookings coming from net new customers. In the quarter, our win rates continue to be very strong at 75%, as our innovation is recognized as differentiating and industry-leading. And from a vertical perspective, retail, manufacturing, and wholesale drove more than 80% of our bookings in the quarter. And drilling into the sub-verticals, they're pretty diverse. And they include apparel, department stores, grocery, consumer goods, industrial, transportation, as well as durable and non-durable goods. On the professional services front, our global team continues to set the bar for the industry. Our cloud portfolio implementations have gone very well in 2021, as our industry-leading team successfully conducted over 100 go-lies just in Q4 alone. In line with our outlook and prior commentary, we remain focused on adding and retaining our exceptional talent in 2022. And speaking of 2022, our pipelines are strong, with net new potential customers representing about 35% of demand. As I mentioned earlier, We're increasing our investment in research and development to nearly $100 million this year. Now, let me provide a few additional details on our product portfolio. I'll start off by providing another positive update on the progress we're making with Manhattan Active Warehouse Management, the industry's first and only true cloud-native WMS serving the Tier 1 market. In May of 2020, we announced Manhattan Active WM as the natural successor of to our industry-leading on-premise warehouse management for open systems solution. So we've been in market for about 20 months with Manhattan Active WM, and we continue to see strong market demand and great enthusiasm. Customer deployments have been very successful, and we now have nearly 60 customers who are committed to deploying Manhattan Active WM around the world. And while Manhattan WMS's been known historically for the way it excels in large-scale, complex direct-to-consumer and retail distribution centers, our initial Manhattan Active WM deployments have really been highly diverse. Today, Manhattan Active WM subscribers are located in 12 different countries and represent 21 distinct industry sub-verticals. And this diversity in our customer base really reinforces our belief that supply chains of all kinds are looking to embrace cloud-native, always current, fully extensible technology for their distribution centers, regardless of their industry. And recent events have certainly shown us the critical importance of technology that allows businesses to respond quickly and effectively to supply chain disruptions. Because of the cloud-native nature of Manhattan Active WM, we empower our customers to deploy technology new sites, new capabilities, new users, very, very swiftly. And that close relationship with Google Cloud allows us to deploy our WM, Manhattan Active WM, excuse me, nearly anywhere, anytime, with high levels of reliability and extremely low levels of latency. The robustness of the underlying Active Platform, its best-in-class user experience and functional capability, and the strengths of our team on the ground are combining to produce exceptional customer outcomes. So now I'll provide you with just a quick update on Manhattan Active Transportation Management. As you recall, our customers can deploy Manhattan Active Transportation alongside Manhattan Active Warehouse Management to form Manhattan Active Supply Chain, the industry's first and only cloud-native, fully unified supply chain execution platform. And since its launch in May of 2021, Manhattan Active Transportation Management has enjoyed outstanding market interest and uptake with strong international traction as well. In fact, half of our initial Manhattan Active Transportation subscribers are outside of North America. And our EMEA and Latin America teams are doing very well with Manhattan Active TM thus far, actually with the product's very first go-live that was in Brazil. And we've communicated in the past. Building a global customer base for our TMS application has been one of our strategic goals, and the hard work of our international TMS teams is really starting to play off. And we're encouraged that the results of Manhattan Active Transportation Management show that our supply chain unification message is really resonating in the market. Almost half of our Manhattan Active Transportation Management customers are also Manhattan active WM customers and our teams are reporting that customers are placing a really high value on our ability to offer a single user interface to manage all aspects of supply chain execution to orchestrate end-to-end processes both across WMS and TMS and keep all of their supply chain applications fully integrated and current and finally on the product front Maybe a quick update on our omnichannel commerce solution, Manhattan Active Omni, including our point-of-sale application. Our point-of-sale project teams, they remain busy with a number of new deployments and rollouts. And throughout the year, we're slated to light up a large number of additional stores running our point-of-sale application. And many of those customers also run enterprise order management. And similar to the benefit I mentioned earlier, many of our Manhattan Active Omni customers certainly see the advantage of a unified solution across both their digital and bricks-and-mortar channels. And this quarter, we'll kick off our first Manhattan Active Allocation project with one of our strategic customers in EMEA. Manhattan Active Allocation is a next-generation inventory optimization solution designed for fashion retailers. It's built on our industry-leading Manhattan Active architecture, and we believe that it brings a fresh approach to a software category that's been mired in decades of old technology. And finally, just this past quarter, we released an exciting new capability within Manhattan Active Omni, our interactive inventory capability. And it's getting a powerful boost from an all-new machine learning capability that really further optimizes order promising. Many of our Manhattan Active Omni customers are shipping orders from hundreds of stores each in addition to their distribution centers. And this new solution analyzes multiple static and dynamic market factors to make a much more accurate shipping and delivery prediction in real time as customers are shopping and checking out. And the initial results we're seeing indicate over a 50% reduction in late deliveries thanks to this sophisticated machine learning algorithm. And for our Manhattan Active Omni customers, it's really another great example of the advantage of an ever-evolving operational platform with new game-changing capabilities like this one being delivered to them on a very regular basis. And we continue to be really very excited about our long-term growth potential. Secular tailwinds are numerous. and the benefits of resilient, modern supply chains I think are pretty clear. Now, why are we confident that Manhattan Associates is well-positioned to gain market share and outgrow the market in 2022 and beyond? Well, we're the industry leader, and our technology is world-class. The competitive environment is favorable, and our win rates are strengthening. The pipelines for our market-leading solutions continue to progress very well. Our cross-sell opportunity is large and growing, and in fact, we've dedicated more resources to cross-selling in 2022 and see the opportunity to expand this over time as well. And then finally, we have a significant pipeline of existing on-premise customers who want to shift to our cloud-native applications that are scalable, versionless, and extensible. So that concludes my business update. Dennis is going to provide you with an update on our financial performance and discuss our outlook for 2022 and beyond. And then I'll close our prepared remarks with a brief summary before moving to Q&A. So Dennis, take it away.