Q1 2025 Manhattan Associates Inc Earnings Call
Speaker Change: Michael Bauer, Unknown Executive, Michael Bauer, Unknown Executive, Michael Bauer, Unknown
Paul: Good afternoon. My name is Paul and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates' first quarter 2025 earning conference call.
Paul: All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.
Paul: If you'd like to ask your question during this time, simply press star and then the number one on your telephone keypad If you'd like to withdraw your question, please press star and then the number two As a reminder, ladies and gentlemen, this call is being recorded today April 22nd, 2025
Speaker Change: I'd now like to introduce your host, Mr. Michael Bauer, Head of Investor Relations of Manhattan Associates. Mr. Bauer, you may begin your conference.
Speaker Change: Great. Thanks, Paul. Good afternoon, everyone. Welcome to Manhattan Associates' 2025 first-quarter earnings call. I will review our cautionary language and then turn the call over to our executive vice chairman, Eddie Capel, with some brief opening commentary before he handed off to our president and chief executive officer, Eric Clark.
Speaker Change: During this call, including the Q and A session, we may make forward-looking statements regarding future events, with the Mormon Hatton Associates' future financial performance.
Speaker Change: We caution you that these forward-looking statements involve risk and uncertainties or not guarantees of future performance and actual results may differ materially from the projections contained in out forward-looking statements.
Speaker Change: I refer you to Manhattan Associates SEC reports for important factors that could cause factual results that differ materially from nose and health projections, particularly our annual report on form 10K for fiscal year 2024 and the risk factor discussion in that report.
Speaker Change: and any risk factor updates we provide not subsequent form tanked cues. Please note that the turbulent global macro environment could impact health performance in course actual results in different material material from out projections.
We are under no obligation to update these statements.
Speaker Change: In addition, outcomes include certain on- GAAP financial measures to provide additional information to investors.
Speaker Change: We have reconciled all non-GAAP measures to related GAAP measures in accordance with SEC roles. You'll find reconciliation schedules in the former decade we followed with the SEC earlier today and on our website, M-A-N-A-H.com. Now, I'll turn the ball over to Eddie.
Eddie Capel: Thanks Mike, and good afternoon everybody and thanks again for joining us this afternoon. Well, it certainly is an interesting time to be delivering a quarterly earning report and maybe an even more interesting time to be providing forward looking guidance.
Speaker Change: I think the words uncertainty and changeable don't really seem to appropriately describe the world we're living in today, do they?
Speaker Change: That's it. In a moment, I'll have the pleasure of formally introducing you to Eric, our new CEO. We'll cover that at quarterly results.
Speaker Change: And given the timing of our transition, we shared the CEO duties during Q1. But since mid-February, we've both been working a double time on the transition process, and I have to say, it really couldn't be going any smoother [inaudible]
Speaker Change: Eric's getting up to speed very quickly, and we've had the opportunity to spend some time with our global teams, our partners and some of our customers.
Speaker Change: And in a few weeks, I'm excited to be able to introduce Eric to a large gathering of our customer community at Momentum.
Speaker Change: And my new role as Executive Vice Chairman, I look forward to supporting Eric and I global teams in any way that I can. Today, I'll be available to answer any product or industry questions as well as provide any historical context that may be helpful.
Speaker Change: So with that, over to Eric. Great. Thank you, Eddie, for the warm introduction. Good afternoon, everyone. And thank you for joining us as we review our first quarter results and full year 2025 outlook. Thank you very much.
Speaker Change: Manhattan is off to a solid start to 2025, posting better than expected top and bottom line results
Speaker Change: But before we review the specifics on the quarter, I'd like to share a few perspectives on our business and the market [inaudible]
Speaker Change: Manhattan's strengths are well-established. Our platform, our products, and our people are world-class. Our unified cloud product portfolio is superior, offering best-in-class functionality. Manhattan is the only vendor named by industry analyst as a leader across the supply chain commerce ecosystem.
Speaker Change: Our growth opportunity continues to expand. Our addressable market is forecasted to grow at double digit caterer for the next several years. In addition to the market growth, we continue to invest in our products to expand the addressable market that we serve.
Speaker Change: Our sales team is driving growth through adding new customers, cross selling our unified product portfolio, and converting our on-premise customers to our cloud offerings.
Speaker Change: All of these sales channels contributed to strong Q1 bookings, and a 25% year-over-year increase in RPO [inaudible]
Speaker Change: As our customers navigate to current macro environment, we believe Manhattan is best positioned to help. As tariffs impact the cost of inventory, precise inventory management and handling of inventory to optimally satisfy in customers is more important than ever.
Speaker Change: The unified capabilities in our products will allow our customers to react faster and with more precision.
Speaker Change: Over the past several years, we've seen many supply chain disruptions, including the global COVID pandemic. In all of these cases, we've seen the companies with the most agile supply chains excel. And we've also seen these disruptions create long-term demand for Manhattan products. And we've seen these disruptions create long-term demand for Manhattan products.
Speaker Change: Less than two weeks ago, Google named Manhattan, its cloud business applications partner of the year for supply chain and logistics.
Speaker Change: This award highlights Manhattan's role as an innovator within the Google Cloud ecosystem, its commitment to driving customer success, and its pioneering application of a genetic AI in generative AI within the Manhattan Act of Suite.
Speaker Change: This is a great honor and demonstrates two leading engineering companies partnering to deliver innovation for their customers
Speaker Change: We will continue to put our customers first as we deliver industry leading innovation and simplification [inaudible]
Speaker Change: Supply chains are inherently sophisticated, but our R&D teams are investing in simplifying deployments to reduce the time to value and accelerate the adoption of Manhattan products across DCs and stores
Speaker Change: These simplification initiatives are already improving customer experiences while enabling Manhattan and its customers to move and grow faster.
Speaker Change: While the current and macro environment brings uncertainty to all businesses, I'm excited about our position in the market and our opportunity for growth. So now let's dive into key one.
Speaker Change: The quarter exceeded expectations as 21% cloud revenue growth drove our top line out performance and earnings leverage. Services revenue performed slightly better than expected, and to date, we have not experienced any adverse impacts from the macro environment beyond what we shared on our Q4 call.
Speaker Change: However, given the inherent flexibility of time and materials contracts and the status of the ever-changing tariff environment, we remain cautious on our near-term services revenue growth. Dennis will share more details on our guidance in just a few moments.
Speaker Change: RPO ended the quarter up 25% to roughly 1.9 billion as demand for our mission critical solutions remained solid. From a vertical perspective, our end markets are diverse and we have healthy established footprints across numerous sub-sectors.
Those sectors include retail, grocery, food distribution, life sciences, industrial, technology, airlines, third-party logistics, and others.
For example, Hugh Wandeel's included a global cosmetics company
Speaker Change: a grocery and drug retailer, a life sciences manufacturer, a global pharmaceutical and medical device company, a department store chain, and a global designer, developer and marketer of footwear, apparel and accessories as well as a number of others.
Speaker Change: Our Q1 competitive win rates remain consistent at about 70%, and we experience strength from new customers with approximately 50% of new cloud bookings generated from net new logos.
Speaker Change: In addition to the helping new logo activity, we continue to experience a good mix of conversions, upsells and cross-sells
Speaker Change: As always, while the timing of large deals in the mix of bookings will vary on a quarterly basis, we believe our bookings breadth from both new and existing customers across a broad set of industries and across our full product portfolio exemplifies our multiple opportunities for sustainable growth.
Speaker Change: And while the macro environment is uncertain, our pipeline remains solid, with net new potential customers representing approximately 35% of the demand.
Speaker Change: This demand also continues to fuel opportunities for our services organization, and Q1, our services team completed over 100 go lives for our customers.
So now let's turn to some product updates.
Speaker Change: This quarter we launched a new product offering called Enterprise Promise and Fulfill, designed to optimize B2B order promising and fulfillment, EPF delivers higher order conversion, lower fulfillment costs, and enhanced B2B customer experiences.
Speaker Change: In recent years, it's been clear that the trend in B2B order fulfillment is around creating more direct to consumer-like experiences.
Speaker Change: B2B customer expectations now include the need for capabilities like real-time inventory availability and order promising, real-time visibility into the order fulfillment process, and the ability to change orders after they've been submitted.
Speaker Change: Meanwhile, our customers are challenged to fulfill from increasingly complex supply chains, oftentimes the result of acquisitions and geographic expansion.
Speaker Change: Modern ERPs simply aren't capable of providing this order fulfillment agility. Manhattan active enterprise promise and fulfill works seamlessly with customers existing ERPs to provide these capabilities without requiring expensive and risky ERP customization.
Speaker Change: As many customers are now moving their ERP workloads to the cloud, they're also re-evaluating which function should remain in the ERP and which are better served by alternative cloud solutions.
Speaker Change: Enterprise Promise and fulfill, along with our broader set of Manhattan active supply chain planning and execution capabilities, is designed to capitalize on this big opportunity.
Speaker Change: Once the rollout is complete, M.A.O. will have replaced their legacy order management, point of sale, CRM, and chatbot.
Speaker Change: No other cloud solution provider can deliver these four vital systems on a unified cloud-native architecture, all with industry-leading functional depth.
Speaker Change: As retailers look to rationalize the complexity and cost of their existing commerce systems, we believe Manhattan Activon omnie puts us in a great position to benefit from the next wave of commerce technology modernization
Speaker Change: And speaking of chatbots, we now have multiple customers under contract for Manhattan Active Maven, our agentic AI customer service spot.
Speaker Change: Because of its deep prebuilt connectivity into the Manhattan Act of Omni API, customers can be live and deflecting 40% or more of their chat sessions in a manner of a few weeks.
Speaker Change: And as of this quarter, Manhattan Active Maven can also answer email. After voice, email is still the most prevalent form of inbound inquiry coming into our customers contact centers.
Speaker Change: Between email and chat, we're now able to significantly reduce the amount of activity performed by customer service agents.
Speaker Change: More broadly on Generative AI, we continue to make progress developing and deploying Manhattan assist speakers across all Manhattan active platform applications.
In addition to pre-existing features like providing application configuration advice
Speaker Change: These new capabilities allow contact center agents to ask questions about return policies. They also allow warehouse associates to ask questions about where they're supposed to induct a full tote and allow transportation planners to ask questions about their company's routing guide.
Speaker Change: We continue to see strong use of Manhattan Assist across our Amni Channel Commerce and Supply Chain Execution Customers. We'll be providing a preview of more agentic AI capabilities next month at Momentum. [inaudible]
Speaker Change: So that concludes my business update. Next, Dennis will provide you with an update on our financial performance and outlook, and then I'll close our prepared remarks with a brief summary before we move on to Q&A. So Dennis, over to you.
Dennis: Thanks, Eric. Our hats off to our men, having global teams, they continue to execute well in a very challenging macro environment.
Dennis: For the quarter, we delivered a better than expected financial performance on the top and bottom lines. This includes solid results across RPO bookings, cloud revenue growth, operating margin expansion and free cash flow generation
Dennis: Fx volatility persist and was roughly a $2 million head into Q1 total revenue. However, it was a $14 million tailwind to sequential RPO growth and did not have a meaningful impact on the year-over-year RPO growth.
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 $263 million up 3% [inaudible]
Dennis: Cloud revenue increased 21% to $94 million in services revenue declined 8% to $121 million.
Dennis: which was a bit better than expected. As previously discussed, the year-over-year decline in services revenue reflects customer budgetary constraints.
Speaker Change: that shifted services work to future periods. As Eric highlighted, given the uncertain macro environment and inherent flexibility of time and material contracts, we remain cautious on our near-term services revenue growth.
Speaker Change: We ended Q1 with RPO of $1.9 billion, up 25% compared to the prior year and 6% sequentially.
Speaker Change: The solid Q1 performance was driven by a healthy mix of cells from both new and existing customers.
Speaker Change: Our average contract duration remains at 5.5 to 6 years. However, some customers are electing longer ramp timelines.
Speaker Change: While the full contract is non-cancellable, we believe the current environment has resulted in several customers to take a more conservative approach to the first half implementation timeline of their contracts.
Speaker Change: Accordingly, we expect 38% of RPO to be recognized as revenue over the next 24 months.
Speaker Change: As Eric stated, our teams are focused on accelerating the adoption of our products and our contracts, always allow customers to amend their timeline for quicker deployments but not slower ones.
Speaker Change: Adjusted operating profit was $91 million with an adjusted operating margin of 34.7%.
Speaker Change: This is up over 340 basis points year over year. Our performance was driven by strong cloud revenue growth combined with operating leverage as our cloud business continues to scale.
Moving the task [inaudible]
Speaker Change: Operating cash flow increased 37% to a solid $75 million. This resulted in a 28% free cash flow margin and 35% adjusted EBITDA margin.
Speaker Change: Regarding the balance sheet, deferred revenue increased 12% to $298 million. We ended the quarter with $206 million in cash and zero debt.
Speaker Change: In the quarter, we leveraged our strong cash position and invested $100 million in share of repurchases.
Speaker Change: Additionally, our board has approved the replenishment of our 100 million share of repurchase authority.
Now onto our 2025 guidance.
Speaker Change: Our long-term and long-standing financial objective is to deliver sustainable double-digit top-line growth and top quartile operating margins, benchmarked against enterprise software costs.
Speaker Change: These are drivers who are best in class. Return on invested capital as we maintain a balanced investment approach to growth and profitability.
Speaker Change: As noted on prior earnings calls, our goal is to update our RPO Outlook on an annual basis.
Speaker Change: Additionally, as previously discussed, our bookings performance is impacted by the number and relative value of large deals we close in any quarter, which can potentially cause lumpiness or non-linear bookings throughout the year.
Speaker Change: As discussed earlier on this call, the macro environment clearly remains very uncertain which has increased our caution
Speaker Change: While clarity on external variables is limited, after numerous conversations with customers and prospects and an analysis of our business, we are reiterating our full year RPO, total revenue and operating margin outlooks.
Speaker Change: To account for our share buyback activity, we are increasing our EPS outlook.
Speaker Change: And finally, we stated in our safe harbor introduction, the turbulent global macro environment could materially impact our performance and cause actual results to differ materially from our projections.
and with that,
For RPO, we continue to target it.
2.11 billion to 2.15 billion. 3.11 billion.
Speaker Change: For Total Revenue, we continue to target 1.06 billion to 1.07 billion to 1.07 billion.
Speaker Change: for Q2, we expect total revenue of $263 million to $265 million.
Speaker Change: For the rest of the year, at the midpoint, we are targeting total revenue of about $271 million in Q3 and accounting for retail peak seasonality of $267 million in Q4.
for adjusted operating margin.
Speaker Change: At the midpoint, we expect adjusted operating margin on a quarterly basis to be about 33% for Q2, 33% in Q3 and accounting for retail peak seasonality, about 32.5% in Q4.
Speaker Change: to account for our share by-back, our full-year adjusted earnings per share range increases to $4.54 to $4.64.
Speaker Change: up from our prior range of $4.45 to $4.55 net. On a quarterly basis, we are targeting Q2 earnings per share of $1.13, Q3.
Speaker Change: of $1.16 and accounting for retail peak seasonality $1.12 and Q4. [inaudible]
Speaker Change: For Gap, earnings for share, our range is increasing to $3.06. Joseph, Joseph, Joseph, Joseph, Joseph,
Speaker Change: to $3.16 for Q2, we are targeting gap earnings per share of 75 cents.
Here are some additional details on our 2025 Outlook . .
Speaker Change: For a full year 2025, we continue to expect cloud revenue of $405 to $410 million dollars.
Speaker Change: On a quarterly basis, this assumes $99.5 million in Q2, $104.5 million in Q3, and $109 million in Q4.
Speaker Change: For services, we continue to expect a range of $494 to $500 million.
Speaker Change: On a quarterly basis, this assumes 126 million in Q2, 129 million in Q3, accounting for retail peak seasonality, 121 million in Q4.
Speaker Change: For maintenance, we expect a range of 118 to 120 million, or a 14 percent decline at the midpoint on attrition to cloud.
Speaker Change: On a quarterly basis, we expect Q2, $30 million, Q3, $29 million, and Q4, $27.5 million.
Speaker Change: And finally, we expect our tax rate to be about 21% and our diluted share count to be 61.5 million shares, which assumes no buyback activity.
Speaker Change: In summary, a solid Q1 performance by the Manhattan team. Thank you and back to Eric for some closing remarks. Great. Thank you, Dennis.
Speaker Change: We are pleased with the better than expected results and strong selling momentum in the quarter, and as we stated several times, we're cautious on the macro environment and we'll continue to manage the business in a prudent manner. However, Manhattan's business fundamentals are solid, our products are considered mission-critical, critical by our customers, and we're excited for the long term opportunity.
Speaker Change: Thank you to everyone for joining the call and thank you to the Manhattan team for their dedication and execution. That concludes our prepared remarks and we'd be happy to take questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is on the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, maybe necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Let's begin.
Speaker Change: Thank you. Our first question is from Terri Tillman with truest security. Please proceed with your question.
Terry Tillman: Yeah, good afternoon. First, I want to say a nice job on the 1Q performance. Hi, Eddie. Welcome aboard, Eric, and Hi, Dennis and Mike. My first question is, I want to kind of probe on cloud bookings and RPO, and I know it's a tough question, but I mean, we clearly do have a new wrinkle here with tariffs and just the uncertainty there. Thank you for your time, and I'll see you next time. Bye.
Yeah, I'm curious about like the
Speaker Change: The sales pipeline and how you see the urine folding, I know you're all maintaining kind of the RPO dynamics.
But...
Speaker Change: is the assumption that maybe near term, there's a little bit of reconstitution with some of the sales pipeline because folks have to kind of pivot and other folks don't cost verses to do so.
Speaker Change: Service Level and Supply Chain Velocity, and we should kind of assume that maybe the way this flows is 2, 2, 3, q, sales activity could be somewhat impacted and it's more of a kind of a seasonal, strong finish in 4, q, so we'd love to help with what is arguably a hard question, but then I have to follow up. Thank you.
Speaker Change: You know, I think when you look at the RPO and converting that RPO to revenue, we feel confident in our guidance.
Speaker Change: If we see challenges in Q2 and Q3, as we've mentioned before, we think we would see it first in services.
Speaker Change: However, we're not seeing that at this point. We continue to see strong bookings performance and we continue to see strong demand on our services and that's why, again, with caution from the macro and we understand that with time and materials contracts things can change quickly in services, but right now we're feeling comfortable with the guidance.
Speaker Change: Yeah, that's an interesting data point, Eric, there on the services kind of quarter to day. Just a follow-up question and I'll get back in the queue is I'm just curious in terms of this multi-year cloud and innovation cycle and investments you've made.
Speaker Change: You know, I think we'd like to hear about growth investments. So you've delivered on all these products. Now it's time to, you know, modify the heck out of these products. Could you maybe share a couple of interesting opportunistic areas where there's some interesting growth investments you're putting to work this year that could pay dividends over the next couple of years. Thank you.
Speaker Change: Yeah, sure. So, you know, clearly, we're very proud of the fact that our products are market leading. And, you know, job one is to continue that and make sure they continue to be market leading. However, with the product portfolio that we have in place today, you know, we think it's the right time to invest in sales and marketing and really drive the growth and at an even faster pace than we already have been driving it. [inaudible]
Speaker Change: So I do expect that we will continue to invest in sales specialists around many of our new products and make sure that we talked about our high win rates against our competitors. We want to continue those high win rates, but we want to be competing for more and more deals.
Thank you.
Bauer, next question is from Brian Peterson with Raymond James William.
Brian Peterson: Thanks, gentlemen, and congrats on the strong quarter. So maybe following up on Terry's question, you guys mentioned last quarter that you had a strong start to the first quarter in terms of bookings and RPO. It sounds like you had a solid close this quarter as well. I'd love to understand anything you can share on linearity as we went through the quarter in any perspective that you can share on how the second quarter started. Thank you very much.
and not a ton of... [inaudible]
Speaker Change: You know, Lumps and Bumps are the say in the quarter. With regard to Q1, maybe Eric has got a comment or two to make back, you know, the forward looking pipeline, but you know, we feel we feel good about where, you know, where the pipeline is, you know, it's a bit early in the early in the quarter, but activity is strong and we certainly have high expectations for the quarter. [inaudible]
Eric Clark: Yeah, I think that said it well. And the only thing I would add to that is as I mentioned in the prepared remarks, you know, 50% of the new cloud bookings in Q1 were from that new logos and, you know, that shows a strong demand for our products. And, you know, typically we think, you know, conversions and cross cells selling to existing customers can be quicker and easier. So to start the year with 50% new logo in Q1, I think is a really good statement for us.
Brian Peterson: Eric brought that up, really focused on sales and investing in sales and marketing, Brian would be my probably primary call out.
Got it, thanks, yes [inaudible]
Thank you, Brian.
Our next question is from Joseph Vruwink with Beard.
Great, thanks for taking my questions.
Brian Peterson: When you think about the theaters of cloud bookings between migrations, cross-cell, new logos [inaudible]
Speaker Change: Do you think one of those is more resilient in the current environment? I mean, I wouldn't have thought new logos would be the thing that really stands out, but it did in the quarter. So...
Speaker Change: That's kind of the heart of my question. I guess you're dealing with big enterprise customers, and so they're probably thinking about what their fulfillment needs to look like.
Speaker Change: years from now. But is there a certain resiliency in one driver of your bookings where you would say, yeah, the macro is turbulent, but these decisions still likely get made in 2025?
Speaker Change: I don't think he's Eddie Joe. I don't think there's any any particular segment that is that is stronger than the other or more resilient the other. I mean we as Eric pointed out we didn't have a terrific
Unknown Executive, Michael Bauer
Unknown Executive, Michael Bauer
Speaker Change: focus on spending across every company on the on the planet at the moment, you know, inventory levels.
Speaker Change: are likely to drop a little bit, making inventory more precious than ever, customer expectations
Okay, great Great.
Speaker Change: And then I want to ask that 38% share of RPO converting to revenue in the next 24 months.
Speaker Change: That's a tip down from I think the 40% you normally see so you can, you know, calculate and can fly bookings on RPL.
Speaker Change: I guess just based on that activity and maybe that is a bit of a new normal here in the near term.
Speaker Change: Do you think the 20% growth in cloud subs that you spoke about last quarter? Is that the right number to think about for this year and next year? And I'll turn it back over. Thank you
Unknown Executive, Michael Bauer
Thank you
True.
Our next question is from Dylan Becker with William Blair.
Dylan Becker: Hey gentlemen, congrats on the results here, maybe for Eric or Eddie to start. He helped us kind of think through how customers are navigating kind of some of the puts and takes, obviously in the current macro you can argue. Thank you.
Dylan Becker: Real-time visibility, planning, and execution is incrementally more important but it is a large transformational project like how that kind of force ranks in their investment kind of cycle relative to kind of putting out maybe some more immediate term types of fires if that makes sense [inaudible]
Dylan Becker: Yeah, I mean, it's very hard to predict, Dylan, you know, the crystal bowl, no question, I think it's a little, a little cladier than it's been for just about every company on the planet of, you know, at the moment. But as we look at
Dylan Becker: You know, the execution of the supply chain, certainly, you know, visibility and so forth is always important, but I think precise execution is going to be top of mind in terms of inventory management and getting that precious inventory into the right place at the right time and into the hands of the consumer when they expect it because [inaudible]
Dylan Becker: I don't think, regardless of everything else that's going on around the world, frankly, I don't think the expectations of the consumer are going to change.
Dylan Becker: Any manufacturer, wholesaler, distributor, retailer is still going to have to focus on executing at a really, really high level and obviously we can help them do that.
Speaker Change: Got it. Okay. That's helpful. Thank you, Eddie. And then maybe for Dennis to going back to the. Yeah.
Speaker Change: Well, before Dennis kicks in or maybe Eric has got a comment here, we have essentially the ultimate visibility. We know exactly what the contract duration is. We have essentially a documented ramp process. [inaudible]
Speaker Change: built in or ramped, built in to that, built into that contract. So the visibility is very, very clear. Now, again, it's very point of that. We've got some things that, you know, we've got in the, in the hopper to hear to try to help accelerate deployments and, you know, help time to value for our customers and generally that pretty, you know, they're pretty open to that. So, you know, there's an opportunity for us to maybe, [inaudible]
Speaker Change: Speed up a little bit, that revenue process during the contract duration, but we've got really, really good visibility into that [inaudible]
Eddie Capel: We have great, as Eddie said, great visibility. We have an internal metric we call bank revenue. And, you know, basically the free cash flow component is, you know, pretty strong as you can imagine, but as Eddie said,
Just great, great visibility. [inaudible]
Multi-Year Projection
All right. Thanks, guys. Really appreciate it.
Our next question is from George Kurosawa with City University.
George Kurosawa: Hey, thanks for taking the questions here. You called out some work you did talking to customers doing some independent analysis that ultimately led you to reiterate the guide. I love you could just double click on, you know, what you learn there, qualitative insights.
Speaker Change: Well, I'll let Eric pick this one up. But it wasn't so much we did, you know, any primary research with customers, we're in, we're in contact with our customers on a constant basis. So I think, you know, it was a it was a process of looking across that pipeline, talking to customers, talking to our prospects, that led us to believe that, you know, we were comfortable reiterating our, you know, annual RPO number.
George Kurosawa: Yeah, and in addition to the constant communication with our customers and we have that, you know, particularly in the customers where we're deploying and we've got services projects going on. It's, you know, in addition to quarterly and monthly reviews, our team is very actively gauging the demand from the services perspective from those clients and all of those factors were taken into consideration.
Speaker Change: Okay, that's that's helpful. And then I also wanted to clarify the FX component in the full year revenue guide. I think you called out 20 million headwind, last quarter, based off the FX moves, what's baked into the full year guide now at this point.
Yeah.
Less than one percent, George. George.
Okay, thanks for the help.
Thanks.
Speaker Change: Our next question is to Mark Schappel with Loop Capital Markets
Mark Chappell: Hi, thank you for taking my call and a nice job on the quarter. Eddie, with respect to your deal pipeline, let's want if you just comment on the strength of the large deals in the pipeline and maybe how that compares with say a year ago, and then also if you could just comment on maybe the confidence in your closure rates with respect to last year as well.
Eddie Capel: Good question, Mark. I mean, it's favorable for sure. Pipeline continues to grow, and sort of
Eddie Capel: Underbelly of your question there, does the large deal pipeline look proportionally similar this year, did it last year, given that pipeline is growing? And the answer to that is yes.
Eddie Capel: You know, for all of the reasons, frankly, that we've, you know, that we've talked about, you know, that we've talked about before. So, you know, I would say yes and yes to an answer to your question there.
Eddie Capel: That's fair of thanks. And then as a follow-up, it's nice to hear about the large Omni Channel deal that was called out in the quarter. It was already just provide some additional details around that deal, such as maybe who you competed with, the length of the sales cycle.
Speaker Change: Yeah, no, this one goes back, so I'll take, yeah, take those back a bit so I can certainly take this one It's an I can't remember the exact sale cycle duration but a little over a year for sure It's a, you know, more of this detail, come on, we just don't have authorization to use names and stuff at the moment, but but we will ensure going forward, but it's a department store for on the channel and point of sale so we're really
Speaker Change: Excited by this is a pranking at first real luxury department store for point of sale so we're we're very excited about that
Speaker Change: and say more details coming, but little over a year in terms of the cycle competed with everybody, it's a deal that everybody was chasing frankly, and glad to come out on top.
Great, thanks. That's all for me. Thanks
Now our next question is from Lachlan Brown with Red Boom Atlantic, Red Burn Atlantic.
Lachlan Brown: Hi, Eddie, Eric, Dennis, Mike, congrats on the strong quarter. Looks like there was strong delivery on M.A.R. relative to the Americas. How should we think about the FX benefit in there? And notwithstanding that, would it be fair to say that there's more supply chain certainty and willingness to invest from your European customer base?
Speaker Change: Well, so as Dennis pointed out, you know, the FX swings represent less than, you know, less than 1%. So, you know, not really a big impact there, we always call them out, we always want to provide full transparency there for sure.
Dennis: Lachlan, you know, in terms of the enthusiasm, spending enthusiasm across the theaters, I would say it's a bad equal.
Dennis: across the three theaters that we, you know, that we operate in. Key one was a little lower for me, for sure. But, you know, those things began to ran again quarter, you know, quarter by quarter. And when we look at the annual and annual pipeline across all those theaters, we're, we're certainly encouraged by all of them.
Speaker Change: Thanks for the detail. And there's some certain tariff environment because you make a talk to some of the capabilities that your active cloud solution can provide that perhaps dawn's premise solution cannot. And maybe you see this is an opportunity trigger of the cloud migration for some of your customers in the near term. Thank you very much.
Speaker Change: Yeah, I don't think it's going to trigger any particular activity in the near term moving from on-prem, you know, to the Clive Lachlan. You know, one never knows exactly, but I don't think so.
Speaker Change: Because, you know, our projects are mission critical and as volatile as the environment is today, you know, generally those are not going to push our customers into making, you know, near term and short term, short term decisions. [inaudible]
Speaker Change: But in answer to the first part of your question, the flexibility and the agility of our clad solutions, the ability to be able to update them in real time with zero down time is really helpful in this environment where again inventory is a lot of work is going to be done in the future.
Unknown Executive, Michael Bauer
That's very clear, Eddie. Thanks for the questions.
Pleasure, Lachlan. Thank you.
Speaker Change: Thank you. There are no further questions at this time. I would like to hand the floor back over to CEO Eric Clark.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.