Q1 2023 Manhattan Associates Inc. Earnings Call
[music].
Good afternoon, My name is Robert and I'll be your conference facilitator today.
At this time I'd like to welcome everyone to the Manhattan Associates first quarter earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer period, if you'd like to ask a question. During this time simply press star one on your telephone keypad, if you'd like to withdraw your question simply press star two on your telephone keypad as a reminder, ladies and.
This call's being recorded today April 25th I would now like to introduce your host Mr. Michael Bauer head of Investor Relations, Evan Manhattan Associates, Mr. Barry You May begin your conference.
Great. Thank you Robert and good afternoon, everyone. Welcome to Manhattan Associates 2023 first quarter earnings call I will review, our cautionary language and then turn the call over to Eddie Capel, our CEO . During this call, including the question and answer session. We may make forward looking statements regarding future events or the future financial performance of Manhattan Associates.
You are cautioned that these forward looking statements involve risks and uncertainties are not guarantees of future performance actual results may differ materially from the projections contained in our forward looking statements I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections.
Particularly our annual report on Form 10-K for fiscal year 2022, and the risk factor discussion in that report as well as any risk factor updates we provide in our subsequent Form 10-Qs. We note in particular, the turbulent global macro environment could impact outperformance and 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.
Find reconciliation schedules in our form 8-K, we submitted to the SEC earlier today and on our website at end and each dot com now I will turn the call over to Ed.
Thanks, Mike and good afternoon, everybody and thank you for joining us as we review our first quarter results and discuss our updated full year 2023 outlook.
Manhattan Associates is off to a strong start in 2023 reporting record results.
Q1, total revenue was $221 million up 24% as reported and 33% if normalized for a cloud transition earnings per share was <unk> 80, <unk> also up 33%.
Both the top and bottom line.
<unk> exceeded our expectations.
Demand is strong customer satisfaction is high and growing investment in research and development is positioning Manhattan as the leading innovator in supply chain execution, Omnichannel solutions and retail point of sale.
These favorable characteristics contributed to Q1 <unk> eighth.
Consecutive record revenue quarter highlighted by year over year, 53% growth in cloud revenue, 29% growth in services revenue and 20% revenue growth across all our geographies and these strong results drove our top line outperformance.
And solid earnings leverage.
R. P O the leading indicator of that growth increased 42% to $1 2 billion over Q1 2022.
As demand for our mission critical cloud solutions continues to be strong and resilient across our product portfolio.
From a vertical perspective retail manufacturing and wholesale continue to derive more than 80% of our bookings for the quarter.
And across our solutions. So some verticals are nicely diversified for example in the quarter client deals one include a discount retailer.
Health solutions company, a grocery retailer and industrial manufacturer of specialty retailer of automotive parts and a fashion brand as well as a number of others.
Win rates in the quarter were about 75% with 25% of new client bookings being generated from net new logos.
Additionally, whilst the mix of bookings will vary on a quarterly basis, we had notable cross sell strengths in the quarter.
And as discussed in prior calls Manhattan's cloud Native platform platform makes unifying mission critical commerce and supply chain systems, a real option versus simply an aspiration.
For our customers. This could result in reduced complexity increased revenue and improved profitability and from Manhattan. It's a natural catalyst to extend our best of breed product footprint within our existing customer base and this differentiation and provides Manhattan active solutions with another clear.
Advantage over our competition.
Our strong product activity continues to drive our services pipeline and growth.
Accordingly, our professional services team continues to perform very well for our customers and completed well over 100 go lives in the quarter.
Our solution pipeline remains robust with encouraging demands across our product suites with new potential customers, representing about 35% of our total pipeline.
While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals.
This includes strategic investments in industry, leading innovation further enablement of customer success and expanding our addressable market.
From a hiring standpoint, we continue to anticipate adding roughly four to 500, new employees. This year and have already welcomed over 150, new employees to the Manhattan family just in Q1 alone.
Now turning to the product front each year a roundabout at this time, we participate in a definitive vendor landscape subset of definitive landscape studies for WNS, Tms and <unk> applications for <unk> and Tms Gartner published publishes an annual magic.
Quadrant report and for O M. S. Forrester publishes their Omnichannel wave report every other year.
While the results of the WNS Magic quadrant won't be released until early next month, we're hopeful to make it 15 consecutive times as a definitive the definitive leader for WNS in this report and for Tms, though I'm happy to share for the.
Fifth consecutive year.
Our fifth consecutive time actually we've been named a leader in the Tms Magic quadrant and that commitment to high levels of investment in innovation and Tms is born in both that strong showing in the MQ and strong levels of project activity across four continents.
Now the Forrester Omnichannel O M. S wave was published this month and for the second consecutive time Manhattan Associates as the only leader in the wave.
Having a single leaguer leader across consecutive waves given it's the report when it comes out every two years is highly unusual and it reflects our technical strength and unmatched functionality that has been generated for a mass 18 years of strong investment in this critical solution.
And as the Forrester and analysis shows no vendor really comes close to matching at depth and breadth of capability across customer service inventory availability real time order promising fulfillment optimization and in store execution.
We deliver each of <unk> and <unk> on our industry, leading and unified Manhattan active platform, which is a cloud native application architecture and development platform.
And Manhattan active Wm continues its strong performance measured in terms of new wins and successful customer adoption and go lives.
Now with over 100, Manhattan active Wm customers. We continue our strong track record of being selected to run the largest and most sophisticated supply chains and.
And we also continue to strengthen our diversity of industry and geographic coverage.
Shifting gears, just a little bit to our Omnichannel solutions. We're happy to report that we took another very significant customer alive with our point of sale solution. This quarter and in addition to delivering <unk> native point of sale across their store fleet. We also executed a three channel order management go live.
<unk> <unk> is really unique in its ability to simultaneously optimize retail wholesale and e-commerce orders and this combined with at point of sale that gives us the ability to help this particular customer deliver omnichannel operational excellence and to provide our technology template.
For a number of other significant specialty apparel brands within their group.
And our momentum this year with thrilled to have a number of point of sale customers presenting on the value they're deriving from the rollout of that.
Omni channel point of sale.
Now speaking of momentum annual user conference, which is coming up here in a month or so we'll be in Scottsdale, Arizona, one of our favorite venues and this year's theme is a moving life and commerce forward and we our customers and our partners will bring that seem to life in many.
Creative and informative ways and we're excited we're excited to have that customer and a partner community come together with so many critical supply chain Commerce commerce comment topics to discuss at this time.
We will also be demonstrating the unique advantages that we deliver when we assembled multiple Manhattan active.
Active applications together, the Manhattan active architecture empowers, our customers and our partners to leverage their creativity and technical prowess to start with our market, leading application functionality and to extend it to do to drive even more positive change for their businesses and their customers.
And finally, we're very excited about the advanced work that we're doing determining how to best take advantage and leverage modern natural language models like chat GPT and bar another topic that we'll be presenting on and discussing in detail up momentum.
So that concludes my business update Dennis is going to provide you with an update on our financial performance and outlook for the rest of the year and then I'll close our prepared remarks with a brief summary, before we move to Q&A. So Dennis.
Thanks Eddie.
So our Manhattan global teams continue to execute exceptionally well in a challenging macro environment for the quarter, we delivered a strong balanced financial performance across topline growth operating margin and cash flow.
On an as reported basis, our Q1 results compare favorably to the rule of 50 and if our revenue growth is normalized for our cloud transition, which excludes license and maintenance revenue.
Our results exceed the rule of 60.
FX in the quarter was a one point headwind to revenue growth a nearly two point headwind to year over year, <unk> growth and about 40 basis points of tailwind to sequential ARPA growth.
Now to our Q1 results.
Growth rates are reported on a year over year basis, unless otherwise stated and I'll, let the numbers speak for themselves.
Total revenue was a record $221 million up 24%, excluding license and maintenance revenue, which removes the compression driven by our cloud transition our total revenue was up 33%.
Cloud revenue totaled $57 million up 53% and as Andy highlighted we ended the quarter with RP O of $1 2 billion.
Up 42% compared to the prior year and up 10% sequentially.
As of March 31, 98% of our RP O represents cloud native subscriptions.
And how about the global services team Global services revenue was a record $116 million up 29% as cloud sales continue to fuel services revenue growth globally.
Operating profit totaled $64 million with adjusted operating margin of 28, 8% up 190 basis points year over year.
Our performance was driven by strong cloud and services revenue growth combined with operating leverage as our cloud business scales and.
Importantly, as Eddie discussed we continue to invest for future growth.
This resulted in Q1 earnings per share of 80 cents up 33% and GAAP EPS of <unk> 62 up 29%.
A company that generates GAAP earnings turning to cash operating cash flow was $59 million up 85%. This resulted in a 30% adjusted EBITDA margin and.
And a 26% free cash flow margin.
Remember like full year 2022, full year 2023 cash taxes will be negatively impacted by the U S tax cuts and jobs Act.
Moving to the balance sheet deferred revenue increased 34% to $218 million, we ended the quarter with $182 million in cash and low and behold zero debt.
Accordingly, we leveraged our strong cash position and invested $7 million in share repurchases in the quarter.
Also.
Our board has approved the replenishing of our $75 million share repurchase authority.
How about them apples that covers the Q1 quarter so onto our updated 2023 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. This.
This includes a balanced investment approach to growth and profitability.
With our strong start to the year and increasing visibility we are raising our 2023 revenue operating margin and earnings per share guidance.
We are also reiterating our 2023, RP O guidepost range and midpoint of 135 billion.
Consistent with our recent earnings releases, our guide posts and guidance ranges can be found in today's earnings release supplemental schedules. All guidance references made on today's call will be the midpoint of their respective ranges as noted on prior earnings calls, we will be updating our outlook on an.
Basis.
So 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.
So for full year 2023.
We expect total revenue of $860 million up $34 million or 4% from our prior midpoint.
$826 $5 million.
Excluding license and maintenance attrition this represents 20% growth all in our target is 12%.
And for Q2, we expect total revenue of $216 million or 21% growth ex license and maintenance all in our target is 13% growth.
For operating margin, we are increasing the midpoint to 26, 5% up from our prior midpoint of 26% included in this outlook is roughly 200 basis points of headwind from the reduction in license and maintenance revenue.
And as Eddie highlighted given the combination of our demand and size of our opportunity. We continue to invest in our business. We believe this near term margin trade off well positions Manhattan associates to expand our Tam deliver long term recurring revenue growth and cash flows.
At the midpoint, we are targeting Q2 operating margin of 26, 5% Q3, 26% and accounting for Q4 retail peak seasonality 24, 5%.
Our full year adjusted EPS outlook is increasing by 20.
To $2 88 up 7% from our prior midpoint of $2.68 on a quarterly basis, we are targeting Q2, and Q3 to be 72 cents.
And accounting for Q4 retail peak seasonality 64 sets.
For GAAP EPS.
Our midpoint increases by 15 to $2 <unk> up 8% from our prior dollars 88 midpoint.
For Q2, we are targeting GAAP EPS of <unk> 50.
Here are some additional details on our 2023 outlook.
Okay.
Yes, we are increasing our cloud revenue mid point to $240 million, representing 36% growth.
And is up 3% over our prior midpoint of $234 million.
On a quarterly basis, we are targeting $59 million in Q2 <unk>.
$61 million in Q3 and $63 million in Q4.
For services, we are increasing our forecast of $455 million to $463 million, the $459 million midpoint represents 17% growth and is up $27 million or 6% from our prior 430.
$2 5 million.
Dollars midpoint.
On a quarterly basis, we are targeting Q2 services revenue of $118 million Q3, $119 million and accounting for Q4 retail peak seasonality $106 million.
Yeah.
Moving to maintenance, we are targeting a range of $126 million to $128 million or an 11% decline at the midpoint on a quarterly basis. We are targeting Q2 $32 million Q3 $35 million in Q4 $29 million.
We expect hardware revenue of $5 million per quarter, and I expect license of $2 million in Q2, and $1 $5 million in Q3 and in Q4.
For consolidated subscription maintenance and services margin, we continue to target about 54% for the full year on a quarterly basis, we are targeting approximately 54, 5%.
In Q2 and Q3.
And 54% in Q4, and finally, we expect our tax rate to be 21, 5% and our diluted share count to be 62, 8 million shares which assumes no buyback activity.
In summary, fantastic execution by the Manhattan team.
And back to Eddie for some closing remarks, thanks Dennis.
We're very pleased we're pleased with our strong start to the year and record financial results.
And as always we expect this year to be one of greatest great accomplishments.
And before opening up the call to questions I'd like to share a couple of recent ones. Firstly earlier. This week Manhattan Associates celebrated an important milestone 25 years as a NASDAQ listed public company, we're very proud of that and second for the 11th consecutive year at team members voted.
Hatton as a top workplace in Atlanta, and this award follows similar recognitions.
Hatton.
And around the globe over the past.
<unk> months.
So congratulations to all of that team members and thank you for all the great work and your dedication to our customers.
So that concludes our prepared remarks, and Rob we'd be happy to take any questions now.
Thank you.
At this time, we'll be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad.
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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 <unk> Securities. Please proceed with your question.
Yes, thanks, good afternoon, and a really strong results congrats on that and I guess happy birthday M. A N H. The first question I guess, Eddie do you also have that office in Manhattan Beach that little cute office does that still.
In the office portfolio, we don't we don't Terry and we've been we've been very happy with our financial performance over the last 25 years of only way to own that real estate I think it might've etch strip this but no we don't unfortunately.
Okay Fair enough. So yes, just a quick question for you Eddie I think in the prepared remarks, you were talking about the increased cross selling what Im curious about so you've got 100 plus customers on the cloud WNS. So that's great to see.
The idea here is these become unified work flows and when folks get onto the micro services architecture. How are the conversations going in kind of a light bulb or the aha moments in terms of while these are integrated workflows.
And then really kind of starting to tip the scales in getting them to buy it and the Oems or the Tms or other solutions, just maybe an update on where you are in those kind of hopefully aha moments and then I had a question for Dennis.
Yes.
I think the.
Certainly those are your expression as the light bulbs going on frankly, it's I think it's a little different honestly I think our customers in the marketplace have been looking for integrated workflows and hoping for winter integrated workflows for a long long time, but it's frankly been very difficult to realize them.
Now have a solution to be able to.
Actually realize that that objective and it becomes a real.
A real option versus as I mentioned, just just an aspiration.
But in answer to your question. The conversations are going are going very well, particularly with our strategic customers, usually when we're talking about whether it be AWS or Tms.
Yes.
And the specific need of that specific customer of that specific time. There are also conversations about all of our other solutions in terms of what that roadmap looks like the move from one to the other two together and so we had.
<unk> Cross sell was a particularly was particularly strongest quarter, it's going to bounce around a little bit for sure, but certainly those conversations are very encouraging.
Got it and I guess Dennis for you Congrats on Dsos and GAAP earnings My question relates to the cloud subscription revenue has been accelerating strongly and it accelerated again in <unk> and it was really actually notable upside I'm curious and maybe each quarter can be different variables that drive notable upside but is there anything you can share.
In the first quarter, whether it was just accelerated kind of go lives or maybe more users or expansion deals just anything more on just the level of positive variance. Thank you.
The primary drivers the ramp the compounding starting with these ramp deals.
Really successful for us as the that's the big driver.
We've had a few I would say, it's a land slide we certainly had a few projects that moved more quickly so sort of a little different subtly different to the ramp that was projected.
Customers brought in production environments more quickly than they are expecting so that's helpful too.
Congrats again thanks.
Thank you Terry Thanks Terry.
Our next question is from Brian Peterson with Raymond James. Please proceed with your question.
Hi, gentlemen, thanks for taking the question and congrats on the results. So Andy I wanted to start on <unk>.
Point of sale.
So you guys have had some success there I'd.
I'd love to hear about maybe the ramp of that product and how we should think about that contributing to <unk> growth.
Over the long term and how excited are you in that portfolio and how that can ultimately get it.
Yes, I mean look it's a reiteration of me, saying I'm very excited about where we where we are there the objective is to get.
10 or a dozen.
Alive and reference customers by the end of the year, because I think thats when sort of the flywheel begins to begins to start.
We're certainly on track, we're certainly on track for that.
Terms of the financial.
Impact of point of sale on our financial results frankly, it's pretty minimal at the moment.
Which frankly is great and that's a function of.
Solid performance across the rest of the product portfolio as well, but the opportunity for strong CAGR in that in that space is.
Certainly there for us.
Look back to a little bit of the same about the.
Same response to the previous question the conversations of bag the roadmap for <unk>.
Modern technology in the retail store are definitely ramping up.
I think.
Continue to be more excited than ever about the opportunity that lies there lies in front of us.
Understood and maybe a follow up to Terry's question on cross sell.
Think about what was really strong this quarter.
As you guys build out the portfolio.
Cross sell motion changed a little bit right. So I guess I'm just curious how that could evolve essentially the next three to five years. Thanks guys.
Yes. It was good balance Brian there was no there was nothing that really stood out it was nice balanced across <unk>.
So the typical ratios ratios for us and across the across the geographies. So that was that was good to see but I would.
In terms of what the typical motion if you.
If you think about which products might come first in the in the portfolio of implementations and so forth.
It really depends it depends on the customer's needs the vertical.
Focus changes that.
That dependency of need a little bit across the across the product suite, but again for us it's not.
Not really it's not really that important which goes first because we've got a unified suite of solutions that can meet any roadmap needs.
At cross sell this quarter was low.
Over 35%.
Our new bookings this quarter came from cross sell so again pretty encouraging.
Thanks, Brian .
Domestic brands.
Yeah.
Our next question is from Joe <unk> with Baird. Please proceed with your question.
Great Hi, everyone I guess I'll start with a macro question.
The general indications, where you've heard this year have been larger enterprise customers still very much forging ahead and thinking about what modernization needs to happen and if there's maybe any signs of stress is it's probably at the lower end of the market, which I imagine is unserved by Manhattan to begin with I guess I'll ask any.
Changes youre seeing from a macro sense or even changes within any particular segment of the business.
No not really Joe.
We've got we've we've diversified more obviously more and more over the last few years.
So less retail focus for us, although still a lot of work going on in retail, but a lot of manufacturers and wholesalers go in direct to consumer so that obviously is very important too to us.
In terms of where the slowness, where the softness might be we haven't seen it in any particular segment or frankly in any particular tier.
There are winners and losers in every tier obviously, we've seen some some of the <unk>.
Larger and maybe not the largest but some of the larger retailers be pretty negatively impacted as well as some of the some of the specialty.
With you guys.
But about 35. The other thing is about 35% of that pipeline is coming from new logos companies that we've never done never done business with before and a lot of those tend to be outside of that typical.
Vertical vertical focus so look.
You'll see the macro challenges we hear the headlines from the companies that are that are.
Is struggling.
And.
But we've seen no particular concentration across either our customer base and geographies or verticals.
Okay, Great and then I.
I guess I'll ask a cross sell question too, but maybe a bit open ended.
How do you think this begins to change your model in a financial sense. So.
You think there's maybe becomes a driver of higher services utilization does new cloud revenue end up activating more quickly than that.
In the past the Obiang tied to have more of a law in WNS rollouts.
And what might be a reasonable timeframe. When you think about this increasing share of bookings coming from cross sell when do some of these things may be start to impact the revenue model as it's reported.
You mean.
Product cross selling Joe yes.
Yeah.
We feel like we're doing pretty good.
As I mentioned, a little more than 35% of our new bookings this quarter came from cross sell.
Okay, 25% of our new bookings came from brand new logos.
So obviously the balances balance is from existing customers.
And buying more of what they've already got so we look at that and feel like it's pretty balanced frankly.
As you know we've been in recent quarters, the past six to eight quarters, we've been as high as 50% of new bookings coming from new logos, we've been as low as 25% from cross sell so balances around a little bit quarter to quarter, but that balance of cross.
So.
Increased sales of the same product to existing customers and new logos.
It's pretty strong and we don't see that changing other than the variability quarter by quarter for the foreseeable future.
Okay. Thank you very much.
Sure our pleasure Joe Thank you.
Okay.
Our next question is from Matt Pfau with William Blair. Please proceed with your question.
Nice results and thanks for taking my questions guys.
Wanted to ask.
Yes can you hear me.
Yes, Sir.
Okay, Hey, just wanted to ask when you look at your business you know what.
Sort of tie is there to perhaps new build out of warehouse for fulfillment space and as the cost of capital has increased in some of these developers have pulled back a bit on the development of new space does that have any impact on you or is it more of a conversion of existing warehouse space for you.
It's mostly the conversion and modernization of existing space.
You asked an interesting question I don't have the percentage off the top of my head to be perfectly honest with you, but it is in the range of 10%, maybe even less of our implementations are going into new buildings.
So certainly the preponderance of what were doing is.
Sure Brian field work, whether it be only the modernization of the software or the retrofit of a building with additional automation.
And software.
Got it.
That's helpful.
And then when we look at that number.
Net new customers or bookings coming from net new customers this quarter.
Lower than that 35% in the pipeline this quarter I think it was higher than the past several quarters.
For that.
Or do you sort of think about the ideal mix, there where youre, bringing in enough new customers on <unk> have enough cross sell opportunities down the road.
Yes, I think.
Clearly, it's important to look at it at least annually.
It is a quarterly number if not even a even a longer longer duration.
Target is about a third we feel like if we can get about a third.
New bookings from new logos that will fuel the future cross sell opportunity like Crazy frankly, yes, and for the past for the past 10 plus years.
We've carried about a 35, 30% to 35% new logo balance in our pipeline.
Great. Thanks.
Thanks, guys I appreciate it.
My pleasure, Matt Thank you.
Our next question is from Mark Chapell with loop capital markets. Please proceed with your question.
Hi, Thank you for taking my question and nice.
Nice job on the quarter such that your job.
In an earlier question you noted that many of your new customers are coming from verticals outside of the.
The core markets for the core verticals I'm wondering if you could just go a little deeper into what verticals. These customers are coming from and also how are many of these new customers or new logos, how are they finding a way to Manhattan.
I think.
First of all you know.
In industrial manufacturers life Sciences high Tech would be would be three that sort of jumped out to me that our.
New.
Or bigger verticals for us now than they were historically.
And really most of that work is driven by those companies doing something more.
Direct to consumer it may not be direct to consumer in the purest sense of to the doorstep and so forth, but a lot of the health care.
Life Sciences, and healthcare solutions companies for example are shipping smaller quantities are very high.
High value goods to individual pharmacies doctors offices, and so forth. So it looks just a lot more like retail and that capability. As you know requires a good deal of sophistication a great deal of control and a great deal of precision.
And.
So I think.
We could talk a lot about.
This space, but those would be the highlights I think.
Okay, great. Thank you and then one follow up.
On the marketing front I mean, the company is very well known in the warehouse, it's less known and order management I was wondering if you just give us a little insight into what some of your marketing efforts are to drive awareness.
Of your more of your order management and point of sale solutions I think you could give a little bit of that in your prepared remarks, you were talking about some of the industry, but I.
Wonder if you could just expand on that yes.
Yeah, what we feel pretty good about.
Our position in the order management space now mark to be perfectly honest with you know the sort of the preeminent analyst in that space analyst firm in that space tends to be Forrester and for.
The last four to six years, they put us as the only leader.
They have a wave process versus a quadrant, but we're positioned as the only leader in that in that space. So we feel pretty good about our awareness. There clearly point of sale is where we've got a continued across the across the bridge and to Bang Bang.
Bang the drum.
We're doing that.
Every possible turn we're talking about the next generation of point of sale solution that we believe retailers retailers need.
And we're not going to continue to start banking that banging that drum.
But there is that but all we've got to have a material number of live reference of all customers in that space to really get that flywheel going and be representative of what our solutions can do and of course, the beauty of point of sale solutions is.
You can test them as a consumer pretty quickly anytime you want.
So we feel good about getting the reach of our solutions out there and the target has been to have again about a dozen referenced apple customers for point of sale by the end of the year because it's just my personal opinion.
That number starts to get such to get sort of.
Bring gravity and materiality to what to what we're doing we already operate from a store execution perspective, we're a little in a little over 20000 stores today installed in life not with point of sale, but with the execution system buy online pick up in store <unk>.
Site pick up store inventory management shipped from store fulfill from store all of those kinds of things live in over 20000 stores and of course, our objective is to.
Bring at point of sale solution.
To all of those stores and more as well and feel like we're making we're making pretty good progress.
Thanks that was helpful.
But let me just say market.
If you got any neighbors did a retailer that feel free to share the feel free to share. The news will we love everybody to be talking about it.
I'll send them your way.
Thanks.
Okay.
Our final question is from Blair Abernethy with Rosenblatt Securities. Please proceed with your question.
Okay, Thanks, nice quarter guys.
Just Andy just following on your point of sale comments, there if you look.
27 customers a total of 20 stores.
How are you are you, 10% penetrated with Pos or 5% is there some sense of how big that opportunity could be for Manhattan.
Hmm.
The penetration well first of all <unk> most were proud of it is.
It's only scratching the scratching the surface in that penetration into that into that.
That 20000 is so don't quote me, but somewhere in the 2% to 3% range. So so that's why we're on one hand incredibly enthusiastic and excited about the space because we are making good good progress it really isn't impacting our financial results just yet.
But of course, you can capture the vision forward in your mind forward and think about the potential positive impact.
It can have on the on the future.
Okay, great. Thank you and then just shifting over to the international business.
Both the EMEA.
EMEA and APAC growing at or above the company overall rate, which is encouraging can you just give us a little more color on what's happening in EMEA and APAC for Manhattan is it.
Net new customers or are they coming could you offer cloud and AI.
Just kind of wondering what what sort of.
What's the dynamic.
Dynamic look like there.
New customers, yes, yes, good question.
So the answer is yes, we offer cloud across the across the globe in fact.
Many of our <unk>.
Customers are international and global organizations that are rolling out internationally, but but so yes is the answer to that question in terms of both APAC and EMEA.
<unk>.
If you look at the sub regions or the countries inside of those theaters.
Some of them more vibrant than others.
Look this is not the time to go down every single every single country and so forth but.
If you go through Europe , you'd say well certainly things in the UK are a little more suppressed in the <unk>.
<unk>.
We used to have.
Not huge but reasonably healthy business in Russia of course, which we've which we've shut down.
You move to <unk>.
APAC and Australia is certainly quite vibrant southeast Asia is quite vibrant China for a variety of reasons has been a bit slower, but but look that's why we have an international business to help with.
A supporting at customers, where they need us to be but also to smooth out some of those lumps here and there by bi specific specific region, but at the end of the day, we're managing through all that Lumpiness region by region, I think exceptionally well and that's why you see.
The performance from the international markets.
Nice growth rates and generating earnings.
Yes, yes, that's great. Okay. Thanks, guys.
It's a pleasure Blair. Thank you.
We have reached the end of our question and answer session I would now like to turn the call back over to Eddie Capel for closing comments.
Thank you, Rob and thanks, everybody for joining us to review the Q1 results as I said, we feel really good about the <unk>.
That we've made to 2023 here, but.
We are just getting started we have got big aspirations as you know.
Expecting an exciting year ahead. So we'll look forward to speaking with you in about 90 days to review our next chapter of the year. Thanks Bye Bye.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.