Q4 2022 Manhattan Associates Inc Earnings Call
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Thank you.
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Good afternoon, My name is Robert and I'll be your conference facilitator today at this time I would like to welcome everyone to Manhattan Associates fourth 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.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad. If he would like to withdraw your question. Please press Star then the number two on your telephone keypad.
As a reminder, ladies and gentlemen, this call is being recorded today February 2nd.
I would now like to introduce your host Mr. Michael Bauer head of Investor Relations at Manhattan Associates. Mr. Barry You May begin your conference.
Thank you Rob and good afternoon, everyone welcome to Manhattan Associates 2022 fourth 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.
South of Manhattan Associates.
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 reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those exits.
Particularly our annual report on Form 10-K for fiscal year 2021, and the risk factor discussion in that report as well as any risk factor updates we provide in our subsequent Form 10-Qs. We note in particular that turbulent global macro environment could impact our performance and cause actual results to differ materially from our projections.
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 I don't know.
Right.
N H dot com now I will turn the call over day, Okay. Thanks, Mike and good afternoon, everyone and thank you for joining us as we review our fourth quarter and full year 2022 results as well as our outlook for 2023.
So 2022 was a remarkable year for Manhattan, setting all time records in total revenue our.
Operating profit cash collections and earnings per share.
And to drive future growth and innovation, we also invested record amounts in our people and in R&D and.
In 2022, we spent over $110 million on research and development, which is up 15% from the previous year. We also increased our total head count by 16% in response to the high demand for our solutions and services.
And we're confident that these investments will contribute to our already high levels of customer satisfaction and extend our position as the leading innovator in core supply chain execution, Omnichannel solutions and retail point of sale commerce.
And given the size of our opportunity in the long term favorable business momentum we plan to continue these investments, including hiring between four and 600 new associates in 2023.
Which we're guiding to be our fourth record revenue year since introducing our goal to become a cloud first company five years ago.
Now, while we remain appropriately cautious regarding the global economy demand for our solutions remains robust and we are optimistic about our long term market opportunity now recall that solutions are mission critical and they are key components to our customers' success.
And Additionally, we're entering 2023 with pretty good visibility several growth drivers, including the acquisition of new customers. The conversion of our on premise customers to the cloud.
Cross selling a unified product portfolio into our customer base.
Specifically pivoting to <unk>.
Quarterly results Q4 was a record quarter that exceeded our expectations.
Revenue increased 16% as a reported $198 million and highlighted by 49% growth implied 22% growth in services and double digit revenue growth across all of our geographies.
And these strong results drove our top line outperformance and solid earnings leverage in the quarter with adjusted earnings per diluted share increasing 69% to 81.
Now <unk>, the leading indicator of that growth increased 50% to $1 1 billion at.
At the end of 2022, and importantly customer satisfaction levels are high win rates remain at 75% plus and demand for our cloud solutions continues to be pretty solid across our product portfolio.
From a vertical perspective retail manufacturing and wholesale continue to drive more than 80% of our bookings in the quarter.
<unk> solutions in the sub verticals are pretty diverse for example in the quarter cloud deals. One include a global cosmetics manufacturer a grocery retailer a diversified automotive company a manufacturer of home goods food wholesaler and an e-commerce retailer as well as numerous others.
And this contributed to a healthy mix of bookings across sub verticals for the full year.
And additionally, aided by the clear benefit of resilient modern supply chains over 40% of our bookings were generated from new logos and over 30% from cross sell opportunities in 2022.
Importantly, our pipeline continues to be strong with solid demand across our product suites net new potential customers represent about 35% of that demand.
As of year end, we had converted less than 10% over on premise customers to the cloud.
Now turning to the product front, we are coming off a very exciting national retail Federation conference in New York customers and prospects. We're back in force this year and we have some exciting product innovations to share with them. Those include the work we're doing around fully enabling RFID with Manhattan active still.
Our solution, we've added native support for RFID directly into checkouts and returns inventory management and store fulfillment functions. So that retailers can make more accurate promises increased conversion rates and maximize inventory exposure for selling.
The value of RFID in stores has proven to be quite significant.
Digital experience becomes an integral part of bricks and mortar shopping it's it's vital that our customers know how much of a particular product that they have.
Where each specific unit is located inside of the store.
And what's more RFID allows our customers to deliver these improved experiences and to do it.
With significantly less labor.
And speaking of that store technology. We just finished a very successful retail peak season, and specifically with that point of sale application a number of our customers are showing very positive results from the rollout of our omni cart capabilities thats the ability to sell items from alternate locations in a single.
And only a unified commerce solution with a built in point of sale and order management capabilities can deliver a seamless.
On the court process.
And regarding implementations, we've seen some really very positive operational results tied to the first wave of deployments of Manhattan active warehouse management and I thought I'd share a couple of anecdotes on the positive operational impact from the deployment of our cloud native WNS.
I've spoken before about employee engagement one of the WNS features which is unique to our application and one of our early adopter Manhattan active Wm customers now activated all the features of employee engagement, including enabling their associates to complete in game, a slight challenge isn't accumulate.
And these points are redeemable for a variety of tangible items and a digital incentive store and the results of this customer is an incremental 5% productivity improvement in the DC on top of their traditional engineered labor standards and incentive program.
And staying on productivity enhancements for a moment one of our high volume apparel customers in Brazil is showing a double digit throughput increase and their distribution center after implementing Manhattan active wm.
Even though the facility was already outfitted with pretty extensive automation workflow optimization inside of Manhattan active Wm is helping them extract.
Record levels of productivity from the material handling automation.
Now even in a less automated DC Manhattan active Wm really shines there to one of our large wholesale drug customers is reporting a picking productivity improvement in excess of 30% and this improvement is attributable to the latest pick path optimization algorithms.
<unk> to Manhattan active Wm.
And before I hand off to Dennis.
I want to take this opportunity to briefly recognize and thank each and every member of the Manhattan Global team.
And Manhattan is committed to creating an inclusive culture, where our team members advanced <unk> contribute to our company wide goals feel valued and engage with the communities in which they live and work and in 2022.
Clearly went above and beyond to deliver a remarkable year with remarkable results for our valued customers and I am confident in the future success of this company largely because of this team.
So that includes our concludes excuse me 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, Eddie as Andy highlighted in 2022, we set all time records in RP.
Total revenue operating profit cash collections and earnings per share.
Gratulation to our team members around the globe for great execution.
Overall for the quarter and the year, we delivered a strong balanced financial performance on top line growth and operating margin with both results comparing favorably to the rule of 40 and if our revenue growth is normalized for our cloud transition.
Excluding license and maintenance attrition both results exceed the role of 50, we continued to deliver strong metrics across revenue growth profitability and cash flow.
I'll start with recapping, our financial performance for the quarter.
And year.
All growth rates are on a year over year basis, unless otherwise stated.
Additionally, we are also providing constant currency growth to demonstrate apples to apples comparisons unless otherwise stated constant currency, we will compare our results as if rates were unchanged from the year ago period.
Yeah.
Q4, total revenue was $198 million up 16% as reported and 19% excluding FX.
Full year revenue totaled 767 million also up 16% and 18% removing FX excluding.
Excluding license and maintenance revenue, which removes the revenue compression by our cloud transition Q4 revenue growth was 29% and full year, 25%.
Q4 cloud revenue totaled $52 million up 49% with full year revenue totaling $176 million.
Up 44%.
Yeah.
We closed out 2022 with RP O of $1 $1 billion on the round growing 50%. This was at the high end of our guidance.
FX rates remain unchanged from the year ago period, RPI growth would be 54%.
And if rates remained unchanged from September 30 levels sequential <unk> growth would be 6%.
As of December 31 over 97% of our RPI represents true cloud native subscriptions.
Q4 services revenue increased 22% to $100 million and full year services revenue increased 18% to $394 million.
Both were records as cloud sales continue to fuel services growth globally.
Shifting to our earnings leverage our Q4, adjusted operating income totaled $60 million with an operating margin of 32% 32% to.
740 basis point increase was driven by revenue growth.
Full year adjusted operating margin was 27, 6% up 80 basis points on revenue growth.
Our Q4 GAAP operating income was $45 million with a 22, 6% operating margin with full year GAAP operating income totaling $153 million with a 20% operating margin.
Our Q4 earnings per share increased 69% to 81.
Note. Our EPS includes <unk> <unk> of tax benefit associated with expiring tax statutes, lowering our effective tax rate in the quarter to 16%.
This resulted in full year EPS of $2 76.
Which was up 24% exceeding guidance.
Q4, operating cash flow increased 38% to $55 million as Q4, adjusted EBITDA margin was 31% and free cash flow margin was 26, 6%.
Our full year operating cash flow was $180 million adjusted EBITDA margin was 28, 5% and free cash flow margin was 22, 6%.
Remember these figures include $58 million in cash taxes paid which is roughly doubling the amount of cash taxes paid over last year.
For more information on the 26 million dollar incremental cash taxes paid paid associated with the U S tax cuts and jobs Act. Please refer to item eight in our earnings supplemental information schedules.
Turning to the balance sheet.
Deferred revenue increased 36% year over year, and 23% sequentially to $209 million.
We closed 2022 with $225 million in cash and zero debt.
For the year, we invested $175 million in share buybacks, including $25 million in Q4.
Also our board has approved a replenishment of our $75 million share repurchase authority.
Now moving to guidance.
As consistently mentioned our financial objective is to deliver sustainable double digit topline growth and top quartile operating margins benchmarked against enterprise SaaS comps.
As Eddie mentioned, we will continue to invest with a balanced approach to growth and profitability.
We are raising the midpoint of the preliminary 2023 revenue operating margin and EPS guidance that we provided last quarter. We are also reiterating our 2023 RPM guidepost guidepost mid point of 135 billion.
Consistent with our recent earnings releases, our guide posts can be found in today's earnings release supplemental schedules as.
As noted on prior earnings calls, we will be updating our outlook on an annual basis. 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.
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Okay.
For full year 2023, we expect total revenue of $820 million to $833 million with a $826 $5 million midpoint up from our prior midpoint of $810 million, excluding license and maintenance attrition. This represents <unk>.
8% growth all in our target is 8%.
First half second half total revenue splits are expected to be about 50 50 for.
For Q1, we expect total revenue of $198 million to $202 million, which at the midpoint represents 21% growth ex license and maintenance attrition and 12% growth all in.
We continue to track ahead of our original margin expectations and reflective of our higher revenue outlook.
We are increasing our 2023 adjusted operating margin range to $25.
5% to 26, 5% with a midpoint of 26% up from our prior guidance of 25, 5%.
Included in this range is a 260 basis point headwind from the $35 million reduction in maintenance and license revenue from our transition to cloud.
At the midpoint operating margin on a quarterly basis is expected to be roughly for.
For Q1, 26% Q2, 26, 8% Q3, 27%.
And accounting for retail peak seasonality 24, 3% in Q4.
Those are pretty exact targets.
This results in a full year adjusted EPS range of $2 61.
The $2 75.
The $2 68 midpoint.
Up from our prior $2 55 midpoint outlook for GAAP EPS, our guidance range is $1 81 to $1 95.
Note if the 2022 below the line income taxes and other income were normalized at 2022 levels 2023, adjusted EPS would be 13 cents higher and GAAP EPS will be 14 since higher.
For Q1, we expect adjusted EPS of <unk> 64 to 66.
And GAAP EPS of <unk> 46 to 48.
For Q2 through Q4, we expect GAAP EPS to be about <unk> <unk> lower than adjusted EPS per quarter, which accounts for our investment and equity based compensation.
Here are some additional details on our 2023 outlook.
For full year 2023, we are increasing our cloud revenue range to 232.
$236 million, representing 33% growth at the midpoint and assumes $53 $8 million in Q1 with about a 3 million dollar sequential increase per quarter throughout the year.
For services revenue, we are increasing our forecast of $428 million to $437 million.
Representing 10% growth at the midpoint.
On a quarterly basis, we expect Q1 services revenue of roughly $103 million.
Q2, $111 million Q3, $114 million and accounting for retail peak seasonality $106 million in Q4.
On attrition to cloud, we expect maintenance and license to represent about an eight point headwind and total revenue growth in 2023.
For maintenance, we expect a range of $122 million to $124 million or a 14% decline at the midpoint.
On a quarterly basis, we expect Q1 to be $33 million Q2, $32 million Q3 $30 million in Q4 $28 million.
We expect license revenue to be roughly $9 million or 1% of 2023 total revenue.
For Q1, we expect $3 5 million of license revenue.
$2 5 million in Q2, and $1 $5 million in both Q3 and Q4.
And for hardware, we anticipate approximately $7 million in revenue per quarter.
For consolidated subscription maintenance and services margin, we are targeting about 54% for the full year on a quarterly basis Q1 will be about 53% Q2, and Q3 is expected to be 54, 5% and accounting for seasonality Q4 is expected to be.
About 53, 5%.
We expect our effective tax rate to be 21, 7% and our diluted share count to be 63 million shares which assumes no buyback activity.
In summary, 2022 was a great year, and we expect 2023 to be another year of balanced growth across revenue profitability and cash flow. Thank you and back to Eddie for some closing remarks.
Terrific. Thanks Dennis.
Like 2022 was a very good year for Manhattan, and while we remain appropriately cautious as I mentioned on the volatile macro conditions out there. We're entering 2023 with solid business momentum and we're very excited about the many opportunities that lie ahead.
So just to recap at strategic demand for our solutions is solid and it seems to be resilient.
Our global teams are executing very well and we're continuing to invest in our business to deliver leading innovation to help our customers with a digital and supply chain transformation journeys.
In closing again, thank you to all of our employees across the globe for a fantastic 2022 is your dedication and commitment to our growing customer base that continues to be one of Manhattans key differentiators.
And Robert with that we're now ready to take any questions that might be out there.
Thank you at this time, we will be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tailwind to Kate your line is in the question queue.
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.
Alright first question comes from Terry Tillman with <unk> Securities. Please proceed with your question.
Yes, Hey, Eddie or Dennis and Mike Congratulations on the results I'm going to do my standard annoying preamble and then I'll get to my questions first.
I love kind of the different examples of customers that helps a lot in terms of understanding how the business has evolved so I hope you keep doing that Dennis modeling basically we don't really have anything today, you basically told US every line item across all four quarters. So thanks for making that easy.
Now finally to my questions maybe the first question for you.
It's just given what you've done with the platform the cloud products and just nowadays.
The business models are a lot different than you have omnichannel when you bring on a new logo and you've been bringing on more than you had in the past what is the new logo looked like versus three or five years ago in terms of the size and scope of that initial deal or project and then I had a follow up for you in that Dennis.
Yes, great question Terry So it is it tends to be a little bit a little bit different.
In the old World.
Of license revenue.
It was more typical for customers to buy multiple products at the same time.
In a subscription based world it seems to be more popular or not.
Not exclusively this way, but more popular frankly to buy one product at a time with follow on upsell later and you can kind of see that in the in the results with 30% of our revenue coming from come from coming from upsell.
I think is also indicative of the unified platform that we have in the bridge from one solution and the other is frankly not very long.
Yes.
Okay, and maybe my follow up for you on again.
Had a quick.
You actually didn't mention in your prepared remarks visibility for solid or strong visibility I forgot exactly the.
The description there.
What I'm curious about is you do have the installed base and we're going to see this maintenance start to kind of decline maybe more meaningfully.
So that's one driver and then the cross selling how's the visibility changing or improving as one much more notable than the other in terms of driving this visibility.
You mean customer base versus new logos.
Dell installed base now starting their journey versus then cross selling and like you had just said.
And then there's repetition to buy more.
Yes, I don't think I don't think there is a.
There's a huge difference in visibility or frankly confidence or visibility.
Only because we're pretty close to our customers Terry.
Whether it be an on premise to cloud conversion or whether it be an expansion of capability.
The customer base, we're pretty close.
We've got long term relationships with these guys.
Generally this year there the roadmap with the so no no big deferred.
The difference in visibility across the two.
Okay, and then finally for you Dennis in terms of the free cash flow margin.
Maybe you could either answer give a perspective on how to think about free cash flow margin for the year or just incremental headwinds on that 56 million plus on cash taxes in 'twenty, two and how that looks in 'twenty great. Thank you.
Yes, so on the free cash flow, it's going to follow up a point or two.
Relative to our operating margin so.
I would probably handicap it as two to three points.
Difference between operating margin.
And then.
I am sorry, Terry what was your other well.
Im hogging up this call I should just stop it and then it was related to that and the impact from the cash taxes like does it take another step up or are we starting to kind of we're going to get past the worst of that.
More pass or worst of that so essentially where we are in a mode of about the same amount of taxes on an annual basis now.
Okay. Thank you.
Thank you Sir.
Our next question is from Joe <unk> with Baird. Please proceed with your question.
Great Hi, Brian .
I wanted to go back.
I wanted to go back to.
Yes.
And one thing that really stood out to me was just all the attention on the <unk>.
Laura.
Speaking of folks about.
Order management and also star related solutions.
Yes, I would imagine WNS is still going to be the primary driver of bookings.
Sure Budd.
Do you anticipate a bit of an uptick in interest as it relates to the inventory.
Well, we certainly hope so Joe.
I don't know that theres going to be a massive step up frankly as you know order management is sort of it's sort of number two on the pecking order of salute.
Solutions solutions for us.
Certainly is a lot of interest.
We clearly continue to make significant investments in that solution.
Particularly the integration with the bricks and mortar storage solutions.
No question. There is there is significant interest there.
And.
We're hoping for continued growth in that momentum and that in that particular area.
Okay great.
Yes, I think at one point in time.
Got it thanks and Mike.
Great.
The installed base.
There is not any sort of timetable yet customers can move as they are ready.
I want to say maybe.
Seven years was was contemplated.
Any views on that.
If it's less than 10% of the base today, maybe how long until most of your installed base has a cloud solution from Manhattan.
Yes, it's still still feel the same way well okay.
Suddenly different questions there.
Joe.
I definitely.
When I look at my Crystal Ball I think most of our existing customers will migrate from on premise to the cloud over the next six to seven years, there's always a few laggards and so forth, but the bulk of our customers will transition from on premise to the cloud over.
Over the next six or seven years.
The slides that the second part of the question is when will our customer base owns something in the cloud from US I remember, where our client first company is so as we cross sell and upsell into the into our customer base. It is quite likely that in on just hypothetically an on premise customer.
For WNS.
Well by our clients Tms solution at cloud point of sale solution or a cloud <unk> solution so that.
That would mean that that time horizon would be shorter than six or seven years.
Okay, Yes that makes sense and then one quick one if I can squeeze it in just.
Yes.
Any thoughts.
Im just RPI.
Quarter by quarter.
Expect seasonality or I.
I guess the macros in that top of our customers might be budget more on a quarterly basis, just any way to think about kind of the cadence of RPI bookings throughout 2023.
Yes.
Look we suspect we've always said.
<unk> bookings.
Likely we will suffer from a little bit of Lumpiness, just like just like license revenue did back in the back in the day.
We haven't seen a ton of seasonality.
When it comes to <unk> bookings.
On it before but frankly these are big strategic purchases and so forth.
Frankly, our customers need to they want to get go and whenever they want to get going in.
So there isn't generally a particular slowdown in any particular quarter again very strategic decisions.
Great. Thank you very much.
Thank you Joe.
Our next question is from Brian Peterson with Raymond James. Please proceed with your question.
Hi, Thanks for taking the question. This is John on for Brian I wanted to first touch on cross sell at a you referenced really good cross sell numbers here in 2022, I think you said, 30%, but im curious if youre seeing a change in cadence with customers coming back for additional products, maybe any geographies you'd call out where you're seeing faster cross sell any color there would be great.
Yes.
Particularly John to be perfectly honest the cross sell across geographies.
Pretty consistent or has been pretty consistent kind of year over year and is pretty consistent across that 30% in 2022.
Number number one.
<unk>.
More more recently.
We've seen a little bit of an uptick in cross sell meaning 2022 over over prior years.
I think again part of that is as we move and have moved into a cloud first environment, we've seen customers.
Bite off smaller pieces of the product portfolio upfront and then but move more quickly into a larger a larger portfolio.
Okay.
Okay. That's great color there. Thank you very much and then also I wanted to touch on the Tms product I seem to recall in the past you've called out strength outside of the U S. I'm curious on the pipes progressing though within the U S and maybe you can give us.
Insight into how the customer conversations are going there. Thank you.
Pretty good I mean honestly the only reason.
The reason that we called out Tms growth outside of the Americas is historically that has not been the strongest stronger strongest market for us.
Designed by design.
Tended not to.
We tended not to offer Tms outside of the Americas and a very strong way that's picked up over the last few years. So we were certainly highlighting some of the successes, particularly in Europe , particularly in Latin America, particularly in Australia, Australia, New Zealand, but.
The product is.
Doing very well frankly, and we've talked a little bit about this before the unification of Manhattan active Wm with Manhattan active TM.
Really jumpstarting, some pretty interesting conversations about.
Yes.
About half of that more recent Manhattan active transportation customers, our Manhattan active wm customers, so really starting to benefit from that unification and we see that as something that will continue on into the future.
Well, thank you very much and congrats on the great quarter.
John I appreciate it.
Our next question is from Matt Pfau with William Blair. Please proceed with your question.
Great. Thanks for taking my questions guys and great quarter.
I wanted to ask in terms of the new customers Youre, signing and it seemed like this year was a particularly strong year for net new customers that you brought on two to Manhattan is there any particular products that you're landing the majority of those with <unk>.
And where are those customers coming from typically thanks.
Yes.
The Great news there, Matt is not particularly it's across the product portfolio. So that's that's encouraging number one and number two.
It is across the sub vertical so I listed some of the.
The principal sub sub verticals and the product portfolio, and it's a pretty nice spread there across new customers versus versus existing snack.
If you drill in a little bit a little bit further.
On the distribution side of the house you certainly see verticals that we have maybe not been quite as strong in over the over the years kind of bubbling to the surface, particularly CPG industrial manufacturing and so forth.
I need to.
Reenergize and modernize their supply chains, and particularly with a focus on kind of direct to consumer or direct to consumer consumer ready.
Similar things are happening in the.
<unk> space as well as you see customer companies.
Additionally, we're not selling direct to consumer now either selling direct to consumer or at least.
Being direct consumer ready as they ship into into retail retail channels. So those would be those would be a couple of spots, where we've seen some nice growth, which really speaks to not not.
Not just total addressable market growth, but certainly verticals that we've not typically being a strong and which is very nice.
Great and then just to follow up on the margin operating margin guidance and commentary so.
So it seems like ex the impact of the cloud transition, which is accelerating in 'twenty three.
You would actually show year over year margin improvement in 'twenty three is that correct and then.
What else should we think about from an expense perspective and in terms of wage inflation and then other investment areas that you are making particularly with the hundreds of people that you plan to add next year or this year. Thanks.
Yes definitely definitely.
Look we guided we guided across all key metrics above.
This year's performance.
2022 performance.
From that perspective.
We would expect.
Operating margin.
The increase.
Through through the year et cetera, and.
Having a little Brian cramping in terms of where we are the people generally where the investments in people will be.
For the most part those will be customer facing.
Our folks so largely in our professional services organization and in our customer service organization now we do we do plan to.
We are actively investing more in research and development. This year, so youll see some some hedge move into there.
Sales and marketing is also another area that we'll continue to add add hedge as we've talked about before we it's important for us to keep driving awareness for our solutions for which we are not quite as well known that's important to us because we think we've got a great opportunity there.
As always we will be selective.
About adding team members to our sales organization, we've got a very effective very efficient sales organization, but as the customer base grows can't coverage in an overall coverage is as important to us. So again back to summarize homeless people, principally customer facing but sales and marketing and in R&D as well.
Okay.
Got it.
For taking my questions I appreciate it.
Okay. Thank you Matt.
Our next question is from Mark Chapell with loop capital markets. Please proceed with your question.
Hi, Thank you for taking my questions and.
Nice job on the quarter.
Thank you Mark.
Youre welcome.
With respect to the macro environment, there was little very little way and commentary in your prepared remarks on that front.
Obviously based on the strong results and guide.
It appears you're encountering very few headwinds I was wondering if you just provide some additional commentary on what youre seeing from a macro perspective.
Look there's definitely trough out here there is no question about that market.
Each of US wake up every morning can see feel and.
See the chop.
But I mean, when we look at the demand for our solutions when we look at that pipeline.
We believe driven by the investments in innovation that we're making the critical nature of our solutions to both the resilience and the growth of our target markets.
We obviously feel pretty good about where we are and we've got pretty good pretty good visibility.
And.
So that is.
<unk> is.
Feels to us that forward motion feels pretty good but it is not without its headwinds for sure not without its headwinds.
Okay, Great and then just shifting gears to your point of point of sale solution. I think it was last last year's user conference you expressed that achieving like 10 to 12 globalized.
Significant model or you felt pretty significant milestone for the company.
Got it very easy for the next sale I was wondering just give us a little bit of an update on where you stand on that front.
Yes, so we're making good progress.
Honestly, you caught me a little colder it should know all those numbers specifically were not quite at that number but.
Honestly, you caught me a little colder it should know all those numbers specifically were not quite at that number but.
Where we are.
Less than a handful away from our.
Our initial target I mean, we're not listen that obviously the finish line is not 10 or 12 installations, but we got this this is the first the first lap for US is sort of getting there we're making good progress. We've got a couple of go lives I think coming up here in Q1 early to Q.
Bye.
Certainly by the fall of this year, we will have.
We will have Randy Dave.
Met that first the first milestone.
From a from an overall momentum of point of sale and store solutions against it feels pretty good we came off of.
Very enthusiastic National retail Federation conference, where were some of the other retailers are we had a pretty big presence from our point of sale perspective actually we were fortunate enough to have.
Two two components, we had our own booth. We were also the only third party vendor in the Google Cloud Booth as well demonstrating point of sale and then we saw a lot of interest coming out of that.
Yeah.
Okay, Great and then on the point of sale again, I think fiscal <unk> was an important new capability that you're building into the product.
Yes, mainly to go after the international customers, maybe just provide us a little bit of an update there yes.
Yes, sure well actually.
Youre spot on.
In addition to international customers.
Often times when you sell point of sale, even to kind of what is a domestically headquartered company. They have operations overseas. They want a single solution. So <unk> is important for them as well.
We're knocking them down frankly, we're knocking down the countries.
There is a process there was a technical integrate into the design process with technical integration process and then there is a certification process with each and every government agency in the individual companies are countries.
To be honest with you you can then we go with a certain pace because you're dealing with those those legislative legislative bodies, but we're making good progress.
Principal focus.
Wave one has been on Europe for us.
But we're moving to both APAC and to Latin America, just as fast as fast as we can and knocking them off is fortunately as fast as that customers need them.
Great. Thank you that's all for me.
Thank you Mark.
Our final question is from Blair Abernethy with Rosenblatt Securities. Please proceed with your question.
Thanks for taking the question and nice quarter guys.
Just following on to point of sale.
Product lines I guess.
Curious if you could give us a little more color on.
On the competitive landscape as you're bidding for these.
These new projects.
What are you typically displacing or what are you seeing in place that.
That you are able to.
To push aside with your solution.
Oh, well pushed aside but yes, I mean look there's a lot of.
The legacy if you want to call it that competition out there because this is obviously a point of sale in general is not a new space have been solutions available for literally 100 years.
There, but our.
Our real competitive differentiation is with an omnichannel solution.
We're not just providing.
Our cash and carry cash register centric solution, obviously, we've seen over the years the point of sale industry.
Kind of move from being a hardware centric industry to now a software based solution with a pretty commoditized hardware, whether it be tablet or.
For our desktop desktop Pcs.
The disposition or the.
The.
Transition is around both hardware and.
And software.
Again in any any solution, where there is a level of personalization and consumer touch involves that's where we were really able to able to shine.
Okay.
Okay great.
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The macro environment is.
Is the retail I'm just wondering of your key verticals is there anyone you would call out to say Hey, this is a little bit squishy here than some of the others.
No I don't think so Blair.
Again, we're all reading frankly, the same articles on watching the same news feeds.
There's a little bit of Squishing us switching it's everywhere.
But.
A function of that in order to compete.
Then you've got to be closer to the customer you've got to.
You've got to be able to provide or add customers have to provide excellent service maximum utilization of the biggest piece of working capital. They have which is the inventory on hand, and bringing those those two things together customer demand and available available inventory. So.
It's.
We're as you know providing mission critical systems to act at.
Customers.
Frankly, there's winners and losers across the across the customer base, but the fortunate thing is.
There were much more diverse today frankly than we were maybe 10.
Or or 12 years 12 years ago, and that's that's helpful to us.
Okay. That's great. Thanks for the extra color.
It was simpler.
We have reached the end of the question and answer session I'd now like to turn the call over to Enrique for closing comments very good. Thank you Robert will again.
As always we appreciate you taking the time to join US This afternoon, particularly since it's our year end earnings call. We're very pleased with the 22 results. We appreciate your support throughout the year and we're excited about.
The path ahead, so we'll look forward to talking to everybody in about 90 days or so thanks a lot.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.