Manhattan Associates, Inc.

Good afternoon. 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 first quarter earnings 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 1 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, April 25th. I would now like to introduce your host, Mr. Michael Bauer, head of investor relations of Manhattan Associates. Mr. Bauer, you may begin your conference.

Great. Thank you, Robert. Good afternoon, everyone. Welcome to Manhattan Associates 2023 first 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. 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 2022 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 the turbulent global macro environment could impact our performance and cause actual results to differ materially from our projections. We're 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 mnh.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 2023 outlook. Well, Manhattan Associates is off to a strong start in 2023, reporting record results. Q1 total revenue was $221 million, up 24% as reported, and 33% if normalized for our client transition. Earnings per share was 80 cents, also up 33%. Both this top and bottom line results exceeded our expectations. Demand is strong, customer satisfaction is high, and our growing investment in research and development has positioned Manhattan as the leading innovator in supply chain execution, omni-channel solutions, and retail point of sale. Now, these favorable characteristics contributed to Q1 being our eighth consecutive record revenue quarter, highlighted by year-over-year 53% growth in cloud revenues, 29% growth in services revenue and 20% revenue growth across all ad geographies. And these strong results drove our top line ad performance and solid earnings leverage in the fourth. RPO, the leading indicator of ad growth, increased 42% to $1.2 billion over Q1 2022. as demand for our mission-critical 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 for the quarter. And across our solutions, the sub-verticals are nicely diversified. For example, in the quarter, cloud deals won include a discount retailer, a health solutions company, a grocery retailer, an industrial manufacturer, a specialty retailer of automotive parts, and a fashion brand, as well as a number of others. Win rates in the quarter were about 75%, with 25% of new cloud bookings being generated from net new logos. And additionally, whilst the mix of bookings will vary on a quarterly basis, we had notable cross-sell strength in the quarter. And as discussed in prior calls, Manhattan's cloud-native platform makes unifying mission-critical commerce and supply chain systems a real option versus simply an aspiration. For our customers, this can result in reduced IT complexity, increased revenue, and improved profitability. And for Manhattan, it's a natural catalyst to extend our best-of-breed product footprint within our existing customer base. And this differentiation provides Manhattan Active Solutions with another clear advantage over our competition. As strong product activity continues to drive a services pipeline and growth. Importantly, our professional services team continues to perform very well for our customers and completed well over 100 go-lives in the quarter. Our solution pipeline remains robust with encouraging demands across our product suites with new potential customers representing about 35% of our total pipeline. While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals. This includes strategic investments in industry-leading innovation, further enablement of customer success, and expanding our adjustable market. From a hiring standpoint, we continue to anticipate adding roughly 400 to 500 new employees this year, and have already welcomed over 150 new employees to the Manhattan family just in Q1 alone. Now, turning to the product front. Each year around about this time, we participate in a definitive vendor landscape set of definitive landscape studies for our WMS, TMS, and OMS applications. For WMS and TMS, Gartner publishes an annual magic quadrant report, and for OMS, Forrester publishes their omni-channel wave report every other year. And while the results of the WMS Magic Quadrant won't be released until early next month, we're hopeful to make it 15 consecutive times as a definitive leader for WMS in this report. And for TMS though, I'm happy to share for the fifth consecutive year, or fifth consecutive time actually, we've been named a leader in the TMS magic quadrant. And that commitment to high levels of investment and innovation in TMS is born in both that strong showing in the MQ and strong levels of project activity across four continents. Now, the Forrester Omnichannel OMS wave was published this month. And for the second consecutive time, Manhattan Associates is the only leader in the wave. Having a single leader across consecutive waves, given the report only comes out every two years, is highly unusual. And it reflects a technical strength and unmatched functionality that has been generated from 18 years of strong investment in this critical solution. And as the Forrester analysis shows, no vendor really comes close to matching our depth and breadth of capability across customer service, inventory availability, real-time order promising, fulfillment optimization, and in-store execution. And, of course, we deliver each of WMS and TMS and OMS on our industry-leading and unified Manhattan Active platform, which is our native application architecture and development platform. And Manhattan Active WM continues its strong performance, measured in terms of new wins and successful customer adoption and go-lives. Now, with over 100 Manhattan Active WM customers, we continue a strong track record of being selected to run the largest and most sophisticated supply chains. And we also continue to strengthen our diversity of industry and geographic coverage. Now, shifting gears just a little bit to our omnichannel solutions, we're happy to report that we took another very significant customer live with our point of sale solution this quarter. And in addition to delivering our cloud-native point of sale across their store fleet, we also executed a three-channel order management go-live simultaneously. OMS is really unique in its ability to simultaneously optimize retail, wholesale, and e-commerce orders. And this, combined with our point of sale, gives us the ability to help this particular customer deliver omnichannel operational excellence and to provide a technology template for a number of other significant specialty apparel brands within their group. And at Momentum this year, we're thrilled to have a number of point of sale customers presenting on the value that they're deriving from the rollout of our omnichannel point of sale. Speaking of momentum, our annual user conference, which is coming up here in a month or so, will be in Scottsdale, Arizona, one of our favorite venues. And this year's theme is moving life and commerce forward. And we, our customers, and our partners will bring that theme to life in many creative and informative ways. And we're excited. We're excited to have our customer and our partner community come together with so many critical supply chain commerce topics to discuss at this time. We'll also be demonstrating the unique advantages that we deliver when we assemble multiple Manhattan active applications together. The Manhattan active architecture empowers our customers and our partners to leverage their creativity and technical prowess. to start with our market-leading application functionality and to extend it to drive even more positive change for their businesses and their customers. And finally, we're very excited about the advanced work that we're doing determining how to best take advantage and leverage modern natural language models like ChatGPT and BARD, another topic that we'll be presenting on and discussing in detail at Momentum. So that concludes my business update. Dennis is going to provide you with an update on our financial performance and outlook for the rest of the year, and then I'll close our prepared remarks with a brief summary before we move to Q&A. So Dennis?