Event Summary
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 31, 1999.
Though 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 software market.
Figure 1
Three events in the quarter are worthy of mention:
Market Impact
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.
Its 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.
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 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.