Q1 2024 Manhattan Associates Inc Earnings Call
[music].
Rob: Good afternoon. My name is Rob, and I'll be your conference facilitator today. At this time, I'd like to welcome everyone to the Manhattan Associates first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Good afternoon.
Robert: My name is Robert and I'll be your conference facilitator today.
Robert: At this time I'd like to welcome everyone to the Manhattan Associates first quarter 2024 earnings Conference call.
Robert: All lines have been placed on mute to prevent any background noise.
Rob: After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, simply press the star and then the number one on your telephone keypad. If you would like to withdraw your question, press the star and then the number 2.
Robert: After the Speakers' remarks, there'll be a question and answer period.
Robert: If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
Robert: If you'd like to withdraw your question press. The Star then the number two.
Rob: As a reminder, ladies and gentlemen, this call is being recorded today, Tuesday, April 23rd, 2024. I will now introduce your host, Mr. Michael Bauer, Head of Investor Relations at Manhattan Associates. Mr. Bauer, you may begin your conference.
Robert: As a reminder, ladies and gentlemen, this call is being recorded today Tuesday April 23 2024.
Robert: I'll now introduce your host Mr. Michael Bauer head of Investor Relations of Manhattan Associates.
Michael Bauer: Mr. Bauer you may begin your conference.
Michael Bauer: Thank you, Rob, and good afternoon, everyone. Welcome to Manhattan Associates' 2024 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 should caution that these forward-looking statements involve risk and uncertainties, are not guarantees of future performance, and that actual results may differ materially from the projections contained in our forward-looking statements.
Michael Bauer: Thank you Rob and good afternoon, everyone. Welcome to Manhattan Associates 2024, 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 finance.
Michael Bauer: Performance of Manhattan Associates.
You are cautioned that these forward looking statements involve risks and uncertainties are not guarantees of future performance and that actual results may differ materially from the projections contained in our forward looking statements I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our project.
Michael Bauer: I refer you to the reports from 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 2023 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 the turbulent global macro environment could impact our performance and cause actual results to differ materially from our projections. We're under no obligation to update these statements.
Michael Bauer: <unk>.
Michael Bauer: Our annual report on Form 10-K for fiscal year, 2023, 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 the turbulent global macro environment could impact outperformance and cause the actual results to differ materially from our projections, we're under no obligation to up to.
Michael Bauer: These statements. In addition, our comments include certain non-GAAP financial measures 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.
Michael Bauer: In addition, our comments include certain non-GAAP financial measures to provide additional information to investors. We have reconciled all non-GAAP measures to the related GAAP measures in accordance with SEC rules. You'll find reconciliation schedules in the Form 8K we submitted to the SEC earlier today and on our website at mnh.com. Now, I'll turn the call over to Eddie.
And on our website at <unk>.
Michael Bauer: And each dot com now I will turn the call over to Eddie.
Eddie Capel: Terrific. Thanks, Mike. Well, good afternoon, everybody, and thank you for joining us as we review our first quarter results and discuss our increased full year 2024 outlook. Manhattan is off to a solid start in 2024, once again reporting record results. Q1 total revenue increased 15% to $255 million, and adjusted earnings per share increased 29% to $1.03, both exceeding expectations. Driving top-line ag performance and earnings leverage, with 36% growth in cloud revenue and 14% growth
Terrific. Thanks, Mike well good afternoon, everybody and thank you for joining us as we review our first quarter results and discuss our increased full year 2020 for outlook.
Eddie Capel: Manhattan is off to a solid start in 2024 once again reporting record results.
Eddie Capel: Q1, total revenue increased 15% to $255 million and adjusted earnings per share increased 29%.
Eddie Capel: To a $1 three.
Eddie Capel: It's exceeding expectations.
Eddie Capel: Driving topline outperformance in earnings earnings leverage was 36% growth in cloud revenue and 14% growth in services revenue.
Eddie Capel: Global macro uncertainty and volatility certainly persists, but Manhattan's business fundamentals are solid. Our teams continue to execute well for our customers, and our steady investment in research and development has firmly established Manhattan as the leading innovator in supply chain execution, omni-channel solutions, and retail point of sale. RPO, the leading indicator of our growth, increased 31% to just over $1.5 billion.
Eddie Capel: Well global macro uncertainty and volatility volatility certainly persists Manhattan's business fundamentals are solid our teams continue to execute well for our customers and our steady investment in research and development has firmly established Manhattan as the leading innovator in supply chain execution Omnichannel.
Eddie Capel: <unk> and retail point of sale.
Eddie Capel: Or P O the leading indicator of that growth increased 31% to just over one $5 billion as demand for our mission critical client solutions remains strong and resilient across that product portfolio.
Eddie Capel: The demand for our mission-critical cloud solutions remains strong and resilient across our product portfolio. From a vertical perspective, retail, manufacturing, and wholesale drove more than 80% of our bookings in the quarter. Across our solutions, the sub-verticals are pretty diverse. For example, in the quarter, Plaid's deals won included an omni-channel, multi-brand retailer, a manufacturer and distributor of golf equipment, one of the world's largest airlines, a paint manufacturer, an apparel and accessories retailer, a tire distributor, as well as a number of others. For the quarter, competitive win rates were solid at about 75%.
From a vertical perspective retail manufacturing and wholesale drove more than 80% of our bookings in the quarter.
Eddie Capel: Our process solutions to suffer verticals are pretty diverse.
Eddie Capel: For example in the quarter client deals one include an omni channel multi brand retailer and manufacturer and distributor of golf equipment.
Eddie Capel: One of the world's largest airlines a paint manufacturer in apparel and accessories retailer a tire distributor as well as a number of others.
Eddie Capel: For the quarter competitive win rates were solid at about 75% and when he experienced strength from new customers with approximately one third of our new bookings being generated from net new logos.
Eddie Capel: And we experience strength from new customers, with approximately one-third of our new bookings being generated from net new logos. That's in addition to healthy new logo activity. We continue to experience a good mix of conversions, upsells, and cross-sells. And while the timing of large deals and the mix of bookings is certainly going to vary on a quarterly basis, we believe our booking breadth from both new and existing customers and also across our product portfolio exemplifies our multiple opportunities for sustainable growth.
Eddie Capel: In addition to healthy new logo activity, we continue to experience a good mix of conversions Upsells and cross sells.
Eddie Capel: And while the timing of large deals in the mix of bookings is certainly going to vary on a quarterly basis, we believe that bookings breath from both new and existing customers and also across our product portfolio exemplifies a multiple opportunities for sustainable growth.
Eddie Capel: Now to this point, our solutions pipeline remains robust, with new potential customers representing approximately 35% of the demand. An important driver of our growth is our ability to deliver industry-leading solutions to service our customers. At best of breed, cloud-native platform solutions provide unmatched access to innovation and are uniquely capable of unifying mission-critical commerce and supply chain.
Eddie Capel: And to this point, our solutions pipeline remains robust with new potential customers, representing approximately 35% of the demand.
Eddie Capel: An important driver to our growth is our ability to deliver industry, leading solutions to service our customers.
Eddie Capel: Our best of breed cloud native platform solutions provide unmatched access to innovation and are uniquely capable of unifying mission critical commerce and supply chain functions.
Eddie Capel: This is differentiating for us and helps our clients improve customer service and loyalty, drive more revenue, and improve efficiency. Now, product sales activity also drives our services growth, and in Q1, our professional services team completed over 100 go-lives and continues to execute very well. And while we remain appropriately cautious on the global economy, we continue to invest to drive growth.
Eddie Capel: This is differentiating for us and helps our clients improve customer service and loyalty drive more revenue and improve efficiency.
Our product sales activity also drives as services growth in pipeline.
Eddie Capel: In Q1, our professional services team completed over 100 go lives and continues to execute very well for our customers.
Eddie Capel: And while we remain appropriately cautious on the global economy, we continue to invest to drive growth. This includes strategic investments in industry, leading innovation further enablement of our customer success and the expansion of our addressable market.
Eddie Capel: This includes strategic investments in industry-leading innovation, further enabling our customer success, and the expansion of our addressable market. From a hiring perspective, in Q1, we welcomed over 100 highly talented individuals into the Manhattan family and are on track to meet our 2024 hiring goal of a few hundred associates. Now, let's turn to some quick updates on our product. Last quarter, I focused on some key updates to our omni-channel commerce solutions. So for this quarter, I'll focus most of my time on updates to our supply chain execution. One of Manhattan's guiding principles is a relentless focus on innovation.
Eddie Capel: From a hiring perspective in Q1, we welcomed over 100 highly talented individuals into the Manhattan family and are on track to meet our 2020 for hiring goal of a few hundreds of associates.
Eddie Capel: Now, let's turn to some quick updates on our products last quarter I focused on some key updates to our Omnichannel Commerce solutions. So for this quarter I will focus most of my time on RF on updates to our supply chain execution products.
Eddie Capel: One of Manhattan's guiding principles is a relentless focus on innovation.
Eddie Capel: We found the move to Evergreen Software to be a real game changer for both our teams and our customers. Our quarterly release process allows our customers to benefit from new features in record time. Each quarter, we deliver a combination of smaller, more tactical features focused on customer enablement, as well as larger, more strategic features which create an operational step change for our customers. Within Manhattan Active WM, we have released several of these larger, more strategic features in recent quarters.
Eddie Capel: We found the move to evergreen software to be a real game changer for both our teams and our customers.
Quarterly release process allows our customers to benefit from new features in record time.
Eddie Capel: Each quarter, we delivered combination of smaller more tactical features focused on customer enablement as well as larger more strategic features which create an operational step change for our customers.
Eddie Capel: Within Manhattan active W. We released several of these larger and more strategic features in recent quarters. You may recall that we announced yard management at last year's momentum conference and we're seeing great reaction adoption for this best in class why MFS Manhattan active yard management helps their warehouse operators enjoying this.
Eddie Capel: Now, you may recall that we announced yard management at last year's Momentum, and we're seeing great reaction and adoption for this best-in-class YMS. Manhattan Active Yard Management helps warehouse operators enjoy the same level of process discipline and optimization in the yard as they've had within the four walls of the distribution center. Yard management also serves to further reinforce process unification between warehouse management and transportation management, allowing for the seamless transition of a trailer moving from transportation management control to warehouse management control.
Eddie Capel: Enjoy the same level of process discipline and optimization in the yard is they've had within the four walls of the distribution center.
Eddie Capel: Yard management also serves to further reinforce process unification between warehouse management and transportation management, allowing for the seamless transition of a of a trailer moving from transportation management control to warehouse management control.
Eddie Capel: A unified yard offering is an important step in helping our customers evolve toward managing an end-to-end flow of inventory, inbound from their suppliers to the distribution center and outbound from their distribution centers to their customers. But as I mentioned earlier, we released your management... just a little less than a year ago.
Eddie Capel: Unified yard offering is an important step in helping our customers evolve towards managing end to end flow of inventory.
Eddie Capel: And Bang from the suppliers to the distribution center and outbound from their distribution centers to their customers.
Eddie Capel: But as I mentioned earlier, we released yard management.
Eddie Capel: Just a little less than a year ago. So the question is what have we done for our Manhattan active Wm customers lately well in January we released.
Eddie Capel: So the question is, you know, what have we done for our Manhattan Active WM customers lately? Well, in January, we released Dynamic Load Building for Manhattan Active WM, a feature that not only optimizes the way the cartons are palletized and optimized, but also the. Dynamic load building is a pretty critical process in industries like grocery, food service, industrial distribution, and a number of others. And many of our customers in those industries have historically used third-party tools or even manual processing.
Eddie Capel: Manhattan active or we released diner.
Eddie Capel: Dynamic load building for Manhattan active Wm, a feature that not only optimizes the way the cartons or.
Eddie Capel: Palletize and optimized but also way to the way that they laid out in the trailer considering temperature actual load vehicles stop sequencing. So on dynamic load building is a pretty critical process an industry is like.
Eddie Capel: Grocery foodservice and industrial distribution and number of others and many of our customers in those industries have historically used third party tools or even manual processes, but now they are able to take advantage of low building right within Manhattan active supply chain execution as <unk>.
Eddie Capel: But now they're able to take advantage of load building right within Manhattan active supply chain execution as part of a unified outbound planning process. The release of new strategic capabilities like yard management, and dynamic load building, along with in-app analytics and embedded generative AI, is one of our most important market differentiators. Given that strong track record of delivery, prospective customers understand that a subscription to Manhattan Active WM, for example, delivers more than what they saw in the initial product demonstration and RFP response.
Eddie Capel: Part of our unified.
Eddie Capel: Planning process.
Yes.
Eddie Capel: The release of use strategic capabilities like yard management dynamic load building, along with that in App analytics and a benefit embedded generally if AI is one of our most important market differentiators.
Eddie Capel: Given that strong track record of delivery perspective customers understand that subscription to Manhattan active Wm for example delivers more than what they saw in the initial product demonstration and RFP response.
Eddie Capel: They're also subscribing to a continuous innovation pipeline built on design thinking principles and conducted in collaboration with some of the most forward-thinking supply chain practitioners. Customers rest assured that our investment in innovation will continue to deliver industry-leading features, all seamlessly woven into the Manhattan Active WM environments and ready for them to activate. Now, further on the supply chain front, we continue to see great results from the activation of a Manhattan Active Transportation Management application, which recently was named a leader in the Gartner Magic Quadrant for TMS, sixth consecutive year, by the way.
Eddie Capel: They're also subscribing to our continuous innovation pipeline built on design thinking principles and conducted in collaboration with some of the most forward thinking supply chain practitioners.
Eddie Capel: Customers rest assured that our investment in innovation, we will continue to deliver industry, leading features all seamlessly woven into the Manhattan active wm environments and ready for them to activate.
Eddie Capel: Further on the supply chain front, we continue to see great results from the activation of our Manhattan active transportation management application, which recently was named a leader in the Gartner Magic quadrant for Tms six consecutive year by the way and as a reminder, this solution is now live on four continents.
Eddie Capel: And as a reminder, this solution is now live on four continents, serving industries spanning grocery, food service, convenience stores, consumer products, apparel, retail, and a number of others. And frankly, our supply chain unification message continues to resonate very well in the market. And to that end, one of our key deals from last year was with Schneider Electric, a multinational, multibillion-dollar corporation that specializes in digital automation and energy management. And we're currently working with Schneider to deploy a unified supply chain execution offering all the way across the globe. We're starting with a distribution center in the Netherlands.
Eddie Capel: Service, serving industries spanning grocery foodservice convenience stores consumer products apparel retail and a number of others.
Eddie Capel: And frankly as supply chain unification message continues to resonate very well in the market and to that end one of our key deals from last year was with Schneider electric a multinational multibillion corporation specializes in digital automation.
Eddie Capel: And energy management, and we're currently working with Schneider to deploy a unified supply chain execution offering all the way across the globe, we're starting with the distribution center in the Netherlands, and Schneider share that vision for unified inbound and outbound supply chain processes in fact, there'll be yes sharing their vision.
Eddie Capel: And Schneider shares that vision for unified inbound and outbound supply chain processes. In fact, they'll be sharing their vision in more detail at our customer conference, Momentum, next month. And finally, speaking of momentum, we're planning a couple of major product announcements for an event in San Antonio, Texas, and we're looking forward to unveiling those major steps forward to both our Manhattan and our New York customers, and I'll look forward to telling you more about them in next quarter's update. So that concludes my business update. Dennis is gonna provide an update on that financial performance and outlook, and then I'll close my prepared remarks with a brief summary before we move to Q&A. So Dennis,
Eddie Capel: In more detail at our customer conference momentum next month.
Eddie Capel: And finally speaking of momentum we're planning a couple of major product announcements for an event in San Antonio, Texas, and we're looking forward to unveiling those major steps forward to both at Manhattan.
Eddie Capel: Associates and in Manhattan customers and I'll look forward to telling you more about them in next quarters update.
Speaker Change: So that concludes my business update Dennis is going to provide an update on that financial.
Speaker Change: Performance and outlook and then I'll close our prepared remarks with a brief summary, before we move to Q&A. So Dennis.
Dennis B. Story: Thanks, Eddie. Our Manhattan Global teams continue to execute well in a challenging macro environment. For the quarter, we delivered a strong, balanced financial performance across top and bottom lines, including posting record results across RPO, revenue, and adjusted operating income. On an as-reported basis, our Q1 results compare favorably to the rule of 40, and if our revenue growth is normalized for our cloud transition, which excludes license and maintenance revenue, our results exceed the rule of 50. FX had a minor impact in the quarter with a 1% headwind, while it was neutral to year-over-year revenue and RPO growth.
Dennis: Thanks Eddie.
Dennis: Our Manhattan global teams continue to execute well in a challenging macro environment for the quarter, we delivered a strong balanced financial performance across top and bottom lines. This includes posting record results across RPM revenue and adjusted operating income.
Dennis: On an as reported basis, our Q1 results compare favorably to the rule of 40 and if our revenue growth is normalized for our cloud transition, which excludes license and maintenance revenue our results exceed the role of 50 <unk>.
Dennis: FX had a minor impact in the quarter.
Dennis: With a 1%.
Dennis: Headwind, while it was neutral to year over year revenue and <unk> growth.
Dennis B. Story: Now turning to our Q1 results, our growth rates are reported on a year-over-year basis unless otherwise stated. For the quarter, total revenue was $255 million, up 15%. Excluding license and maintenance revenue, which removes the compression driven by our cloud transition, our total revenue is up 20%. Cloud revenue totaled $78 million, up 36%, and as Eddie highlighted, we ended the quarter with RPO of $1.5 billion, up 31% compared to the prior year and up 6% sequentially.
Dennis: Now turning to our Q1 results our growth rates are reported on a year over year basis, unless otherwise stated for the quarter total revenue was $255 million up 15% <unk>.
Dennis: Excluding license and maintenance revenue, which removes the compression driven by our cloud transition our total revenue was up 20%.
Dennis: Cloud revenue totaled $78 million up 36% and as Andy highlighted we ended the quarter with RPI of $1 5 billion up 31% compared to the prior year and up 6% sequentially.
Dennis B. Story: Removing the impacts of FX, the Q1 sequential increase of $97 million in RPO exceeded the sequential increase we achieved in Q4. The strong Q1 performance was driven by a healthy mix of sales from both new and existing customers, with solid results from across our Manhattan Active suite of products.
Dennis: Moving the impacts of FX, the Q1 sequential increase of $97 million and <unk> exceeded the sequential increase we achieved in Q4.
Dennis: The strong Q1 performance was driven by a healthy mix of sales from both new and existing customers with solid results from across our Manhattan active suite of products.
Dennis B. Story: And our global services teams delivered record revenue totaling $132 million, up 14% as cloud sales continue to fuel services revenue growth globally. Adjusted operating profit was $80 million, with an adjusted operating margin of 31.3%. This is 250 basis points year over year, up year over year. Our performance was driven by strong cloud and services revenue growth combined with operating leverage as our cloud business continues to scale. Importantly, as Eddie discussed, we continue to invest in innovation to drive sustainable long-term growth.
Dennis: And our global services teams delivered record revenue totaling $132 million up 14% as cloud sales continue to fuel services revenue growth globally.
Dennis: Adjusted operating profit was $80 million with adjusted operating margin of 31, 3%. This is 250 basis points year over year up year over year. Our performance was driven by strong cloud and services revenue growth combined with operating leverage is.
Dennis: Our cloud business continues to scale.
Dennis: Importantly, as Eddie discussed we continue to invest in innovation to drive sustainable long term growth.
Dennis B. Story: Turning to EPS, we delivered Q1 adjusted earnings per share of $1.03, up 29%, and GAAP EPS of 86 cents, up 39%. And moving to cash, operating cash flow was a solid $55 million. This is down slightly from the prior year period due to a record 2023 cash bonus payout and Timing of Cash Collection. This resulted in a 21% free cash flow margin and 32% adjusted EBITDA margin. Regarding the balance sheet, deferred revenue increased 21% to $265 million.
Dennis: Turning to EPS, we delivered Q1 adjusted earnings per share of $1 83 up 29% and GAAP EPS of <unk> 86 up 39%.
Dennis: And moving to cash operating cash flow was a solid $55 million. This is down slightly from the prior year period due to record a record 2023 cash bonus payout in.
Dennis: And timing of cash collections.
Dennis: This resulted in 21% free cash flow margin and 32% adjusted EBITDA margin.
Regarding the balance sheet.
Dennis: <unk> revenue increased 21% to $265 million.
Dennis B. Story: We ended the quarter with $208 million in cash and zero debt. In the quarter, we leveraged our strong cash position and invested $73 million in share repurchases. Additionally, our board has approved the replenishment of our $75 million share repurchase authority. That covers the summary results.
Dennis: We ended the quarter with $208 million in cash and zero debt.
Dennis: In the quarter, we leveraged our strong cash position and invested $73 million in share repurchases.
Dennis: Additionally, our board has approved the replenishment of our $75 million.
Share repurchase authority.
Speaker Change: So that covers the summary results.
Dennis B. Story: Now on to our updated 2024 guide. As consistently mentioned, our financial objective is to deliver sustainable double-digit top-line growth and top quartile operating margins benchmarked against Enterprise SASCOM. These are important drivers of our best-in-class return on invested capital as we maintain a balanced investment approach to growth and profitability. With our solid start to the year and increasing visibility, we are raising our 2024 revenue operating margin and earnings per share guidance, which can be found in today's earnings release.
Speaker Change: Now onto our updated 2020 for guidance.
Speaker Change: As consistently mentioned our financial objective is to deliver sustainable double digit topline growth and top quartile operating margins benchmarked against the enterprise SaaS comps. These are important drivers to our best in class return on invested capital as we maintain a balanced investment approach to growth.
Speaker Change: And profitability.
Speaker Change: With our solid start to the year and increasing visibility we are raising our 2020 for revenue operating margin and earnings per share guidance, which can be found in today's earnings release.
Dennis B. Story: We are also reiterating our 2024 RPO target range and midpoint of $1.78 billion. As noted on prior earnings calls, our objective is to update our RPO outlook on an annual basis. And lastly, on RPO, as previously noted, 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 nonlinear bookings throughout the year.
Speaker Change: We are also reiterating our 2020 for Rps target range and midpoint of $1 $7 8 billion.
Speaker Change: As noted on prior earnings calls our objective is to update our outlook on an annual basis.
And lastly on ARPA as previously noted 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.
Dennis B. Story: With that, for the full year 2024, we expect total revenue of $1.026 billion to $1.034 billion, with a $1.03 billion midpoint comparing favorably to our prior outlook and representing 17% growth, excluding license and maintenance, and 11% all in. For Q2, we are targeting total revenue of $254 million to $258 million, which at the midpoint represents 17 percent growth, excluding license and maintenance attrition and 11 percent growth all For the rest of the year, at the midpoint, we are targeting total revenue of about $263 million in Q3 and, accounting for retail peak seasonality, $256 million in Q4.
Speaker Change: With that for the full year 2024.
Speaker Change: We expect total revenue of 1.0, $2 6 billion to 1.0, $3 4 billion.
Speaker Change: With a 1.03 billion midpoint, comparing favorably to our prior outlook and representing 17% growth, excluding license and maintenance and 11% all in.
For Q2, we are targeting total revenue of 254 million to $258 million, which at the midpoint represents 17% growth, excluding license and maintenance attrition and 11% growth all in.
For the rest of the year at the midpoint, we are targeting total revenue of about $263 million in Q3, and accounting for retail peak seasonality $256 million in Q4.
Dennis B. Story: For adjusted operating margin, we are increasing the midpoint to 29.75% from our prior midpoint of 29%, which includes a 170 basis point headwind from our license and maintenance revenue attrition to cloud. And, as Eddie highlighted, given the combination of our demand and size of our opportunity, we continue to invest in our business. At the midpoint...
Speaker Change: For adjusted operating margin, we are increasing the midpoint to 29, 75% from our prior midpoint of 29%, which includes 170 basis point headwind from our license and maintenance revenue attrition to cloud.
Speaker Change: And as Eddie highlighted given the combination of our demand and size of our opportunity we continue to invest in our business.
Speaker Change: At the mid point adjusted operating margin on a quarterly basis is expected to be about 29, 5% for both Q2, and Q3 and accounting for retail peak seasonality 28, 5% in Q4.
Dennis B. Story: Adjusted operating margin on a quarterly basis is expected to be about 29.5% for both Q2 and Q3 and, accounting for retail peak seasonality, 28.5% in Q4. This results in our full year adjusted earnings per share range of $3.86 to $3.94. On a quarterly basis, we are targeting Q2 earnings per share of $0.96, Q3, $0.99, and accounting for retail peak seasonality, $0.93, and Q4 for GAP. Earnings per share are midpoint ticks down 4 cents to $2.82 on higher investment and equity-based compensation. For Q2, we are targeting GAAP earnings per share of 66 cents. Here are some additional details on our 2024 outlook.
Speaker Change: This results in our full year adjusted earnings per share range to increase to $3 86 to $3 94.
On a quarterly basis, we are targeting Q2 earnings per share of <unk> 96 cents Q3 99.
And accounting for retail peak seasonality 93 in Q4.
Speaker Change: For GAAP.
Speaker Change: Earnings per share our midpoint ticks down <unk> to $2 82.
Speaker Change: On higher investment and equity based compensation for Q2, we are targeting GAAP earnings per share of <unk> 66.
Speaker Change: Here are some additional details on our 2020 for outlook.
Dennis B. Story: We are increasing our cloud revenue midpoint to $332.5 million, representing 31% growth. On a quarterly basis, we are targeting $80.5 million in Q2, $85 million in Q3, and $89 million in Q4. For services, we are increasing our forecast to $538 to $544 million, with the $541 million midpoint representing 11% growth on a quarterly basis. We are targeting Q2 services revenue of $137 million. Q3 $140 million and accounting for Q4 retail peak seasonality $132 million for maintenance.
Speaker Change: Where we are.
Speaker Change: Our increasing our cloud revenue midpoint to $332 5 million.
Speaker Change: Growth.
Speaker Change: On a quarterly basis, we are targeting $80 5 million in Q2 $85 million in Q3 and $89 million in Q4.
Speaker Change: For services, we are increasing our forecast to $538 million to $544 million with $541 million midpoint, representing.
Speaker Change: 11% growth.
Speaker Change: On a quarterly basis.
Speaker Change: We are targeting Q2 services revenue of $137 million.
Speaker Change: Q3 of $140 million and accounting for Q4 retail peak seasonality $132 million.
Speaker Change: For maintenance.
Dennis B. Story: We are targeting a midpoint of $124.5 million, which represents a 14% decline. On a quarterly basis, we are targeting Q2 at $31 million, Q3 $30 million, and Q4 $28.5 million. For Consolidated Subscription, Maintenance, and Services Margin, we continue to target about 100 basis points of margin improvement for the year. And finally, we expect our tax rate to be 21.5% for the balance of the year, and our diluted share count to be 62.5 million shares, which assumes no buyback activity.
Speaker Change: We are targeting a midpoint of $124 $5 million, which represents a 14% decline.
Speaker Change: On a quarterly basis, we are targeting Q2 at 31 million Q3 dollars $30 million in Q4, $28 5 million.
Speaker Change: Our consolidated subscription maintenance and services margin, we continue to target about 100 basis points of margin improvement for the year.
Speaker Change: And finally, we expect our tax rate to be 21, 5% for the balance of the year, our diluted share count to be 62, 5 million shares which assumes no buyback activity.
Eddie Capel: So in summary, a solid Q1 performance by the Manhattan Global team. Thank you, and back to Eddie for some closing remarks. Yeah, terrific. Thanks, Dennis.
Speaker Change: So in summary, a solid Q1 performance by the Manhattan Global team. Thank you and back to Eddie for some closing remarks, yes terrific. Thanks, Dennis will look we're very pleased with our solid start to the year and a record Q1 Q1 results.
Eddie Capel: Yes, terrific. Thanks, Dennis. Well, look, we're very pleased with our solid start to the year and our record Q1 results. We continue to be appropriately cautious, I think, on the volatile conditions that are out there, but our business momentum remains very favorable, and we remain certainly optimistic about the business opportunities that are in front of us. So, thanks. Thanks, everyone, for joining the call, and thank you to our global team for all the exceptional work that you do for our customers. So, that concludes our prepared remarks, and, Rob, we'd be happy to take any questions. Thank you.
Eddie Capel: We continue to be appropriately cautious I think on the on the volatile conditions that are out there, but but that business momentum remains very favorable and we remain certainly optimistic about the business opportunities that that is in front of us. So thanks, thanks, everyone for joining the call and thank you to our global team for all the exception.
Speaker Change: I'll work that you do for our customers. So that concludes our prepared remarks, and Rob we'd be happy to take take any questions.
Rob: Thank you.
Rob: If you would like to ask a question at this time, you may press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Rob: If you'd like to ask a question at this time you May press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if he'd like to withdraw your question from the queue.
For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment. Please we poll for questions. Thank you.
Rob: Thank you and our first question is from the line of Terry Tillman with <unk> Securities. Please proceed with your questions.
Rob: One moment, please, while we poll for questions. Thank you. Thank you, and our first question is from the line of Terry Tillman with Truist Securities. Please answer your questions.
Terrell Frederick Tillman: Yes, Thanks for taking my question and good afternoon here, Eddie Denison, Mike first and foremost great disclosure there on the FX impact the RPM that's really helpful.
Terrell Frederick Tillman: First and foremost, great disclosure there on the FX impact on RPO. That's really helpful. Just the first question, maybe for you, Eddie, is just an update on stats on cloud WMS. I got knocked off the call. So, I may have missed it. I don't know if you said anything, but I think last quarter when we were asked about it, you gave something in terms of maybe sites that are up and running, but just anything you can share, whether it's sites, whether it's conversations with some of the folks that hesitated to move going forward, just would love some statistics that you can share on just where you are on cloud WMS adoption. And then I had a couple of follow-ups.
Terry Tillman: Yes.
Constant currency adjusted numbers 97 million. So thanks for the disclosure just the first question maybe for you.
Speaker Change: On the on just an update on stats on cloud WNS I got knocked off the call.
Speaker Change: So I may have missed it I don't know if you said anything but I think last quarter. When asked about it you gave something in terms of maybe sites that are up and running but just anything you can share whether it's site whether its conversations with some of the folks that hesitated to move going forward just would love. Some statistics that you can share on just where you are on cloud WNS adoption and then I heard yes.
Speaker Change: Sure, Yes, sure sure sure.
Eddie Capel: Yeah, sure, sure, sure. Terry, you'll have to give me just a little bit of license.
Speaker Change: Terry you, let's say give me just a little bit of licensed we're going live quite frequently with with sites. These days so.
Eddie Capel: We're going live quite frequently with sites these days, so the live site count is right at about 225. Actually, I think it's a little bit more than that, but close enough for this conversation. 225, and there's certainly no reticence in terms of moving to the cloud, either for new customers. Of course, they're moving directly to the cloud with us, or with existing customers that are converting and migrating over time. Some are moving pretty aggressively, frankly.
Speaker Change: The live site count is right at about 225 actually I think it's a little bit more than that but close enough close enough for this conversation 225.
Speaker Change: Certainly no reticence in terms of <unk>.
Speaker Change: Moving moving to the cloud either.
Speaker Change: <unk> for new customers and of course, they are moving directly to the cloud with us.
Speaker Change: For our existing customers that are that are converting in migrating migrating over time, some are moving pretty gap pretty aggressively frankly, we've got customers doing more than one site a month on a global basis going live is a large automated via one 1 million square foot facilities.
Eddie Capel: We've got customers that are doing more than one site a month on a global basis going live. These are large, automated, million-square-foot facilities and so forth. So, yeah, just strong momentum there. We're working hard to keep up with the demand.
Speaker Change: And so forth.
Speaker Change: So yes, just just strong strong momentum there, we're working hard to keep up with the demand.
Terrell Frederick Tillman: That's great. And maybe just a follow-up, and then I had a question for Dennis on the cash flow. But just, Eddie, in terms of versionless software, and your customers starting to experience this in kind of zero-down time, is it starting to kind of accelerate the conversations? Because you all have this vision for your customers of unified commerce. But is it starting to kind of accelerate conversations on, well, okay, now we have the WMS, but it really does make sense to do the TMS or OMS? I'm just curious where you are on that is starting to manifest in cross-selling and up-selling.
Speaker Change: That's great and maybe just a follow up and then I had a question for Dennis on the free cash flow, but just.
Speaker Change: In terms of virtual software in your customers starting to experience. This in kind of the zero downtime.
Speaker Change: Is it starting to kind of accelerate the conversations because youll have this vision for your customers a unified commerce, but is it starting to kind of accelerate conversations on well. Okay. Now we have the <unk>. It really does make sense to do the Tms or on that so I'm. Just curious where you are on that starting to manifest in cross selling.
Speaker Change: Up selling.
Eddie Capel: Yes, it definitely is. Look, we've said it over and over and over again, these are enterprise-class systems. You don't see instantaneous hockey sticks and so forth, but we definitely see it.
Speaker Change: Yes.
Speaker Change: He is.
Speaker Change: Look we would say over and over and over again. These are enterprise class systems, you don't see immediate hockey sticks, and so forth, but we definitely see it in fact I mentioned Schneider electric.
Eddie Capel: In fact, I mentioned Schneider Electric in my prepared remarks. They actually bought both WMS and TMS simultaneously. You've got a very large global rollout of unified supply chain execution for those guys. They'll be talking about momentum. There's no question that we're starting to see that unified message pick up momentum. I don't think there is a conversation that we have with either a customer or a new logo prospect about TMS that doesn't include WMS, and about WMS that doesn't include TMS. Again, they may not all be like Schneider Electric buying both together, but the conversations are certainly conjoined.
Speaker Change: In my prepared remarks.
Speaker Change: <unk>.
Speaker Change: Both Dolby.
Speaker Change: And Tms simultaneously.
Speaker Change: Very large global rollout of unified supply chain execution for for those guys.
There'll be talking about.
Speaker Change: Momentum in.
Speaker Change: There's no question that we're starting to see that that unified message pick up momentum.
Speaker Change: I don't think there is a conversation that we have with either a customer or a new a new logo prospect.
Speaker Change: Tms. So it doesn't include WNS and about WNS that doesn't include Tms again, they may not all be like Schneider electric buying both together, but the conversations are.
Dennis B. Story: Thanks for that, Eddie. And Dennis, I guess on cash flow, you called out the largest, you know, kind of cash bonuses in the seasonality and impact on cash flow. But, you know, is 2Q something that sequentially anything you can share about how to think about it or just maybe even full year on how you're thinking about maybe a free cash flow margin? Thank you.
Speaker Change: Certainly conjoined.
Speaker Change: Thanks for that Ed and Dennis I guess on cash flow you called out the largest kind of cash bonuses.
Speaker Change: And the seasonality of impacting cash flow, but.
Speaker Change: Is <unk> something that sequentially anything you can share about how to think about it or just maybe even full year on how youre thinking about maybe a free cash flow margin. Thank you.
Dennis B. Story: Yeah, so, you know, Q2 will snap back from Q1 definitely, 25 to 26% free cash flow margin on a full year basis. We may tick up from that. There's a little bit of conservatism there.
Yes so.
Speaker Change: Q2 will snap back from Q1 definitely 25 to.
Speaker Change: 26% free cash flow margin on.
Speaker Change: On a full year basis.
Speaker Change: We may tick up from that.
Speaker Change: Little bit of conservatism there.
Brian Peterson: Our next question is from the line of Bryan Peterson with Raymond James. Please submit your questions.
Speaker Change: Wonderful thank you.
Speaker Change: Thank you Terry.
Speaker Change: Our next question is from the line of Brian Peterson with Raymond James. Please proceed with your questions.
Eddie Capel: Hi, gentlemen. Thanks for taking the question. Eddie, you mentioned some examples of global supply chain investments for customers with Manhattan. I'm curious, for somebody that has a truly global project that's hitting multiple DCs, how long does that product or project take? Is that something that can be done in a few years, or is the timeline usually longer than that?
Hi, gentlemen, thanks for taking my questions. So Eddie you mentioned some examples global supply chain investments for customers with Manhattan, I'm curious for somebody as a truly global projects, they're putting multiple dcs.
Speaker Change: How long does a false or project.
Brian Peterson: That's something that can be bundled with few years or is the timeline usually longer than that.
Eddie Capel: Yeah, well, that's a great question, and there's no perfect answer, Brian, frankly. It really depends on the, you know, the size and the magnitude, of course. Look, if I were to pick how long it takes to roll out a unified supply chain execution program, both WMS and TMS, let's assume 30, 40, or 50 distribution centers, something like that. That's probably a three-year program, I would say. You know, it could be a little longer, but it's probably not going to be shorter.
Brian Peterson: Yes.
Eddie: Great question and there is no perfect answer Brian frankly.
Eddie: It really depends on the on the.
Eddie: The size and the magnitude of course.
Eddie: Look if I were if I were to pick.
Eddie: How long does it take to roll out unified supply chain execution program, both WNS and Tms, let's let's assume 30, 40 or 50 distribution centers something like that.
Eddie: That's probably a three year program.
Speaker Change: I would say.
Speaker Change: It could be.
Speaker Change: Could be a little longer.
Speaker Change: <unk> not going to be shorter.
Brian Peterson: Got it. Okay, that helps a lot, actually. So, just maybe follow up, by the way, this is more on the supply chain execution side, but point of sale, some really strong stats to share last quarter. Curious what the feedback has been from customers and prospects to start in 2024. Thanks, guys. Yeah, yes. You know, it continues to go well from an execution point of view.
Speaker Change: Got it okay.
Speaker Change: A lot actually so just maybe follow up on the witnesses is more on the supply chain execution side, but point of sale. Some really strong stats to share last quarter curious what the feedback has been.
From customers and prospects to start in 2024, thanks, guys Yeah, yes.
Speaker Change: Continues to go well from an execution perspective in the field I think we brought a couple.
Eddie Capel: Yeah, yes. It continues to go well from an execution perspective in the field. I think we brought a couple of new customers live this quarter. We did secure one nice deal, one nice new logo deal in the quarter. Very pleased about that.
Speaker Change: Couple of new customers live this quarter, we did we did secure one nice deal one nice new logo deal in the in the quarter.
I'm very pleased very pleased about that.
Eddie Capel: I think we've reported this same scenario before. This is a brand new customer. We've never done business with them before, and the only product that they bought from us was point of sale. So it's still a loan on its own merits.
Speaker Change: I think we've reported this.
Speaker Change: Same scenario before this is a brand new customer we've never done business with them before and the only product that they bought from US was point of sale.
Speaker Change: So it still stood alone on its own merit.
Eddie Capel: I forget exactly, but I think it's right around a 225-store chain. So we're looking forward to getting that project rolling as well. And continuing to see strong momentum in the field, both from an execution, a go-live, and a nice little bit of sales motion there as well.
Speaker Change: I forget exactly but I think it's right around 225 store chain. So we're looking forward to getting that project rolling as well so.
Speaker Change: Continuing to see strong momentum in the in the field both from an execution a go live and a nice little bit of sales motion there as well.
Joseph Vruwink: Our next questions are from the line of Joe Vruink with Baird. Please submit your questions.
Speaker Change: Great to hear thanks, Eddie.
Eddie: Thank you Brian.
Eddie: Yes.
Eddie: Our next questions are from the line of Joe <unk> with Baird. Please proceed with your questions.
Joseph Vruwink: Great. Hi, everyone. Thanks for taking the questions. One up front, just on the composition of RPO bookings across WMS, OMS, and TMS, have your expectations changed at all in terms of the relative share of what's flowing into your backlog, just given how the year has started?
Joe: Great Hi, everyone. Thanks for taking my questions.
Joe: One upfront just on composition of RTL bookings across Wns's LMS Tms.
Joe: Your expectations changed at all in terms of the relative share of whats falling into your backlog just given how the year has started.
Eddie Capel: No, I would say, you know, it advances by quarter. We, you know, we talk about it all the time, Joe. But, in terms of the makeup, I think, you know, we expect it to be pretty consistent. You know, the way I think about it is, you know, on an annual basis, and it'll advance around, you know, kind of quarter by quarter.
Speaker Change: No I would say.
Speaker Change: <unk> by quarter.
Speaker Change: We talk about it all the time Joe.
Speaker Change: But in terms of the makeup I think we expect it to be pretty consistent.
Speaker Change: The way I'd think about it as an.
On an annual basis, and it'll bounce around kind of quarter by quarter.
Speaker Change: Okay great.
Joseph Vruwink: And then ActiveWM, that debuted in the spring of 2020, you saw a pretty nice step up in RPO bookings really towards the end of that year and then certainly in 2021. So the early adopters at this point, they're in year three, year four, some are maybe coming up on renewal conversations, but certainly many are far enough along and live where you've probably engaged with the new cloud installed base just on cross-selling.
Speaker Change: And then at Wm that debuted in the spring of 2020, yet you saw a pretty nice step up in RPI booking is really towards the end of that year and then started in May 2021. So the early adopters at this point they're in year three year four some are maybe coming up on renewal conversations, but certainly 98.
Sure enough along in life, where you probably engaged with new cloud installed base just on cross selling how has that experience experience at renewal and then maybe net retention experience over the course of that initial five years. So engagement how is that fared so far and does.
Joseph Vruwink: How has that experience, both experience at renewal and then maybe net retention experience over the course of that initial five-year or so engagement, fared so far, and does it change at all the kind of evolution of your model as more of the model is just going to reflect cloud financials and how the renewal base is evolving over time?
Does it change at all kind of the evolution of your model as more of the model is just generate cloud financials and how the renewal base is all thing over time.
Eddie Capel: Let's see, quite a bit packed in there, but we haven't seen, obviously, material renewals just yet because, to your point, we haven't even quite met the four-year mark for launch. So next year and the year after that are when we'll start to see more renewals. The net retention rate is very, very strong, and cross-sells we're pleased with. [inaudible] on a quarterly basis but usually settles in annually to be around about 25% cross sell-up sell.
Speaker Change: Let's see quite a bit packed in there, but we haven't seen obviously material renewals just yet because to your point, we havent, even quite quite met the four year Mark for launch.
Speaker Change: So next year and the year after as we almost start to see more of more of the more of the noodles renewals net retention rate is very very strong cross sells were pleased with.
Speaker Change: I know I'm a bit of a broken record here, but again bounces around a little bit quarter by quarter.
Speaker Change: This quarter I think the cross sales were.
Speaker Change: In the 20%, maybe just a tick above 20, 20% that seems to bounce around frankly between anything from.
Joseph Vruwink: Great. I'll leave it there. Thank you.
Mark Schappel: Our next questions are from the line of Mark Schappel with Loop Capital. Please proceed with your questions.
Speaker Change: 15% to 35.
Mark Schappel: Hi, thank you for taking my question. Eddie, could you just provide a little bit of an update on the Shopify partnership that was announced recently, specifically with respect to the, you know, product integration efforts? Yeah, sure.
Speaker Change: On a quarterly basis, but usually sets settles in annually to be around about 25%.
Speaker Change: Cross sell up sell.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: Thank you.
Speaker Change: Okay. Thank you Joe.
Speaker Change: Our next question is from the line of Mark Chapell with loop capital. Please proceed with your questions.
Mark Schappel: Alright. Thank you for thank you for taking my question.
Mark Schappel: Could you just provide a little bit of an update on the Shopify partnership that was announced recently specifically with respect to the.
Eddie Capel: Yeah, sure. Sure, I'd be happy to, Mark.
Mark Schappel: The product integration efforts.
Eddie Capel: So we, you know, we announced that at NRF in earnest and have seen, you know, seen a lot of interest around the Shopify partnership. I'll try to make it short. The, you know, gist of it is that Shopify sees an opportunity for them to come up into the enterprise with, you know, their web store and e-commerce storefront. We obviously are a great partner for them because they would love to be able to integrate directly into our enterprise class order management system and look after our enterprise order management system customers.
Mark Schappel: Yeah sure sure I'd be happy to Marc So.
Mark Schappel: We announced that.
Speaker Change: In RF.
Speaker Change: <unk> seen a lot of interest around.
Speaker Change: The Shopify partnership I'll try to make it short.
Speaker Change: The gist of it is that shopify season opportunity for them to come up into the enterprise with with their web store and E. Commerce E. Commerce storefront, we obviously are a great partner for them because.
Speaker Change: They would love to be able to integrate directly into our enterprise.
Speaker Change: Enterprise class order management system.
Speaker Change: Good after our enterprise order management system customers, So that's sort of.
Eddie Capel: So that's, you know, sort of great news, you know, great news for them. We think there's going to be, over time, a wave of e-commerce platform replacements given some of the older systems have kind of fallen by the wayside and so forth. We've busily been building standard integration and out-of-the-box integration with Shopify. Our R&D teams on both sides have been working very closely together, and it is a very productive relationship and partnership.
Great News Great news for them, we think there's going to be over time, a wave of E Commerce platform.
Speaker Change: Ah replacements, given some of the older systems.
Speaker Change: Kind of fallen off of the waste side, and so forth, obviously, shopify do as well and wed like to attached to that to that replacement cycle as it happens over the next over the next few years.
Speaker Change: The benefit of the partnership for Manhattan Associates.
Speaker Change: We.
We visually been building standard integration and out of the box integration with with Shopify.
Eddie Capel: I am looking forward to seeing what comes of that in the future. It will feature, as one of the things that we talk about in a little more detail, momentum with our existing customers as well, and I think it will be interesting for them.
And.
Speaker Change: Our R&D teams on both sides have been working very closely together.
Speaker Change: <unk> seems to have been.
Speaker Change: It is now it seems to have been it is a very productive relationship and partnership with <unk>.
Speaker Change: Looking forward to seeing what comes of that in the future It will feature.
Speaker Change: One of the things that we talk about in a little more detail that momentum with our existing customers as well and I think it will be interesting for them.
Mark Schappel: Growth in the Asia-Pacific region seemed a little bit softer this quarter than in the past. I was wondering if we should read anything into this, or is this just quarterly variability in the numbers?
Speaker Change: Great Thanks for them.
Speaker Change: Growth in the Asia Pac region seemed a little bit softer this quarter then.
Speaker Change: But maybe in the past just wondering if we should read anything into this or is this just.
Speaker Change: Quarterly variability in the numbers.
Speaker Change: No actually it was actually.
Eddie Capel: No, it was actually pretty strong this quarter. Now, as you know, APAC for us is in the 6 to 10% range of our revenue, so it can be a little bit on the smaller side from an actual numbers perspective, but we had a good quarter, frankly. Good margins, and the pipeline looks pretty good in APAC as well, maybe with the exception of China, where things are not quite as strong for us. Thank you.
Speaker Change: Pretty strong this quarter.
Speaker Change: As you know APAC for us is.
Speaker Change: The 6% to 10% of our revenue so it can be a little bit on the smaller side from a from an actual numbers perspective, but but we had a good we had a good quarter frankly.
Speaker Change: Good margins.
Speaker Change: And.
Speaker Change: And the pipeline looks pretty good.
Speaker Change: In APAC as well, maybe with the exception of <unk>.
Speaker Change: China, where things are not quite as strong for us.
Mark Schappel: Great, thank you. That's all.
Speaker Change: Great. Thank you that's all.
Speaker Change: Thank you Mark.
George Karasawa: Our next question is from the line of George Karasawa with Citi. Please proceed with your questions.
Speaker Change: Our next question is from the line of George <unk> with Citi. Please proceed with your question.
George Karasawa: Thanks for taking the questions. I'm happy to be on the call.
George: Thanks for taking the questions happy to be on the call maybe just high level on the demand backdrop, you guys described kind of a volatile environment that you're executing through.
George Karasawa: Maybe just at a high level on the demand backdrop, you guys described kind of a volatile environment that you're executing through. You know, maybe you could just double-click on kind of what you're seeing there relative to what you saw last quarter. And if there's kind of any particular verticals that you described as maybe seeing a little more impact. Thank you.
George: Maybe you could just double click on kind of what youre seeing there relative to what you saw last quarter and if there's kind of any particular verticals that you described.
George: Maybe seeing a little more impact thank you.
Eddie Capel: I would say no, George. And look, the macro volatility that I'm referring to is the exact same volatility that every single company on the planet is observing. Look, I'm going to repeat myself from last quarter. Twelve months ago, there was a healthy amount of macro volatility and so forth around the world. And it seems to us that none of those have come off the table, but more issues have been added to the mix, hence the reference to volatility and so forth.
Speaker Change: I would say no GA and look the macro the volatility that I'm, referring to is the exact same volatility that every single company on the planet is observing.
Speaker Change: I think I said look I'm going to.
Speaker Change: Repeat myself from I think last quarter 12 months 12 months ago, there was a healthy amount of.
Speaker Change: Macro volatility and so forth around the world.
Speaker Change: It seems to us that none of those have come off the table, but more issues.
Speaker Change: Been added to the added to the mix just hence the hence the reference to the volatility and so forth, but it hasnt had a particular impact on any any vertical.
Eddie Capel: But it hasn't had a particular impact on any vertical. For us, as I pointed out in some of the wins for the quarter, we've got pretty good diversity across airlines and paint suppliers and golf equipment retailers and so forth. So we feel pretty good about the diversity and how we can smooth out some of that volatility. But I think it would be inappropriate for us not to mention all of the backdrop of the things that are going on around the world.
Speaker Change: For us.
Speaker Change: As I pointed out in some of the wins for the quarter, we got pretty good diversity across airlines and paint suppliers in golf equipment.
Speaker Change: Retailers.
Speaker Change: So we feel I feel pretty good about the diversity and how we can smooth that some of that volatility, but I think it would be.
Inappropriate for us not to mentioned.
Speaker Change: The backdrop of the things that are going on around the world.
George Karasawa: Got it. That makes sense. And then just on the updated guidance, obviously flow through most of the upside for the quarter, but, you know, thinking about the back half of the year, maybe a very slight tweak down, maybe just any puts and takes and how you're thinking about the rest of the year.
Got it that makes sense and then just on the updated guidance obviously flowed through.
Speaker Change: Yes, the upside from quarter, but thinking about the back half of the year, maybe a very slight tweak down maybe just any puts and takes and how youre thinking about the rest of the year.
Eddie Capel: Not a big change. I mean, Dennis obviously highlighted the FX challenges we'd already seen in Q1 since we did our budgets and put the plans out. It was just sort of a little bit disappointing. Frankly, it's not a material change.
Speaker Change: Yes.
Speaker Change: Not a big Big change I mean, Dennis obviously highlighted the FX challenges we've already seen in Q1 since we put the bit IRA did our budgets and put the plans yet.
Speaker Change: Just to sort of a little bit disappointing frankly.
Speaker Change: <unk>.
Speaker Change: Not a material none of it not a material change.
George Karasawa: We made it clear that we're only going to provide annual RPO guidance. Now, we did say for the year that our growth would be at about $360 million in RPO growth, $90 million a quarter. In constant currency, we did $97 million in RPO growth for the quarter, so kind of a little bit ahead, again, in constant currency.
Speaker Change: We made it clear that we're only going to provide our annual guidance we.
Speaker Change: We did say for the year that that growth would be at about $360 million in IPO and RPM growth $90 million a quarter.
Speaker Change: In constant currency, we did 97 million and <unk> growth for the quarter, So kind of a little bit ahead again constant currency wise.
Speaker Change: But no no material change in outlook for for the year at the moment.
Eddie Capel: And, George, we'd like to... We like to under-promise and over-deliver, so there's not a material adjustment in the back half of the year. Got it. Makes sense. Thanks for taking.
Great George we like we like to.
Speaker Change: We like to under promise and over deliver so there's not a material.
Speaker Change: Adjustment in the back half of the year.
Speaker Change: Got it makes sense, thanks for taking my questions.
Dylan Becker: Our next question is from the line of Dylan Becker with William Blair. Please proceed with your questions.
Speaker Change: Thanks George.
Speaker Change: Our next question is from the line of Dylan Becker with William Blair. Please proceed with your questions.
Dylan Becker: Hey, gentlemen. Great to connect with you. I appreciate you taking the questions. Maybe, Eddie, starting with you, we've talked a lot about the kind of continued investment and innovation and what that can create from a cross-selling perspective, given how this cloud migration can unlock some of that. I wonder how you were thinking about the, like, blueprint phase and the importance of that dynamic of services in not only getting the customers live but maybe giving, like, a bit of a peek under the hood and maybe a strategic source of helping inform some of those R&D or kind of platform investment initiatives as you work through some of this transition as well.
Dylan Becker: Hey, gentlemen, great to connect you I appreciate you taking the question maybe Eddie starting with you we've talked a lot about kind of the continued investment in innovation.
Dylan Becker: It can create from a cross selling perspective, given kind of this cloud migration can unlock some of this I wonder how you are thinking about like blueprint phase and the importance of that.
Dylan Becker: That dynamic of services.
Dylan Becker: And not only getting our customers live, but maybe giving a bit of a peek under the hood and maybe a strategic source of helping inform some of those R&D or kind of platform investment initiatives as you work through some of this transition as well.
Eddie Capel: Yeah, there's no question. One of the sort of secret weapons of our company is that services business, from the perspective of being shoulder-to-shoulder with our customers, you know, understanding what market trends look like, understanding what their specific needs look like, and informing, you know, our product roadmap as we, you know, as we go forward. Now, on a more near-term basis, also no doubt is where, you know, blueprinting and designing, maybe it's a WMS, a TMS, an order management system, as it's being deployed, it's quite helpful to have the full portfolio available to us so, you know, we can, you know, guide and maybe help our customers understand the benefits of a fully unified product portfolio.
Speaker Change: Yes, Theres no question I mean, one of the one of the secret weapons of our company is our services business.
Speaker Change: From the perspective of being shoulder to shoulder with that customers.
Speaker Change: Understanding what market trends look like understanding what their specific needs look like.
Speaker Change: Informing our product roadmap as we as we go forward now on a on a more near term basis also know that as were blueprinting and designing maybe it's <unk> and order management system.
Speaker Change: As it's being deployed.
Speaker Change: Quite helpful to have the full portfolio available to us so we can.
Speaker Change: Guide.
Speaker Change: And maybe help our customers understand the benefits of a fully unified.
Dylan Becker: Got it. Okay, that makes kind of sense.
Speaker Change: Portfolio.
Speaker Change: Got it okay that makes a ton of sense, maybe kind of sticking with that theme.
Eddie Capel: And maybe kind of sticking with that theme from a kind of an adjacency perspective, as you migrate more of these customers and consolidate kind of more of these systems around that idea of unified commerce, how should we think about the opportunity for kind of data monetization or embedded analytics use cases and things of the like? I know there's kind of some embedded benchmarking today, but maybe kind of connecting data and workflows, and what can unlocking automation mean for monetization given these, these systems that have historically been so disparate? It seems like it's kind of an incremental unlock opportunity.
Speaker Change: From a kind of an adjacency perspective as you migrate more of these customers and consolidate kind of more of these systems around that idea of unified commerce, how should we think about the opportunity.
Speaker Change: Four kind of data monetization or embedded analytics use cases and things of the like I know, there's kind of some embedded benchmarking today, but maybe kind of connecting data and workflows, what unlocking automation can mean for monetization given these these systems have historically been so desperate seems like its kind.
A an incremental unlock opportunity.
Dylan Becker: Yeah, for sure. Obviously, we've got a lot of analytical power in our system. We've got a lot of very valuable data, and we've got a lot of analytical power and tools that we provide to our customers, as you point out, embedded in our solutions. And cross-sell and up-sell, for us, is certainly the name of the game. We're pretty clear about that. When we sell solutions to our customers, we're very open with them.
Speaker Change: Yeah for sure I mean, we've got all of them.
Speaker Change: So we've got a lot of.
Speaker Change: Analytical power and I assume you've got a lot of very valuable data and we've got a lot of analytical power and tools that we provide to our customers as you pointed out embedded in embedded in our solutions and.
Speaker Change: Cross selling upsell for US is certainly the the name of name of the game, where we're pretty clear about that when we sell solutions to our customers. We are very open with them Hey, we would like the opportunity.
Dylan Becker: Hey, we would like the opportunity, as the need arises, to help you with all of your supply chain needs, kind of end-to-end. And the unified platform that we have certainly helps enable that. We believe the bridges to get from one of our solutions to another are much shorter, given the technology underpinnings that we have, the zero data replication in terms of transactional data replication that's required. It makes it smooth, makes it seamless, faster, and, of course, a lower total cost of ownership.
Speaker Change: As the need comes up to help you with all of your supply chain needs.
Speaker Change: Kind of kind of end to end.
Speaker Change: The unified platform that we have certainly helps enable that we believe the bridges to get from one of our solutions to another is much shorter given the technology underpinnings that we have.
Speaker Change: Zero data replication in terms of transactional data replication Thats. This is Rick.
Rick: <unk> it makes it smooth makes it seamless.
Rick: Faster and of course, a lower total cost of ownership.
Dylan Becker: Great. Thank you all. I appreciate it.
Speaker Change: Great. Thank you I appreciate it.
Speaker Change: Sure thing.
Speaker Change: Thank you.
Blair Abernethy: Our last question will be coming from the line of Blair Abernethy with Rosenblatt Securities. Please proceed with your question.
Speaker Change: Our last question will be coming from the line of Blair Abernethy with Rosenblatt Securities. Please proceed with your questions.
Blair Abernethy: Thanks, and thanks for taking my question. Just following on the last line of thought there, Eddie, on the migration to the cloud as you get more and more of your customers. Data Flows, Workflows, and Data Flows related to those in the cloud. Are there other opportunities there for you to partner with other outside parties to help the customer leverage their data more?
Blair Abernethy: Thanks, and thanks for taking my question.
Blair Abernethy: Just following on the last line of thought there Eddie on the migration to the cloud as you get the whole more and more of your customers.
Blair Abernethy: Data flows workflows and data flows related to those in the cloud are there are there other opportunities there for you to pause.
Blair Abernethy: Partner with other outside parties to help the customer and leverage.
Blair Abernethy: Leverage their data more.
Eddie Capel: Oh, sure. Yeah, you know, always.
Eddie: Sure Yes.
Eddie Capel: Obviously, our, our... I would say our principal data partner and technology partner is Google, who I think everybody knows is pretty powerful when it comes to a combination of analytics, data leverage, generative AI, business analytics, of course, their BigQuery, and so on and so forth. They've done some really clever, clever work in enabling their customers and our joint customers to be able to monetize the data that's inside of that system, and we get the benefit from that as well as we put together our cross-sell and up-sell opportunities and roadmaps with our customers and prospects.
Speaker Change: Always obviously R R.
Speaker Change: Say, a principle data partner and technology partner is Google.
Speaker Change: Who I think everybody knows is pretty.
Powerful when it comes to a combination of analytics data leverage.
Speaker Change: Generative AI business analytics of course, that'd be query and so on and so on and so forth.
Speaker Change: They've done some really clever clever work enable and enabling.
Speaker Change: Their customers and our joint customers to be able to monetize the data that's inside of that system.
Speaker Change: We get the benefit from that as well as we put together at cross sell and up sell opportunities and roadmaps with our customers and prospects.
Blair Abernethy: Great, thank you. And just Dennis, one quick question for you. I missed the early part of the call, but I'm not sure if you talked about the hiring environment at all, sort of how your retention rates are going and your hiring plans for 2024.
Speaker Change: Great. Thank you.
Just ask one quick one for you I missed the early part of the call, but I'm not sure if you talked about the.
Speaker Change: The hiring environment at all sort of how your retention rates are going and your hiring plans for 2024.
Dennis B. Story: Yeah, I did mention it. We welcomed about 100, almost exactly 100 new associates to the family in Q1, and we are on track with hiring plans for 2024. Attrition is fortunately running at a very low rate for us, so we're able to keep hold of our great talent, and they continue to gain more and more experience, which is really helpful for us, for our customers, and everybody concerned. However, hiring plans are on track for several hundred hires this year.
Speaker Change: Yes, I did mention it we welcomed.
Speaker Change: 100, 100, almost exactly 100, new associates to the family in in Q1.
Speaker Change: And on track with our hiring plans for 2020 for attrition is fortunately running at a very low rate for us. So we're able to keep hold of a great talent and they continue to gain more and more experience, which is really helpful. For you know for us for our customers.
Speaker Change: Everybody concerned, but hiring plans are on track for several hundred hires this year.
Yeah.
Blair Abernethy: Great. Perfect. Thanks very much.
Speaker Change: Great perfect. Thanks very much.
Eddie Capel: My pleasure, Blair. Thank you.
Speaker Change: Our pleasure Blair. Thank you.
Rob: Thank you. At this time, we've come to the end of our question and answer session, and I'll turn it over to management for closing remarks.
Speaker Change: Thank you at this time, we've come to the end of our question and answer session now I'll turn the floor back to management for closing remarks.
Eddie Capel: Okay, very good. Well, thank you, Rob, and thanks, everybody, for joining us. We really appreciate your time. We're, as we mentioned, excited about the start of the year and looking forward to more of the same and reporting out the results to you in about 90 days or so. So thanks again.
Speaker Change: Okay very good well, thank you Rob and thanks, everybody for joining us we really appreciate your time, whereas we mentioned we're excited about the start to in the start to the year and looking forward to more of the same and reporting out to you. The results in about 90 days or so so thanks again.
Rob: This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.
Speaker Change: This will conclude today's conference. Thank you for your participation you may now disconnect your lines at this time.