Q1 2021 Manhattan Associates Inc Earnings Call
[music].
Good afternoon, My name is Jeff and I'll be your conference muscle the ear 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 speakers' remarks, there will be a question and answer period.
If you would like to ask the 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.
All sorts of reminder, ladies and gentlemen, this call is being recorded today April 27.
I would now like to introduce Mr. Eddie Capel the CEO, Mr. Dennis story 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 Capel, our CEO during this call, including the question and answer session.
May make forward looking statements regarding future events or the future financial performance of Manhattan Associates.
The caution that these forward looking statements involve risks 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 from Manhattan Associates files with the SEC from <unk>.
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 of discussion in that report as well of any risk factor updates, we provide and the subsequent form 10 Qs. We note in particular that uncertainty regarding the impact of the COVID-19 pandemic on outperformance could cause actual results to differ.
Materially from our projections.
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 8-K, we submitted to the SEC earlier today and on our website at MAA on each dot com now I will turn the call over to Eddie Thanks, Mike 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 on adjusted earnings per diluted share of 43, both exceeding expectations.
Our business pace continues to be solid with broad revenue outperformance across the solutions driving top line revenue growth and earnings leverage in the quarter, while simultaneously driving on increasing investment in the business.
The team continues to execute well and our business momentum is accelerating underscoring the strength and growing and the growing demand for our cloud solutions. We achieved record bookings in Q1, where there are P O increasing 108% over the prior year on 36% so.
<unk> to $421 million.
Without forward revenue visibility, improving and the inherent leverage in our model will be increasing at 2021 guidance across the board.
Equally important our pipeline continues to grow nicely with about 90% of the pipe consisting of cloud opportunities of 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 solutions.
Solutions of mission critical to our customers on our end markets.
Now with the need from Martin adaptable scalable and resilient supply chain inventory and omni channel solutions is never more apparent we are in the early stages of extending out of mind and wallet share.
Additionally, the secular tailwind of numerous.
Digital transformation of businesses brick and mortar stores shifting to an innovative multi function facility concept the insatiable desire to get as close as possible to the end customer creative inventory management strategies and shorter of fulfillment timelines of just some of the significant driver.
Or is that are aligning customer of that demand with that product strategy.
And our unified platform is the industry, leading and provides our customers with solutions of the scalable version lifts on 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 of bag to reach its first anniversary and on pace for innovation to set our innovation our innovation set to accelerate on the heels of nearly $19 million of investor.
In R&D just this year alone we are strategically positioned for the long term sustainable growth.
On the sales front competitive win rates remained strong at about 70% is that commitment to innovation keeps of Manhattan associates the top of the industry.
In Q1 of 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 of pretty diverse as well, including apparel department stores food and beverage industrial as well as durable 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 as 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 so just some quick updates on our product portfolio.
Starting with our point of sales solution Q.
Q1 was a pretty positive quarter for P. O S. Both of US with respect to go lives and new customer signings.
Well early pipeline opportunities are of 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 of well known specialty retailer. The during the quarter went live with that point of sale application in the pilot store.
On the feedback from the store associates has been extremely positive with commentary on the ease of use speed and responsiveness and the retailer has started rolling out of the system across their store fleet and will be complete in a few months.
Then they will turn their attention to activating the rest of the Manhattan active omni suite, including enterprise order management and the store fulfillment.
And when it comes to new point of sale customer signings, we're happy to announce that the three additional projects that have been signed and kicked off in the last quarter. These include of well known global apparel brand that will first pilot at the point of sale of application here in the U S. This summer and then plan to roll on.
The solution to the 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 of application and.
And that's the same advantage proved attractive for a long time Manhattan active <unk> customer in Canada, who rollout of point of sales solution across the fleet of apparel retail stores by early fall on.
Finally, we've also kicked off of projected of well known sports apparel and footwear customer on this global brand will start by using our point of sale to enable endless aisle capabilities in their stores, enabling the store associates to use mobile devices to capture orders for customers when our size or of 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 of that particular customer.
While the pandemic seem to.
Cause many of the store systems of much of the store systems activities to be put on hold third party integrators in the industry research firms are now beginning to indicate the planned investments in point of sale or again, showing signs of picking up because we were able to continue to invest heavily in our point of sale of application threat. The pandemic we believe.
The very very well positioned for the inevitable need for replacement cycle in point of sale and store systems in general.
Now turning to the supply chain of Q1 was another good quarter for our transportation management application just in recent weeks, we received word from Gartner for the third year in a row. Our application was one of the very few to be included in the leaders quadrant, the and the recently published Gartner Magic quadrant for transportation management.
And we've been able to maintain this important industry designation because of the continued investment and innovation within Tms and also of the high levels of customer satisfaction.
We garner without customers.
The Tms market continues to be an active one for us as customers either move older on premise deployments of Tms of the cloud or adopt a new Tms for the very first time and generally speaking <unk> Tms customers.
Or cloud Tms allies smaller customers to benefit from the power of our leading Tms solution.
Speaking of supply chain application 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 of professional services team across.
North and South America, and Europe remained quite busy preparing for some are full of Manhattan active Wm go lives and Additionally, our sales pipeline remains strong across both existing Manhattan W. M. S. On premise customers looking to go cloud native and with opportunities with net new customers.
Q1 was also a nice quarter for of demand forecasting and inventory optimization solutions as we continue to see both existing of 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 upcoming momentum connect 2021 conference in May.
Last year will be virtual unfortunately, but we're planning again to make some really important product announcements for a number of years now of our product strategy has been centered around two key ideas mic, creating a best in class functional capabilities towards truly cloud native architecture.
Secondly, delivering unified applications within the three main areas of focus omni channel supply chain and inventory and at this year's conference will announce yet another large step forward in making that vision a reality for our customers.
So that concludes my business update with that I'll pass it over to Dennis who will provide you with an update on our financial performance and discuss.
Outlook for 2021, and I'll close our prepared remarks for the brief summary, before moving to Q&A, So Dennis take it away.
Thanks Eddie.
I would characterize our first quarter execution is on all rounder, we delivered strong financial performance from top line to bottom line with.
With the cross the board solid growth profitability cash flow and balance sheet results.
Here's the key summary of financial highlights with growth rates on a year over year basis, unless otherwise noted.
As Eddie mentioned Q1 total revenue was $157 million up 2% adjusted earnings per share was <unk> 43 cents up 8% GAAP EPS was <unk> 35 cents and overall performance was driven by our cloud revenue in the quarter Q.
Operating income totaled $36 million up 12% year over year adjusted operating margin was 22, 7% of 200 basis points and our GAAP operating margin was 16, 2%.
Q1 cloud revenue was $27 million up 54% line.
License revenue was $7 $8 million down 19% as our end markets are predominantly choosing our cloud solutions.
And Q on Q1, RPI was the record performance at $421 million up 108%. The case, you forgot from Eddie's comments year over year end of 36% sequentially.
At our current full year outlook of four.
452 of $550 million, we are on track to exceed our $500 million midpoint.
Further cloud momentum is fueling our services pipeline and revenue growth opportunity.
Q1 services revenue exceeded expectations totaling $80 million against an $87 million comp in Q1 2020.
More importantly services revenue was up 13% sequentially over Q4, 2020, with our growth outlook accelerating for the balance of 2021.
Our Q2 services revenue for the forecast is $83 million to $85 million up 17% year over year.
And for Q3, and Q4, our forecast calls for 20% year over year growth.
Maintenance was up 1% on cash collections.
The important point here like license revenue, we do expect second half of tuition on customer conversions to cloud, which will positively impact our RVO performance.
And also our hardware team delivered a solid $6 million of sales up 56% year over year.
So let me turn to cash and cash flow. Another strong performance Q1 closed with cash on hand totaling $197 million with zero debt.
Operating cash flow was $40 million up $3 five times year over year, and our Q1 free cash flow margin was 25%.
Our current deferred revenue balance totaled $123 million up 8% over Q4 2020.
And 17% year over year on cloud billings.
And also we invested $27 million on share buybacks in Q1, and our board raised our buyback authority to $50 million.
That's the result summary, I'll cover some additional financial updates and guidance and then turn the call back to Eddie.
Our cloud revenue outperformance was mostly driven by positive deal timing overages on renewals overages and renewals can be lumpy on a quarterly basis for Q2, we expect cloud revenue to be roughly up 46% compared to Q2 2020.
For the full year, we are raising our previous cloud revenue estimate of $108 million to $110 million to a range of $111 million to $113 million equating to 40% growth at the midpoint.
As frequently mentioned remaining performance obligation of our RP O.
Is the leading proxy for our cloud revenue.
We updated our outlook to exceed $500 million.
Mid point for 2021 going forward, our intention remains to guide the RP O on an annual basis as bookings can be lumpy, primarily based on sales cycle timing and the number and relative value of large deals and product mix from quarter to quarter.
Furthermore, on flow through from RPI to cloud revenue some customers have longer implementation cycles.
Associated with large projects, requiring a multi year annual subscription ramp built into the contract.
These revenue ramps are commonly are common for larger cloud deals and with larger opportunities becoming more prevalent in our pipeline. We expect <unk> growth to accelerate first followed by gradual steepening ramp in cloud revenue growth.
Providing us with very good visibility into the future subscription revenue.
So all said we are confident in our ability to achieve the high end of our prior 450 to 550 million RP O outlook for 2021.
As discussed in our previous Q4 earnings call, we expect license and maintenance revenue attrition to accelerate in 2021 estimating license revenue to be in the range of $20 million to $25 million for the full year, which represents a 41% year over year decline.
For Q2, we anticipate license revenue to be approximately $6 million.
In Q3, and Q4 to be about $4 million each quarter.
For maintenance revenue, we continue to target of approximately $35 million per quarter throughout 2021.
And we expect the attrition impact will manifest itself for the most part in the second half of 2021.
Our consolidated subscription maintenance and services margin for the quarter was 59% driven by revenue performance and cloud operating leverage we expect Q2 consolidated subscription maintenance and services margin to be about 52, 6% improving 40 bps.
Yes over prior expectations.
Given the strong demand, we anticipate we anticipate cost to tick up slightly in the second half on hiring and performance based comp.
The second half margin to be about 51, 1% compared to our prior expectations of 51, 5%.
And for operating income and margin.
We are increasing our full year 2021 guidance 50 bps, resulting in a midpoint of 21, 5% and we remain confident in our ability to make strong progress on achieving the rule of 40 over time.
On a quarterly basis, we anticipate adjusted operating margin to be 22, 5% for Q2.
21, 2% in Q3.
And 19, 4%, Inc Q4.
Regarding taxes, our adjusted effective income tax rate was 21, 5%.
We expect our Q2 and full year 2021, adjusted tax rate to be 21, 5% down from our prior expectations of 23%.
The lower tax rate will benefit pro forma adjusted EPS by roughly <unk> <unk> for the full year.
Our GAAP effective income tax rate was nine 9% for the quarter driven by excess tax benefits on restricted stock vesting.
We expect our full year 2021, GAAP tax rate to be about 20%.
Regarding our capital structure in Q1, 2021, we repurchased approximately 214000 shares worth roughly $27 million for.
For the second quarter and full year, we estimate our diluted shares outstanding to be $64 8 million shares which assumes no buyback activity.
Also for Capex, we estimate for 2001 to invest about $6 million to $8 million at this time.
So that completes the core financial update.
Turning to increased 2021 guidance.
For total revenue, we are raising guidance from our previous range of $595 million to $625 million, which represented 4% growth at the midpoint.
To the new guidance range of $625 million to $640 million targeting 8% growth at the midpoint of $632 million.
As a reminder of this includes $22 $5 million of revenue compression equating to four percentage points of growth driven by license and maintenance attrition.
For Q2, we expect total revenue of $154 million to $159 million or 15% growth at the $157 million midpoint.
As we account for continued license attrition, we expect Q3 and Q4 midpoint total revenue growth to be approximately 7% to 8%.
For adjusted earnings per share.
We are increasing our previous guidance range of $1 44, two of $1 59.
Two of dollars 60 to $1 70, with the midpoint of $1 65 up from our previous midpoint of $1 52.
For GAAP earnings per share guidance range as of $1 10 to $1 20, with the midpoint of $1 15 up from our previous midpoint of $1 four.
For Q2, we expect adjusted EPS to be 42 to 44.
And as previously discussed for operating margin, we are raising our target range of 21% to 22% and for Q2, we expect an operating margin range of 22, 3% to 22, 7%.
So in summary of.
Our underlying growth fundamentals are strong excluding license and maintenance, which are line items negatively impacted by our cloud transition because they are of trading at the mid point of our Q2 and full year guidance. Our pro forma total 2021 total revenue growth is 20 <unk>.
3% for Q2 and full year of 17%.
So thank you that covers my financial update I will turn the call back to Eddie.
Terrific. Thanks Dennis.
So we're very pleased with our strong start to 2021 and record results will.
While we continue to operate in a pretty turbulent global macro environment, we're confident in our ability to help deliver success for our customers and drive long term sustainable growth from Manhattan Associates.
Many of our customers and prospects are in the early stages of the digital transformation and even then move to the cloud.
With our industry, leading innovation technical and domain expertise and the world's most talented and seasoned supply chain commerce employees.
We believe that we are best positioned to help the industry modernize which in turn creates a really exciting opportunity from Manhattan associates.
So with that Jeff we'd be happy to take any questions.
Absolutely.
This time I would like to remind everyone in order to ask your questions Press Star then the number one on your telephone keypad.
Again, Thats star one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Okay.
Your first question comes from the line of Terry Tillman from <unk> Securities. Your line is open.
Hey, good afternoon, everyone and congrats on the all rounder.
The <unk>.
Maybe my first question for you on the dentist had a question for you but.
Well hearing about point of sale of that seems like forever ago. When we were hearing about the early kind of success in the pipeline building what I'm curious about is its good to hear about some new deals starting to flow again, and then projects moving forward, but could you maybe educate us on kind of what the point of sale kind of opportunities look like when you land one of those.
From a size and scale perspective, how does that compare to the yoga mats and WNS business then.
Is the pipeline activity continuing to build as we move into the the second half of the year.
Yes. It does it certainly seems the interest is picking up in the market Terry we're seeing the interest pick up and as I mentioned in my prepared comments the.
Industry analysts and.
And the third party integrators, and so forth seem to be indicating that you know after of the GAAP year of 2020, where we are.
<unk> spent a large part of the time close as they reopen.
And on <unk>.
Emerge really is multi function facilities by online curbside boot.
Boutiques galleries rich.
The return centers for products for the board on line and so forth and the systems that they have in place today don't don't support those capabilities very well as well as all of the <unk>.
Cross selling on Upselling that certainly retailers want to do and manage and maximize the inventory they have across the network. So there's certainly seems to be some some forward forward momentum there.
The the.
The position that we're in with point of sale being sort of an extension of our omni or order management suite of solutions seems to be.
Being pretty well received in the market you again heard from my comments the most of our customers.
Are seeing one of the other go first on.
On that on that roadmap because there is a real strategic advantage for them.
With regard to the size of the opportunity.
The market is large as we know we know the the game as it were has moved from being the hardware game to of software game.
And that's where the the critical mass is beginning to beginning to build.
I don't know that I'm going to be able to give you a and I don't want to give you a specific ASP.
Of point of sales as it relates to order management and warehouse management, but suffice to say as a huge opportunity either particularly.
When the customers and retailers have a large store the large store network.
I mean, I guess I would just say.
But it certainly would not be unusual for.
Our point of sale opportunity to be in the same ballpark.
The material there'll be a mess program or a material Om's program.
Okay, that's great to hear I guess, maybe Dennis.
For you in terms of we were looking for $50 million of additional <unk> on the quarter you did over 100 billions of additional RP O. So like what I'm curious about is the two part question. One what are you seeing in terms of commitments are these still these kind of long term kind of multiyear commitment did anything change of duration in the secondly.
That was the big beat I'm curious.
Was it of volume and velocity of deal activity or was it did.
The benefit from some of especially large deals looking for a little bit more color on the beat there. Thank you.
In terms of the duration no change orders are still hitting right at the five year Mark given the mission critical and strategic nature nature of the solutions, Terry and what I would tell you is as you know.
Pretty diverse spread of.
Bookings across the customer there wasn't any material concentration of one customer.
In the pool of deals that we closed in the quarter, good volume and good velocity and good diversity as well.
That's great congrats.
Thanks Terry.
Your next question comes from the line of Joe <unk> from Baird. Your line is open.
Great Hi, everyone.
I'll just.
The stick with the RPI of about gangs.
Obviously, it doesn't happen without a good product, but Eddie and Dennis I'm wondering.
The thematic topics around the <unk> category right now the yet.
New Wm as pairing with robotics and automation new W of mass manage a pretty tight labor constraints in the industry.
You can plot to do with the e-commerce.
Are any of these factors you think driving maybe increase the awareness or ultimately with the kind of pipeline growth for you.
More than the others or is it really just the combination of new product embrace of the cloud of these thematic things all the kind of happening at once.
I think.
On the he's done a great great review of some of the some of the drivers there Joe.
But.
The top of the list.
Is is more immediate access to innovation.
The.
We've talked about it before but honestly I feel like it's it is head and shoulders above above the other above the other drivers with so many things changes the changing in the supply chain, obviously digital transformation continuing to accelerate.
The all of these other things that you talked about are factors, but the need to be flexible agile and meet ever changing business needs drives the need to get your hands on new innovation quickly and.
That I think is the number one number one reason there's no question that.
On the <unk>.
<unk> finding talent and so forth puts pressure on our customers' organization, so that having us manage the solutions and so forth. It is helpful to them.
As a corollary to it the access to innovation will be number one.
Okay. That's helpful. And then I think a lot of your prepared remarks were discussing just.
Expansions at existing accounts across the full suite of omni channel capabilities on I would add on.
Imagine eventually.
Of that will lead across the service.
<unk> chain across the entire kind of unified platform.
Is it possible to give any maybe quantification I don't know if its not revenue retention maybe.
Some sort of cohort analysis, just a general sense, what youre seeing with existing customers, maybe a few years ago.
Kind of how the spam west Manhattan is evolving.
Yes, I wouldn't say, there's any any major change in terms of.
The our ability to cross sell and up so across the suite of solutions to be to be honest with you. Joe you know we've had we've had great customer retention over the world over the over the years, we generally referred to as maintenance as maintenance maintenance retention.
Still feel it's true the large percentage of our new software sales in every given quarter comes from existing customers.
But the good news is with the with all of that said still a healthy number of new logos coming into the family. So.
I think of great balance there as we continue to drive innovation into the marketplace, we certainly expect to be able to.
Continue that cross sell and upsell and especially.
<unk> as we do introduce new products to the marketplace, and we sort of little bit of that.
In the last quarter with.
Point of sale one of the more recent product introductions.
Yes, Joe I would say also 25%.
Of our software was net new customers in the quarter and if you look at our pipeline 40, 40% of the pipeline is made up of net new customers as well I think that goes to Eddie story about the importance of.
The innovation and from a retention point of view, it's early days from a renewal of point of view, but we're basically at 99% to 100% on cloud renewal retention.
Okay interesting I'll leave it there thank you.
Okay.
Thank you Joe.
Your next question comes from the line of UN Kim from Loop capital. Your line is open.
Thank you so another super congrats on another strong quarter, Eddie or Dennis It Mike.
So Eddie it's.
Good to hear that point of sales is coming back which I take it.
Some parts of the retail vertical is coming back. So can you update us on where we are in terms of the retail vertical coming back from the.
The depth of COVID-19 or the last year and then also.
Can you update us on the competitive landscape in the retail vertical because I believe certain.
The vendors did take a step back when the retail vertical.
The slowdown last year, yes.
Well certainly in terms of the journey.
Of retail.
Coming back for us over the last of shall we call. It 15 15 months during 2020.
And the and the real depths of the pandemic there was still a fair amount of activity. We saw the first Q2 was pretty turbulent, but sort of a fair amount of activity on the WNS side.
Direct to consumer shipments were increasing obviously the need for speed was there and so forth. So we sort of.
Felt fairly healthy amount of activity in WNS, the larger strategic Manhattan active omni projects.
When the low quiet last year, but maybe for obvious reason there were smaller point projects with curbside and both of those projects and ship from store projects and so forth, but the big Omni channel.
<unk> seemed to wane, a little bit with seeing that pick back up.
And then again for obvious reasons with many stores closed store systems projects were.
It was the bidding of the GAAP here in 2020 and again, we're starting to see point of sale in the store systems projects begin to pick back up kind of across the board. So I would say that's sort of been the journey across the solution suite over the last.
<unk> 12, or 12 or 15 months in terms of the competitive landscape. It hasnt changed a great deal frankly.
Really competitors remain the same they remain as active because from <unk>.
Terrific competitors of competitiveness that they're in.
US sharper on our toes and on keeping innovating.
Okay.
Thanks for that and then Europe showed another strong sequential growth.
You just talk about what kind of trends youre, seeing there and whether or not we can whether or not we can continue to expect this positive trend out of Europe for the remaining of the year.
The services business was particularly strong in the <unk>.
In Q1.
We're starting to see just just like here in the U S. Frankly things begin to begin to open up direct to consumer growing it's been growing over the last over the last 12 months. So I don't think there's anything really very different in Europe, that's happening here.
Pretty positive across the board there are a couple of spots in APAC.
Or a little slower than we might like.
Australia is pretty strong, but Japan's a little flat frankly, China, China's a little flat, but but the smaller parts of the business and we certainly expect those to cycle back up.
In the next couple of three quarters.
Okay, Great I have one for Dennis.
Very strong cash flow for Q1, especially so to kind of the.
Looks like the cash collection of was especially strong in the quarter.
Was there like a onetime thing that drove the cash collection or is this on some sort of on trend.
The emerging let's start to have higher mix of subscription billings side and moving away from license deals.
No one no one time trend.
We have as a company thats Super focused on as part of our DNA on cash it was a record cash collections quarter for us and really underpinning that is really the growing subscription business.
Okay, great. Thanks period <unk>.
5% free cash flow margin.
Yes.
Yeah.
Thank you Ian.
Your next question comes from the line of Mark Chapelle from Benchmark. Your line is open.
Alright. Thank you for taking my question and congratulations on the quarter guys. Thank you Mark.
A quick question for you on active Wm granted I know, it's still early but could you address whether you are seeing a different set of competitors with that solution. Then you did what's your interest of on premise products and also true if you could just address.
The active wm win rates and whether they are above the 70% average for all of your products yeah. So so.
The short answer is no competitors of pretty much the same.
Today as they have been over the last one.
Even longer than that but let's call. It couple of three of four of five five years. So.
The same competitive landscape in terms of the in terms of of the win rates.
I don't have that right off the top of my head, but certainly the strong that probably might be.
A tick above the 70%.
And we feel pretty good about pretty good about where we are.
Talked about this before generally generally when we we don't come in first.
It's the pricing challenge and so forth.
But still feel pretty good about the by the win rates.
Okay, Great and then in your prepared remarks, you mentioned that the company was benefiting from a couple of secular tailwind from any of what you mentioned in the past, but this time you brought up something called creative inventory strategies. I was wondering if you could just clarify that a little bit more for us yes sure.
Really with with an acceleration of buy online pickup in store.
Curbside curbside pickup and ship from store.
It throws off.
Traditional inventory.
Excuse me strategies.
No.
Because you don't know it's much harder to predict.
On forecast what those the impact of those strategies are going to be on the stores inventory strategy.
We're not relying on walk ins Wilkins anymore.
So it requires frankly creative and sophisticated.
A forecasting strategies on over the long term integration with an order management system. So that you can get a much better handle on what those are.
More creative fulfillment strategy is it going to look like across the store network and how they feed back in to inventory optimization.
Thank you helpful on.
Nice job on the quarter. Thanks, guys.
Mark.
Yes.
Your next question comes from the line of Brian Peterson from Raymond James Your line is open.
I'll give you the gentleman thanks for taking the question. So congrats on the really really strong rpms. This quarter. So maybe a follow up to Terry's question, but just you talked about the duration of Dennis I know you hit on that but is there any commonality.
What you are displacing or how youre thinking about sales cycles. It was just such a big step up I'm just curious maybe what changed in the kind of how did that trend versus your expectation.
I don't think of us.
Any any trend if we if.
If we look back my my answer to that Brian would be if you think of back particularly.
Particularly Manhattan active Wm, which drove a healthy of mind of the bookings and then of course the results of our P O.
Yeah.
It's about three quarters since we released or it certainly wasn't the the.
But at the end of the quarter.
The first quarter, most folks were figuring out what it was what it looked like and so forth and then we began to enter into sales cycles, and we really started picking up some sales cycle momentum from Manhattan active banana neck of Wm in kind of Q Q4, and again in Q1 so.
No Big no big change no.
A couple of question direct competitive landscape and secular trends and so forth no big changes there, but I do think of it is taken just a little while to build momentum.
Yes, Brian we're almost we're almost equally split on conversions and net new customers.
On MA W. M.
And as Eddie mentioned, we're already over two dozen.
Close over two dozen deals there so.
Alright, so off of a pretty good start with that two to three quarters of that but maybe a higher level one Eddie just on all of them.
When I take all of your Thunder from momentum next month, but just thinking about the innovation over the last several years.
The point of sales, obviously of new product, but we've seen a lot of innovation on the Wm side I'm just curious as we sit here today, how much of your product efforts are really focused on enhancing your existing product offerings versus potentially building out things that are adjacent to the portfolio yeah. So.
There's really sort of three three.
Prongs of the attack.
We have plenty of ideas for new innovation inside of our existing solutions.
We really do.
So we will continue to innovate into our existing solutions. No question, we are certainly continuing to build out.
The footprint with new products, the ability and the ability to better cross sell upsell and obviously help our customers and then the third bucket is the real creative and innovative unification of the solutions okay because.
There's a level of unification.
And keep them flat out capability that we can deliver to the marketplace through a component of base set of micro services based.
Solutions, the could not be done before.
So of unification, new innovation into our existing solutions and footprint growth.
Thanks Jay.
Thank you Brian.
Your next question comes from the line of Mark the toll.
From Rosenblatt your line is open.
Thank you good evening gentlemen.
Two quick ones in terms of outside North America pipeline.
Curious, where your sales capacity is relative to <unk>.
Perhaps levels you'd like it to be.
<unk> in Europe, and then speaking to APAC sort of what's the.
What sort of the status there and what are the limitations in terms of.
Moving the needle in APAC and then Eddie.
Eddie perhaps maybe looking through your Pos.
Telescope just curious if you have.
Any incremental sense of yet on the pace of retail store reopening sort.
The level relative to the last quarter. So are we still seeing.
Sort of a slow.
Steady pick up or is it perhaps speeding up a bit just anything incremental on the margin there.
Yes.
First of all in terms of just in terms of kind of overall overall dynamics and so forth Europe's about 20% to 25% about pipeline number one.
In terms of sales capacity, we are not capacity constrained we do have.
A couple of open spots in Europe, frankly, we say this a lot, but we've always got of a few open spots.
The domain experts in that field both Europe.
APAC and in Europe, the U S, but we're not capacity constrained.
In terms of APAC of course, APAC represents about six or 7% of all of our revenue and it's very important to us. It's certainly very important to our global customers.
And so forth, but the but it also represents a pretty diverse set of countries, Japan, China, Singapore, and Southeast Asia, and Australia is spread across the six or 7% and honestly it's.
We like many others talk about APAC is the region, but boy it is pretty diverse in and of its in and of itself. So there's there's no no again, no particular sales capacity issue there.
And country by country, almost there are kind of different dynamics going on I think we all know that Australia and New Zealand are in pretty good pretty good shape things are pretty open.
And on businesses businesses flourishing reasonably reasonably well there.
Whereas some of the other countries of struggling struggling a little bit of struggling a little bit more.
And then regard with regard to your second question.
Around looking through the point of sale.
The scope I think you called it.
What we're seeing in terms of store openings, obviously Europe is opening up a good bit more.
From a.
A trajectory perspective, now, particularly in the in the U K here.
Here, obviously, we're pretty much full.
Pretty much fully open across the board in the spots that are not.
I think retailers are definitely feeling like it's pretty pretty close by and the bigger.
Getting to feel the need for adoption.
<unk> in those stores.
Super Thank you appreciate it.
Certainly mark Thank you.
Your next question comes from the line of David Robinson from William Blair. Your line is open.
Alright, Thanks for taking my question I guess, just a quick one around kind of of the secular tailwind that you've been experiencing I guess, given the increasing demand across the product portfolio and the amount of pilots that you guys in the wood.
To put into play and potential customers further understand the importance of omni channel cloud base.
Hi chain solutions due to COVID-19.
Experiencing the shortening of the sales cycle or the acceleration there.
Has it stayed about the same yeah, yeah. It's a good question.
Yes.
So broadly speaking no the sales cycles of remained about the same.
However in the last 12 months, we have seen some.
What I would call smaller point projects go faster right. So when we were in the when we were in a situation where stores were closed from retailers wanted to use those stores of ship from locations. We saw we saw some shift from store projects.
<unk>.
We source some buy online pickup in store, some curbside pick up projects, where where our customers came to us and said listen we've got to be alive in days.
We've referred to it in a couple of previous earnings calls I think some examples where.
Frankly, we turned on a dime and had buy online pickup in store solutions up and running with an existing customer of course, and literally six or seven days on even in situations, where it was a new customer needed curbside pickup program.
Zero to live in six weeks. So we did see some of those small programs have very short sales cycles, but the overall David.
Nothing honestly has really changed at the higher level of more strategic level.
Got it and I guess just to kind of build upon that there've been any kind of discussion or change in sales strategy as you've seen kind of the success of being able to sell those small projects that obviously can.
Lead to the larger ones in the future or is that kind of similar as well.
Really David.
We've got a reasonably broad portfolio and the supply chain space and there were certainly some of our solutions that are considered tip of arrow.
If you think about the distribution management side, sometimes slotting optimization projects or labor management projects on the transportation side look at transportation procurement or transportation modeling engagements, which would be considered tip of arrow for Tms in the same is true of omni channel and some of the ones that we've talked about that.
Isn't that really isn't a big change big of change for us I have to say that.
Since we are focused largely on tier one and tier two usually of those because those companies who have put a lot of thought into these transformational programs and intend to take the time with the sales cycle, but engage in larger initiatives with us.
Okay, great. Thanks for taking my questions.
The pleasure David Thank you.
That concludes our Q&A and now back to Mr. Eddie Capel for final remarks, alright, very good Jeff. Thank you very much I appreciate it and thank you everybody for taking the time to.
Joining the call today and get an update on our on our Q1 2021 as I said, we're excited about the quarter, but even more excited about the go forward opportunity and we will look forward to speaking to you about three months from now where that Q2 update. Thanks again appreciate it.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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