Manhattan Associates, Inc.

Good afternoon. My name is Dilem and I'll be your conference facilitator today. At this time, all participants are on a listen-only mode. I'd like to welcome everyone to the Manhattan Associates Q2 earnings conference call. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, slowly press star 1 1 on your telephone keypad. As a reminder, ladies and gentlemen, this call has been recorded today, July 26, 2022. I would now like to introduce Mr. Michael Bauer, Head of Investor Relations of Manhattan Associates. Mr. Bauer, you may begin your conference.

Thank you, Dylan, and good afternoon, everyone. Welcome to Manhattan Associates' 2022 second 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 the answer session, we may make forward-looking statements regarding future events or the future financial performance of Manhattan Associates. You 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 filed 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 2021 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 turbulent global macro environment could impact our performance and cause actual results to differ materially from our projections. We are under no obligation to update 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 menh.com. Now, I'll turn the call over to Eddie.

Thanks, Mike. Well, good afternoon, everyone, and thank you for joining us as we review our second quarter results and discuss the increased outlook that we have for full year 2022. Manhattan delivered a record Q2 and record first half results. generating Q2 total revenue of $192 million and adjusted earnings per share of $0.69, both exceeding our expectations. Specifically, 48% growth in cloud revenue and 19% growth in services revenue drove our top line out performance and strong earnings leverage in the quarter. Our global teams are executing very well for our customers, and we continue to invest in our people and in R&D. Our consistent investment and unmatched industry expertise are key factors in our continued strong customer satisfaction levels and innovation that differentiates our mission-critical Manhattan Active platform and solutions. The industry-leading innovation that we're delivering to the market is a key component to our customer success. providing them with the ability to adapt quickly and efficiently to changing market conditions and profitably scale their businesses. Frankly, factors that contributed to our 75% win rates in the quarter. Now, despite FX headwinds, in Q2, RPO, the leading indicator of our growth, increased 84% to $898 million, excluding the FX impact due to the strong dollar RPO totaled $928 million, up 90%. And regardless of any FX movements, we're on pace to exceed our prior outlook of $1 billion in RPO for the second half of this year. Demand for our cloud solutions is strong and broad-based across products, industry verticals, and geographic locations. It also remains robust from both new and existing customers. Similar to Q1, demand from net new customers was particularly strong and contributed 50% of our total bookings in the quarter. And while the mix of bookings will certainly vary on a quarterly basis, We believe that net new customers generating about 55% of our cloud bookings in the first half of the year exemplifies the unique value that we're delivering to the market and our large and growing opportunity. From a vertical perspective, retail, manufacturing, and wholesale continue to drive more than 80% of our bookings in the quarter. Across our cloud solutions, the sub-verticals are pretty diverse. For example, in the quarter-clad deals, one includes a manufacturer of recreational vehicles, a food distribution wholesaler, a Japanese multinational conglomerate that specializes in electronics and industrial products, a specialty retailer of automotive parts, an industrial manufacturer, and a large fashion brand, as well as a number of others. So, as you can see, pretty diverse. And our cloud pipeline continues to be robust with solid demand across our product suites, and net new customers represent about 35% of that demand. On the services front, our global team continues to execute very well, conducting well over 100. Everybody, I'm very sorry about the technical difficulties, but I'll pick back up. and talk a little bit about our cloud pipeline. I think I had mentioned that the vertical diversity that we experienced in Q2. But our cloud pipeline, I think I mentioned this, continues to be robust with a solid demand across our product suite. And our net new customers represent about 35% of the demand in our pipeline. And on the services front, our global team continues to execute incredibly well. They conducted well over 100 go-lives in the quarter. And company-wide, we continue to make really great progress against that hiring. We added over 300 new team members during the first half of the year and expect to be at least 4,000 employees by the conclusion of 2022. These hires will contribute to our ability to meet our future customer needs, grow our market share, and extend our addressable market. Now, speaking of our team, we are very proud that we were recently voted by them a top place to work in Atlanta for the 10th consecutive year. And we've won similar awards this year in India, Australia, and Singapore. I'm also very happy to report that in mid-May, we hosted the In person, our annual customer conference, and it really was a great success. Attendance for the event was strong and terrific to see and talk and collaborate with our customers and partners face to face about our innovation and product strategy. At the conference, we brought together the industry's top agents of change, and we laid out our vision for agile and sustainable supply chain commerce. So let me spend a moment or two on a couple of the newer product concepts that we rolled out at the event. Solution Assembly and our Manhattan Active Platform Developer Portal. So regarding Solution Assembly, we see this concept as the logical next step for the solution unification strategy that we introduced in 2017. Now as a reminder, Solution unification refers to the unique way that we deliver best-in-class order management, point-of-sale, and customer relationship management into a single unified experience called Manhattan Active Omni. Now, this same concept holds true for the unification of active supply chain with warehouse management, transportation management, yard management, automation orchestration, and so on. And at Momentum this year, we introduced our customers to the concept of solution assemblies. And assemblies refer to the Manhattan-designed and developed end-to-end flows which span our major Manhattan active cloud offerings, Omni, Supply Chain, and Inventory. So let me give you a quick example to illustrate the power of assemblies and the strong cross-selling opportunities within our solutions. Given the challenge that inventory continues to pose, let's review a solution assembly in this area that we specifically demonstrated at Momentum. By assembling Manhattan Active Allocation and Manhattan Active Omni, we help have fashion and apparel customers maximize margin and sell through of their own inventory from the time the inventory arrives in the market to the end of the selling season. The key to this particular assembly is the way that allocation continuously informs order management about the health of every inventory position throughout the supply chain network. And armed with this real-time inventory health data, OMS uses the global view of direct consumer demand to proactively reduce inventory positions where they're running heavy and avoid those locations where they're running light. Assembling allocation and order management, it's really made possible via the unique way that we connect APIs across our cloud deployment. And this out-of-the-box assembly reduces both IT complexity and delivers material revenue margin uplink, in this case, for our specialty and apparel customers. Turning now to one of the other key highlights from Momentum, technology. Since we introduced the Manhattan Active Platform in 2017, its cloud-native, evergreen, and auto-scaling capabilities have delivered game-changing innovation for our customers. And as we've talked about, these technical capabilities have been really important differentiators for our solution across a number of application categories. Like the functional capabilities of the Manhattan Active applications, our technology, in particular the extensibility of our underlying tech platform, is vital to our technology-focused customers. So, at Momentum, we introduced the Manhattan Active Platform Developer Portal, a self-guided reference tool for the technologists and developers within our customer base. Now paired with Proactiv, our platform's tool for extending the base behavior of Manhattan Active Applications, the developer portal provides technologists with the ability to incorporate our extensive library of APIs into their broader technical landscape. And we believe that the strong demand that we're seeing from Manhattan Active Applications reflects the mission critical and strategic innovation that we continue to develop. Enhancing customer experiences and customer service remains top of mind for leading enterprises. And when combined with the capabilities that we offer around maximizing revenue and profitability of owned inventory, we expect demand for our solutions to remain strong. And that concludes my business update. Dennis is going to provide you with an update on our financial performance and our enhanced outlook. And then I'll close our prepared remarks with a brief summary before we move to Q&A. So, Dennis?