Manhattan Associates, Inc.

Good afternoon, everyone. My name is Robert, and I'll be your conference facilitator today. At this time, I'd like to welcome everyone to the Manhattan Associates third quarter 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'd like to ask a question during this time, simply press star one on your telephone keypad. If you'd like to withdraw your question, simply press star 2 on your telephone keypad. As a reminder, ladies and gentlemen, this call is being recorded today, October 25th. I would now like to introduce your host, Mr. Michael Bauer, head of investor relations of Manhattan Associates. Mr. Bauer, you may begin.

Thank you, Robert, and good afternoon, everyone. Welcome to Manhattan Associates' 2022 third 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. We 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 that 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 on subsequent Form 10-Qs. We note, in particular, the 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 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, everyone, and thank you for joining us as we review our third quarter results, discuss our updated full-year 2022 outlook, and provide some preliminary color in our thinking around 2023. Both Q3 and year-to-date results were record-setting for Manhattan Associates, with Q3 total revenue of $198 million and adjusted earnings per share of 66 cents. Both exceeded our expectations. Demand is strong, customer satisfaction is solid, and we continue to be the leading innovator in core supply chain execution, omnichannel solutions, and retail point-of-sale commerce. And while we remain cautious regarding the global economy, we continue to set aggressive growth and investment goals. This includes strategically allocating capital towards industry-leading innovation, enabling customer success, and expanding our addressable market. And we expect these efforts to further deliver on our long-term growth and earnings objectives. We remain optimistic on our outlook for the remainder of this year and into 2023. And as such, we're raising our 2022 guidance for both revenue and earnings. Q3 was our sixth consecutive record revenue quarter, highlighted by 41% growth in cloud revenue, and 17% growth in services revenue. And this encompasses double-digit revenue growth across all of our geographies. These strong results drove our top line at performance and solid earnings leverage in the quarter. Our global teams are exceedingly busy in the field and are executing well for our customers. Driven by new product sales and system upgrades, we're experiencing strong services demand and continue to actively recruit into our services team around the world to meet demand and further drive customer satisfaction. And this includes hiring over 500 new team members across our company in the first nine months of 2022, slightly exceeding our original plans. And while we're prudently cautious, we still remain focused on adding additional exceptional talent Foundational to our growth is Manhattan's ability to deliver industry-leading innovation and services to our customers. Our mission-critical Manhattan Active platform and solutions are differentiated and are key components in our customers' success, providing them with the ability to best serve their end markets, adapt quickly and efficiently to changing market conditions, and profitably scale their businesses. These powerful benefits contributed to our strong customer satisfaction levels and 75% plus win rates within the quarter. Now despite noticeable FX headwinds, RPO, the leading indicator of our growth, increased 69% to $970 million at the end of Q3. On a constant currency basis, which uses the one year ago FX rates, RPO crossed the $1 billion milestone and was up 76%. Importantly, though, demand for our cloud solutions continues to be strong and resilient across our product portfolio. From a vertical perspective, retail, manufacturing, and wholesale continue to drive more than 80% of our bookings in the quarter. And across our solutions, the sub-verticals are pretty diverse. For example, the quarter Applied deals included a manufacturer and distributor of engineered components, a sporting goods and outdoor recreational retailer, an aerospace and defense company, a grocery retailer, an appliance and electronics manufacturer, and a food and beverage company, among many others. Our pipeline continues to be robust with solid demand across our product suites. Net new potential customers represent about 35% of that demand, And here to date, new logos have generated a full half of our total bookings. And as I mentioned earlier, our global professional services businesses both are all performing very well, posting record revenue results with Q3 revenue of 17%, and we continue to receive high marks for customer satisfaction, conducting well over 100 go-lives in the quarter. With our R&D spend poised to eclipse $100 million this year, let's move to a quick update on our industry-leading solutions, starting with Manhattan Active Transportation Management. Across industries and geographies, we continue to experience strong demand and win rates from Manhattan Active TM. And like Manhattan Active Warehouse Management, Manhattan Active Transportation Management serves the needs of retailers, grocers, the food and beverage industry, pharmaceutical distributors, industrial distributors, and many others. And that same principle holds true across geographies, with Manhattan active TM already live on three continents with a fourth in process. Now, according to Gartner, the total addressable market for WMS and TMS are approximately the same size and present a significant growth opportunity for Manhattan. Both WMS and TMS markets are large, global, and span nearly all industries. Now Manhattan Active's supply chain, which comprises of Manhattan Active Warehouse Management and Manhattan Active Transportation Management, affords us the ability to provide leading edge supply chain technologies to customers across industries and across the globe. And as supply chain practitioners hunger for continuous innovation, our truly cloud-native, always current, unified solution is uniquely positioned to provide our customers a platform for co-development. And as a result, we're seeing a growing number of our Manhattan Active WM customers also subscribe to Manhattan Active Transportation Management. In just five quarters after launching Manhattan Active Transportation Management, we believe this growing attach rate for the solution is further indication that our target markets understand and appreciate the many benefits of supply chain unification. Unlike application integration, which several software vendors can offer, true solution unification can only be achieved by replatforming applications to a truly cloud-native and shared collection of microservices. This state-of-the-art common platform makes this unification possible and gives Manhattan Active Supply Chain applications a clear advantage over the competition. And the great thing about the concept of solution unification is that it works up and down the application stack. Macro unification delivers powerful benefits from the suite level, such as with Manhattan Active Omni and Manhattan Active Supply Chain, but unification also delivers benefits all the way down to the feature level. Many of our early activating customers are already benefiting from the Manhattan Active WM's combination of warehouse management, labor management, automation, orchestration, yard management, slotting optimization, and a number of historically separate applications all built into a unified solution. Now, moving to our retail-specific capabilities, we continue to progress at a rapid pace, implementing Manhattan active store solutions across a number of leading retailers. To date, we have Manhattan Active Solutions running in more than 20,000 stores, enabling over 140,000 daily store users across 70 countries. And point of sale continues to be a strategic focus for us, and our message around the importance of running an omnichannel native point of sale continues to resonate. We believe strongly that to achieve omnichannel operational excellence, Store systems must be an extension of the retailer's digital platform. And Manhattan is the only technology provider who can provide best-in-class capabilities serving both the digital and the physical store channels. And we continue to add new prospects to our point-of-sale pipeline and anticipate an active Q4 with respect to point-of-sales. So in summary, Manhattan active supply chain continues to be a real force in the market with new customers subscribing and existing customers going live on a weekly basis. But before I hand off to Dennis, I'm also excited to share that Manhattan Associates recently won a Trust Radius 2022 Tech Cares Award for corporate social responsibility and ESG initiatives. Our company was specifically recognized for both our commitment to building environmental sustainability into the supply chain and also our employee wellness program. So that concludes my business update. Dennis is going to provide you with an update about financial performance and outlook, and then I'll close our prepared remarks with a brief summary before we move to Q&A. So, Dennis?