Q3 2022 Manhattan Associates Inc Earnings Call
[music].
Good afternoon, everyone. My name is Robert and I'll be your conference facilitator today at.
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 speakers' remarks, there'll be a question and answer period.
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 two on your telephone keypad as a reminder, ladies and gentlemen, this call's being recorded today October 25th I would now like to introduce your host Mr. Michael Bauer head of.
Relations of Manhattan Associates, Mr. Barry 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 earnings call, including the question and answer session. We may make forward looking statements regarding future events or the future financial performance of Manhattan Associates.
<unk> 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.
We 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 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 provided the subsequent Form 10-Qs.
In particular, the turbulent global macro environment could impact outperformance and cause actual results to differ materially from our projections.
We have no obligation to update these statements. In addition, our Congress includes 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 in <unk>.
The web site.
<unk> Dot com now ill turn the call over to Ed.
Thanks, Mike.
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 and I'm thinking around 2023.
Our Q3 and year to date results were record setting for Manhattan Associates.
<unk> total revenue of $198 million.
And adjusted earnings per share of <unk> 66.
Both exceeded our expectations.
Demand is strong customer satisfaction is solid and we continue to be the leading innovator in core.
Our 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.
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 are raising our 2022 guidance for both revenue and earnings.
Q3 was our sixth consecutive record revenue quarter.
I did by 41% growth implied revenue.
17% growth in services revenue.
This encompasses double digit revenue growth across all of our geographies.
These strong results driven by top line outperformance and solid earnings leverage in the quarter.
Our global teams are exceeding any visiting the field and are executing well for our customers.
And then by new product sales and system upgrades, we're experiencing.
Long service system.
Continue.
We recruit into our services team around the world to meet plan.
The drive customer satisfaction.
This includes hiring over 500, new team members across our company and the first nine months of 2022.
<unk> exceeding our original plans.
Prudently cautious we still remain focused on adding additional exceptional talent.
Okay.
Foundational to add gross is manhattan's ability to deliver industry, leading innovation and services to our customers.
In addition, critical Manhattan platform 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.
Okay.
Despite notable FX headwinds our Po, the leading indicator of our growth increased 69% to <unk>.
$970 million at the end of Q3.
Constant currency basis, which is just over one year ago FX rates.
<unk> crossed the $1 billion milestone was up 76%.
Importantly, though demand for 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 of course, our solutions. The sub verticals are pretty diverse for example in the quarter.
Slide deals included a manufacturer and distributor of engineered components, our sporting goods and outdoor recreational retailer and aerospace and defense company, a grocery retailer and appliance and electronics manufacturer and our food and beverage company among many others.
Our pipeline continues to be robust with solid demand across our product suites.
New potential customers represented about 35% of that demand and year to date, new logos have generated a full half of our total bookings.
And as I mentioned earlier, our global professional services business.
As adults allow preferred performing very well posting record revenue results with Q3 revenue up 17% and we continue to receive high marks for customer satisfaction conducting well over 100 go lives in the quarter.
Well, 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 in win rates from Manhattan active tier.
Like Manhattan active warehouse management.
Matthew Transportation management serves the needs of retailers grocers.
And beverage industry pharmaceutical distributors industrial distributors and many others.
Principal holds true across geographies with Manhattan active TM already live on three continents with a fourth in process now.
According to Gartner the true total addressable market for WNS and Tms are approximately the same size and present, a significant growth opportunity for Manhattan.
WNS and Tms markets are large global and spanned nearly all industries.
And Manhattan active supply chain, which comprises of Manhattan active warehouse management and Manhattan active transportation management associate ability to provide leading edge supply chain technologies and customers across industries and across the globe.
Supply chain practitioners hunger for continuous innovation I 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 strong solution unification can only be achieved.
By re platforming applications towards truly cloud native and shared collection of micro services.
State of the art common platform makes this unification possible against Manhattan active supply chain applications, a clear advantage over the competition.
And the great thing about the concept of solution unification.
And it works up and then the application stack macro unification delivers powerful benefits from the suite level, such as with Manhattan active omni in 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 <unk> combination of warehouse management Labor management automation orchestration yard management slotting optimization and a number of historically separate applications.
<unk> into a unified solution.
Yeah.
Now moving to our retail specific capabilities, we continue to progress at a rapid pace implementing Manhattan active storage solutions across a number of leading retailers.
To date, we have Manhattan active solutions running in more than 20000 stores, enabling over 140000 daily store users across 70 countries.
Point of sale continues to be a strategic focus for us and our message around the importance of running an omnichannel Megan.
<unk> continues to ramp.
Nate we believe strongly that to achieve Omnichannel operational excellence sourced store systems must be an extension of the retailer's digital platform.
And 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 sale.
So in summary, Manhattan active supply chain continues to build for us 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 2020.
Theres award for corporate social responsibility and ESG initiatives, our company specifically recognized for both our commitment to building environmental sustainability into the supply chain and also our employee employee wellness program.
So that concludes my business update Dennis is going to provide you with an update of our financial performance and outlook and then I'll close our prepared remarks with a brief summary, before we move to Q&A. So Dennis.
Thanks Heidi.
Global teams continue to execute execute extremely well in a challenging macro environment.
From a quarterly delivered strong financial results as both our Q3 and year to date results compare favorably to the rule of 40 plus.
Manhattan has solid visibility and we continued to deliver strong metrics across growth profitability and cash flow.
Start with a recap of the quarter with growth rates on a year over year basis, unless otherwise stated.
Additionally, due to the volatile FX environment. We are also providing constant currency growth to demonstrate apples to apples comps.
Yes, otherwise stated constant currency, we will compare our results as if rates were unchanged from the year ago period.
Okay.
Total revenue was a record $198 million up 17% as reported and up 21% in constant currency, excluding license and maintenance revenue, which removes the compression driven by our cloud transition as reported total revenue was up 23%.
And 27% in constant currency.
Q3 cloud revenue totaled $45 million up 41% and as Eddie highlighted we ended the quarter with RP O of $970 million up 69%.
Excluding FX RP O totaled 1.01 billion up 76% and assumes year ago FX rates.
So sequential growth was 10% and assumes FX rates will remain unchanged from the June 30 levels.
Looking ahead to Q4, we expect <unk> to be at the high end of our prior guidepost range of $950 million.
1.05 billion on an as reported basis and exceed the range excluding FX.
As of September 30th over 97% of our Rps represents true cloud native subscriptions.
As Eddie mentioned Q3 Global services revenue was a record $103 million up 17% as cloud sales continue to fuel services revenue growth globally.
Our Q3 operating profit totaled $51 million with adjusted operating margin of roughly 26%, which includes $13 million of incremental performance based compensation.
Hurdles.
On a normalized basis operating margin would be approximately 32%.
I'd call that tapping on tapping on the door door of rule of 50.
The quarter of better than expected margin performance was driven by revenue growth and operating leverage importantly, we continue to invest for future growth.
For the quarter Q3, adjusted earnings per share was <unk> 66, and GAAP earnings per share totaled <unk> 47.
Okay.
Turning to cash Q3, operating cash flow was a solid $40 million and year to date operating cash flow was $124 million.
Q3, adjusted EBITDA margin was 27% free cash flow margin was 19% and was impacted by timing of cash taxes paid and accounts receivable billings.
As previously discussed.
The year to date decline in operating cash is solely tied to the incremental cash taxes paid associated with the U S tax cuts and jobs Act that did not impact the year ago period.
Year to date, we have paid $42 million in cash taxes compared to $18 million over the first nine months of 2021.
With the vast majority of the increase due to the new law.
We continue to expect the 2025 and $30 million of additional tax payments in 2022.
For more information I would refer you to item eight in our earnings release supplemental information schedules.
Turning to the balance sheet deferred revenue increased 24% year over year to $169 million with subscriptions totaling over 50% of the line item.
Similarly to free cash flow differed revenue was impacted by the quarterly fluctuation of cash receipts.
Specifically some customers paid us in Q2 of this year versus Q3 of 2021.
We ended the quarter with $197 million in cash and zero debt.
In the quarter, we invested $50 million in share repurchases, resulting in $150 million in buybacks year to date.
Also our board has approved the replenishing of our $70 million share repurchase authority.
Now turning to updated 2022 guidance.
With our strong year to date performance and increasing visibility.
We are raising our 2022 outlook on both the top and bottom lines and are on pace to deliver our third consecutive record revenue year.
As such the mid point of our total revenue range is increasing to $751 $5 million.
Representing 13% growth as reported and 16% constant currency.
This is up from our prior guidance midpoint of $737 million and 11% growth.
Excluding license and maintenance attrition 2022 growth would be 23% as reported and 26% in constant currency.
That's pretty solid.
Inclusive of our increased investment in hiring we continue to anticipate full year adjusted operating margin to be about 25, 5%.
Which is in line with our prior guidance range and ahead of our original margin target is 23, 5%.
For full year adjusted earnings per share the midpoint of our range is increasing to $2 44 up from our prior midpoint of $2 37.
For GAAP EPS, yes, that's GAAP EPS the midpoint is moving to a $1 72 up from the prior midpoint of $1 65 note. The difference between non-GAAP and GAAP is solely our investment and equity based compensation.
This implies Q4 revenue of $182 $5 million targeting cloud revenue of $47 5 million services revenue of $93 5 million and maintenance revenue of $32 $5 million operating margin is targeted at 21.
8%, resulting in adjusted earnings per share of <unk> 49 cents.
As previously mentioned on prior calls our Q4 margin accounts for retail peak seasonality, which traditionally on a sequential basis is down from Q3 as customers idle implementations to focus on their busy season.
So that covers the 2022 guidance update.
We're going to move to the preliminary 2023 parameters are.
Our financial objective is to deliver sustainable double digit top line growth and top quartile operating margins.
<unk> marked against enterprise SaaS comps.
Please refer to item nine on our earnings release for our updated 2022 and 2023 guideposts.
We are also reiterating.
Reiterating our 2024 guidepost estimates that we published in February which on an FX suggested basis should be used as a baseline for our future performance.
No our published 2024 guideposts to have not been adjusted for currency movements.
As Eddie highlighted we've taken a cautious approach to the volatile macro environment balancing our optimism regarding our large and growing opportunity strong resilient demand across our solutions with the uncertain outcome economic outlook.
Additionally, we are currently in our budget cycle, and we'll firm up our 2023 parameters on our Q4 call in early February .
Accounting for the current FX environment, our preliminary estimate for 2023 total revenue is $800 million to $820 million, representing 16% growth, excluding license and maintenance attrition and 8% reported growth at the midpoint.
If rates would have remained at June 30 levels. Our 2023 total revenue range would be $10 million higher or approximately $820 million at the midpoint.
Yeah.
For 2023 cloud revenue, we are targeting $230 million to $233 million, representing 35% growth at the midpoint.
This compares favorably to our prior guide post mid point of $230 million that used year end 2021 FX rates.
If rates remain at 2021 levels. The mid point of our cloud revenue range would increase to $239 million.
For our PEO, we are targeting a range of one three to $1 $4 billion, representing about 30% growth at the midpoint, which compares favorably to our prior guide post mid point of 132 5 billion.
Okay.
Yes, that's 132 5 billion that used year end 2021, FX rates if rates remain at 2021 levels, our RP O range will be about $50 million higher.
Additionally, as previously discussed our bookings performance is impacted by the number and relative value of large deals we close in any quarter, which can potentially cause lumpiness or non linear bookings throughout the year.
Our services demand continues to be fueled by cloud, resulting in solid visibility in 2023, we are targeting services revenue of $417 million to $425 million, which represents 9% growth at the midpoint, 10% excluding the impact.
FX.
On attrition to cloud, we expect maintenance revenue to be $115 million to $122 million or a 15% decline at the midpoint and license revenue to be about 1% of total revenue.
We expect our adjusted operating margin to be roughly unchanged from our current 2022 projections. While we continue to track ahead of our original margin expectations. The combination of opportunistic investment in our business and hiring supply chain talent as well as attrition to come.
<unk> is masking some of the inherent leverage in our model.
We expect our effective tax rate to be 21, 7% and our diluted share count to be approximately $63 4 million shares which assumes no buyback activity.
In summary for 2023 parameters and on an as reported basis, we expect total revenue license and maintenance attrition to increase 16%.
Cloud revenue increased 35%.
Services revenue to increase 9% RP O to increased 30% and and for us to achieve 25, 5% operating margin. So that covers a very stout financial performance update and outlook. Thank you and back to Eddie for some closing remarks.
Great. Thanks, Dennis.
Despite the volatile macro conditions, our global teams are executing extremely well and we're really encouraged by the resiliency of our business.
With our results and the strong demand for our solutions really across the world.
But most importantly, we remain confident in our ability to deliver success for our customers and help them with their digital transformation journeys.
So with that thanks to everybody for joining the call and to our employees for their great work and dedication.
With that Robert we'd be happy to take any questions.
Thank you at this time will be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Terry Tillman with true with Securities. Please proceed with your question.
Hey, good afternoon gentlemen.
First I guess, congrats on GAAP earnings and tapping on the role of 50.
Thank you.
So a couple of questions maybe first for you.
We get asked the question a lot about the retail complex in general and E Commerce, and then potentially impact on your business the way I'd like to frame. This question is this.
As if in retail related industries and e-commerce, if more shifting from just trying to sell as much as you can when demand is strong to managing maybe even excess inventory or trying to enhanced service level to the conversations or are they changing in terms of maybe what products you need to lead with and or just the.
Directional dynamics around their budgets.
This just modest adjustments Terry when it comes down to it.
Thank you you obviously you frame the general dynamic in the market well, but at the end of the day, you still don't get away from retailers really wanting to drive.
That loyalty and customer satisfaction so.
Being able to keep the promise.
It's still very very important to again drive that loyalty in and reputation and of course, we're right in the middle of of helping them do that.
Got it and I guess, maybe a follow up for you Eddie is up any more color you could share on the important product cycle around cloud W. Mouse, you know I think you've given some commentary over the quarters in terms of giving us some credit so to speak in terms of where you are in either go lives or just total customer count.
Any more you can share about where you ended at the end of <unk> or how you think about it by the end of the year and then I had a follow up for Dennis.
Yes.
So let's see we're at about 80 customers under under contract just a couple more than that I think I think NAV, but let's use AAV for for a round number still strong demand around the globe are still strong from tier one and strong across industries.
We've mentioned before we've we've.
For Eclipse Snag frankly, the 100000 users of WNS under Manhattan active the Manhattan active Wm subscription so we just.
We continue to be very pleased with that particular product.
That's great to hear and I guess, maybe Dennis for you in terms of it was notable to call out across Opex, but then also the accrual I'd like to double click into that a little bit.
$13 million was incremental this was a new accrual in the third quarter, if I'm not mistaken so otherwise the margin would've been even stronger than it was how do we allocate the $13 million, but some of it up in the cost of revenue or three opex items any more you could share on the $13 million. Thank you.
We've basically spread that up and down the P&L Terry in terms of department structure.
Okay.
And youll see that in the 10-Q, as well, which would probably be publishing tomorrow.
Okay, great and congrats again.
Thank you Terry.
Okay.
Our next question comes from Joe <unk> with Baird. Please proceed with your question.
Great Hi, everyone.
I guess on the 2023 out of luck.
One of the interesting things is that.
<unk> revenues expected to.
See an accelerated pace of decline I guess, we've kind of been talking a lot this year about how good.
New logo interest has been an active W. M.
Are you starting to get the indication from the big installed base that those customers are now ready to move at a more aggressive pace.
If that's true it is.
The potential revenue benefit from that and I understand there's a lot that's uncertain, but is that something that is maybe 2020 for 2025 kind of that timeframe for getting an inflection in growth.
No real change in dynamic there Joe.
Some of the maintenance starts to fall off.
In 2023, and part of that is for deals frankly that we signed in prior years that were coming to a point of go live and that maintenance is starting to starting to tail off in 2023. So.
I appreciate the question.
It is a clever one.
There really is no major change in trajectory of dynamic there.
Okay. Okay.
And then just on the broader approach you took to kind of recalibrating.
The 2023.
Numbers.
It seems like we have.
One hand, your performance and execution, which has been really good and it sounds like really no changes in that and then there's also a macro overlay if where you don't want to get ahead of yourself do you want a bacon the uncertainty that's out there.
How would you kind of characterize one versus the other as you know.
Investors approach.
Manhattan into next year is there any sort of historical precedent, where you would go back in time and say yeah not tougher macro. This is what has been relevant to our business or kind of what.
What's kind of the puts and takes on your ability to execute versus the.
The macro.
Well in the <unk>.
<unk> in the in the three or four of these twists and turns that I've been through in my 20 years.
We have followed a similar similar pattern, we've managed through the uncertainty we've always done that pretty well.
Invested into it.
And in general that will be at strategy, regardless of what happens in 2023 and beyond.
And the balance here is that we feel very positive and optimistic about our future performance and frankly, we've looked as deep into the crystal ball as we possibly can but we still see the <unk>.
Last year's a little foggy when we look deep into it. So that's why we're taking sort of a cautious.
Cautious approach, obviously, we feel great about our balance sheet position going into any turbulent times with cash on the balance sheet zero debt and so forth gives us the flexibility that we need to be able to continue on with that strategy that I alluded to which is focus on our customers.
Focus on our people manage through uncertainty, but invest into it.
And then one quick one if I may I'm, Eddie just your comment on kind of investing into uncertainty.
With the margin outlook kind of being flattish as opposed to getting a bit of improvement next year I imagine. This is part of it any particular areas.
Do you think are opportunities for investment.
Not particularly.
I mean, all across the portfolio frankly.
We've got we've got some great opportunities across the portfolio.
And the areas that we've talked about before in terms of extending expanding our total addressable.
Our total addressable market.
Okay.
Okay. Thank you very much.
Our pleasure Joe Thank you.
Our next question is from Brian Peterson with Raymond James. Please proceed with your question.
Hey, gentlemen, just maybe following up on the margin outlook for next year, Dennis typically or at least over the last few years you guys have got it got.
Got it down in terms of the margins, obviously, you've outperformed that you've executed really well against that you have just curious we saw.
Seeing just more leverage now given that the product investments that you've made or maybe more leverage or updated stance on on hiring I'd just be curious maybe some some qualitative inputs on what went into that.
Yes, I think I think we are.
Currently.
Some leverage opportunity the other the other side of the equation is is we've got such strong demand and we've got to continue to aggressively hire.
So good good good problems to have there Brian .
No understood and Eddie maybe one quick follow up for you just just with your eight years or so active wm customers that you have.
How are those how does.
Look from a land versus expand perspective, I guess I'm trying to understand are you getting in at a near 100% penetration in terms of the DC footprint or is it kind of starting small and you have an expand motion overtime.
The combination a combination Brian .
We're still in our bags, which is very positive we are still at about 50 50 in terms of meaning 50% brand new customers that we've never done business before 50% existing customers converting and then when you look good.
The opportunity to continue to expand our <unk> footprint with both those categorizations of customers.
There is still plenty of opportunity there for sure.
Okay.
Thanks Eddie.
My pleasure, Brian Thank you.
Okay.
Our next question comes from Matt Pfau with William Blair. Please proceed with your question.
Great. Thanks for taking my questions guys wanted to ask on the visibility into 'twenty three revenue guidance. So on the cloud side I would assume that the <unk> you have should give you pretty good visibility into that number but correct me if I'm wrong, there, but then on the services side, how much visibility do you have in that whats the potential.
Variability there, particularly in a weaker macro.
Youre certainly right about the first.
Got pretty good visibility into it.
Cloud revenue based upon a deal.
Deals signed in prior years, and so forth, obviously, we've still got assigned.
So a new deals in 'twenty three both for 'twenty, three revenue and Andi and the eight years.
In terms of services visibility.
It's not.
All contracted work for sure, but we've got visibility into the rollout plans across there.
Portfolio across geographies.
Cross industry verticals.
And.
Is there an opportunity for some of those things some of those projects to slowdown.
I suppose there is but.
When you think about the fact that most of them are backed up by era vocable subscription fees. It does seem like the likelihood that those things will slowdown is lesser number one and no particular sequence number two.
We are always considered mission critical.
Central to business operations. So when you put those two things together.
Yes.
Never say, there isn't any risk, but we feel pretty good about the visibility Matt.
Yeah.
Just wanted to follow up on your comments around point of sale I know that in your conference in May It was a point of emphasis to to make sure. Your customers are aware that youre in that market and.
Yes product newer product there are you starting to see that materialize is that starting to build the pipeline.
It seems not just that event, but all of the efforts that that team, particularly.
World Class marketing organization have put in to drive drive awareness through every avenue that.
Although we can gain certainly seems to be.
Doing the trick in that pipeline is building and again I mentioned in my prepared comments, where you were looking for looking forward to a pretty active Q4 from our point of sale perspective.
Okay, great. Thanks, guys I appreciate it.
Pleasure, Matt Thank you.
Our next question comes from the line of Mark Chapell with loop capital. Please proceed with your question.
Hi, Thank you for taking my questions and nice job on the quarter.
Eddie starting with you.
Based on the strong results.
The guidance on the upbeat commentary it appears that youre not seeing much of a.
Anyway have a slowdown in your business is this the correct way to read this.
Okay.
I think that'll be an accurate way to read it mark but.
Look we're all of US both personally and professionally as I mentioned before I used that expression. We've we've looked as deep into the Crystal ball is we can look and as we look deeper and deeper the glasses little clarity. So we're just Ah.
Playing a little caution to the outlook too.
Okay understood.
I appreciate your earlier comments on the TM product.
It is the early success, you're seeing coming from any particular industry or geography, I think you spoke earlier about maybe a 50 50 breakdown between new and existing customers, but what about that industry or geographies are you seeing any particular strength.
No.
Yeah, no, it's pretty balanced mark actually as I mentioned, we get.
We're live on three continents, we got the fourth and in progress. So it gives you a little sense of the geographic dispersion Europe happens to be pretty strong I'm, not saying, it's a <unk>.
Liar, but had some strong performance going on in Europe and across the industry.
We've got some good penetration penetration there too so good start.
About five five quarters and from the release of the new product, but you will feel pretty good about where we are for sure.
Great. Thank you I'll hand, it off to somebody else.
Okay terrific Mark Thank you.
My last question comes from the line of Blair Abernathy with Rosenblatt Securities. Please proceed with your question.
Thanks, and nice performance guys.
I just wanted to maybe get a little bit more color on the active WNS 80 customers.
As some of the earliest customers become more seasoned.
What kind of it was sort of the dynamic youre seeing in terms of pull through of other products.
Yes, I mean, we.
We're certainly seeing nice attach rate for transportation management. That's for that's for sure. We continue to see expanded usage of WNS inside of that inside of that footprint.
Labor management is a great and so the obvious add on into that into that portfolio as well and then geographic expansion where.
One of our customers where customers might well be starting in one geography and expanding out across the world, So pretty nice pretty nice footprint.
<unk> expansion across the board blood frankly Blair.
Year to date, we have 30% 30% of our.
Year to date bookings as cross sell upsell, that's up from 20% last year.
Same period that's it.
Across all products, but it is certainly a big part of it.
Okay excellent excellent.
And then just a quick one for you.
As you kind of look at your 2023 margins in this.
Declining maintenance.
Revenue as the business transitions I mean is that how much of a headwind is that from a from a margin perspective, and as you kind of look out to more of a three to five year timeframe.
Does that margin start to climb again.
Well, if you normalized margins for license and CSS, it's about 180 bps.
Of upside.
From a normalized perspective.
Margin models pretty stout.
Okay, Okay great.
We have reached the end of the question and answer session I would now like to turn the call back over to Eddie Capel for closing comments.
Thank you Robert and thanks, everybody for joining the joining our call today as you can tell we're excited about.
Where we are and even more excited about our future and look forward to updating you on that again in about 90 days or so.
Obviously, we want to speak to you between now and then so I know, it's a little early but happy holidays to you all thanks Bye bye.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.