Manhattan Associates Completes Second Quarter On Record Pace

  • Written By:
  • Published:

Manhattan Associates Completes Second Quarter On Record Pace
S. McVey - August 15, 2000

Event Summary

Manhattan Associates celebrated a record second quarter with license revenues reaching an all-time high of $5.7 million and services/resale hardware topping $28.9 million. Total revenue of $34.6 million is an increase of 22% from the first quarter of fiscal 2000 and an increase of 75% from the second quarter of fiscal 1999. The company extended its positive bottom line in the second quarter with $4.5 million in net earnings, giving it four consecutive quarters in the black.

Figure 1.

Manhattan also announced continued progress on its InfoLink initiatives. InfoLink is the company's collaboration product for suppliers, retailers, logistics providers to link Internet trading exchanges. The solution will use Microsoft's XML schemas and BizTalk framework. The InfoLink Advisory Council, a group of retailers who will participate in guiding InfoLink's focus and features, gained as members leading retailers Nordstroms, Inc., The Limited, Inc., and Dillard's, Inc.

Other events of note during the quarter include the signing of customers Staples, Inc., Ingram Industries, Inc., and Innotrac Corp., as well as repeat business at The $9 billion Staples will implement Manhattan solutions for advanced warehouse management, productivity tracking and labor management, and pickline optimization at multiple fulfillment centers.

Market Impact

Manhattan Associates has made significant strides in revitalizing its business, but still has some hurdles to overcome. The second quarter results demonstrate that the company was able to build on momentum gained in its first quarter. Manhattan appears to be an efficiently run organization and enjoys one of the highest gross revenue margins in the SCE market, facts that help explain its excellent profitability over the last several years.

Because they interact closely with the physical characteristics of their environments, warehouse management systems tend to require a significant level of customization during their implementation. Manhattan's solutions exemplify this reality, a fact borne out by the company's large percentage of services revenue, 62% for fiscal 1999. While an out-of-the-box solution may be an impractical goal for many WMS vendors and clients, Manhattan's usually involve more customization than most.

Its strengths aside, Manhattan will need to continue efforts on its InfoLink and other initiatives in order to spark its license revenue growth lest it degenerate exclusively into a services organization. Licenses edged lower as a percentage of total revenue to 16%, continuing a decline begun in 1998 (see Fig. 2). Clearly, Manhattan's new products to be launched over the next six to nine months are intended to sustain the recent dollar growth in license revenues over the last two quarters. A latecomer among the plethora of collaboration product offerings, InfoLink can greatly boost new license growth if it is successful in beating out more established offerings.

Figure 2.

Manhattan and its fellow WMS vendors were joined recently on Wall Street by EXE Technologies, a Dallas-based SCE vendor offering WMS linked to Internet fulfillment. With three times Manhattan's license revenues in the second quarter of 2000 (TEC estimate), EXE could spell trouble for the rest of the SCE market, especially with the increased visibility afforded by its new status as a public company.

User Recommendations

Users should view Manhattan's recent results as a confirmation of its ability to execute in its core markets. For companies operating in retail, apparel, or consumer goods manufacturing who need solid warehousing or transportation management capabilities only, Manhattan is a logical short list candidate.

Companies who are looking for support for e-commerce or marketplace initiatives, such as e-procurement and Internet fulfillment will want to consider Manhattan, but only in conjunction with vendors that offer web front-ends and transaction processing engines (such as CommericalWare), at least until InfoLink is generally available and has proven itself as a viable B2B platform.

comments powered by Disqus