Spring Brings New Growth To Manhattan Associates
Supply Chain Execution vendor, Manhattan Associates, recently reported
record results for the first quarter of 2000. Total revenue for the first
quarter ended March 31, 2000 was $28.3 million, an increase of 22% from
revenue of $23.2 million for the fourth quarter of 1999 and an increase
of 56% from revenue of $18.2 million for the first quarter ended March
Manhattan managed to grow both license and services revenues, their percentages
remained little changed from 1999 averages of 18% licenses and 65% services.
License fees for the first quarter ended March 31, 2000 were $5.0 million,
an increase of 17% from license fees of $4.3 million for the fourth quarter
of 1999. Services revenue for the first quarter ended March 31, 2000 was
$17.5 million, an increase of 20% over services revenue of $14.6 million
for the fourth quarter of 1999.
Manhattan's profitability streak continued in the first quarter with net
income of $2.9 million, or $0.10 per diluted share, compared to net income
of $1.6 million, or $0.06 per diluted share in the fourth quarter of 1999.
Manhattan's results are an achievement for the Atlanta, Georgia based
vendor, but mimic those reported by many of its competitors in the SCE
events in the quarter are worthy of mention:
in principle with CGS (Computer Generated Systems) to deliver Web-hosted
versions of its WMS and TMS products to small and mid-sized companies.
This is an early step in Manhattan's movement toward being able to
offer its applications as a subscription service over the Internet.
of a pilot project for its new product suite, InfoLink, and continued
work on releasing a commercial product. InfoLink is Manhattan's belated
entry in the tide of business-to-business collaboration software awash
in the market.
in the United Kingdom, which should give Manhattan a needed boost
in visibility outside North America. Bleckmann Logistics handles logistics
for Shoe Studio Group, owner of footwear brands familiar to North
American consumers such as Timberland, Rockport, and Cartier, and
will implement PkMS at a 100,000 square foot facility. Sainsbury Supermarkets
is a large grocery retailer located in the UK and plans to use PkMS
for managing a massive 34 sites responsible for 23,000 products to
428 customers throughout the UK.
Like its competitors in the SCE market, Manhattan needs to use its strong
first quarter to build momentum to drive further revenue growth. The SCE
market is highly fragmented and rapid time to market is an imperative
in winning new customers. Although Manhattan has provided the execution
backbone for dot-coms for several years, it has suffered from lack of
a well-defined Internet product strategy (see TEC note, "Transition
for Manhattan Associates Necessary for Long Term Growth").
President and CEO, Richard Haddrill is overseeing Manhattan's Internet
development, which is finally underway after a period of stagnation in
the latter part of 1999. Haddrill was appointed to replace Chairman Alan
Dabbiere in October 1999 amid a broad restructuring of the company's operations.
There is a low probability (30%) that the agreement with CGS will yield
a web hosted offering before the third quarter 2000, placing Manhattan
well behind competitors such as Catalyst International, which finished
work on its web deployed WMS in late 1999. Supply chain planning vendor
Logility formed an alliance to offer its WarehousePRO WMS over the web
through partner eBaseOne.com in January.
lagging Internet capabilities aside, Manhattan did make progress in meeting
its international market penetration objectives with its wins at large
facilities in the UK. Its success at Bleckmann Logistics also indicates
Manhattan knows how to spawn new business from existing installations.
Manhattan had installed its WMS at Timberland in 1998, which helped it
in winning the contract at Shoe Studio 3PL Bleckmann.
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 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