What Happened?
Shares of supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) fell 25.6% in the morning session after the company reported weak fourth-quarter results: Its revenue guidance for next year suggests a significant slowdown in demand, and its full-year revenue guidance fell short of Wall Street's estimates. Moving down the income statement, full-year EPS guidance also came in below expectations. On the other hand, MANH beat EPS expectations on revenue, which came in slightly ahead of Wall Street's estimates. Overall, this was a weaker quarter, with the outlook weighing on shares.
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What The Market Is Telling Us
Manhattan Associates’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for Manhattan Associates and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 13.1% on the news that the company reported a "beat and raise" quarter. Fourth quarter results exceeded expectations for revenue, EPS, and free cash flow. Gross margin also improved. Notably, Remaining performance obligations (RPO - leading revenue indicator) grew by 36% at the end of the year. However, its revenue guidance for next year suggests a significant slowdown in demand, but we can't be too negative because it exceeded Wall Street analysts' expectations. In addition, the company raised the full-year RPO guidance to $1.78 billion at the midpoint (versus the previous guidance of $1.75 billion). Similarly, FY'24 operating margin guidance was raised. Overall, this was a really good quarter that should please shareholders.
Manhattan Associates is down 16.5% since the beginning of the year, and at $224.45 per share, it is trading 27.5% below its 52-week high of $309.78 from December 2024. Investors who bought $1,000 worth of Manhattan Associates’s shares 5 years ago would now be looking at an investment worth $2,578.
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