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Manhattan Associates Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 31, 2012 03:36PM

Manhattan Associates Inc. (MANH) filed Quarterly Report for the period ended 2012-09-30. Manhattan Associates, Inc. has a market cap of $1.22 billion; its shares were traded at around $59.99 with a P/E ratio of 25.1 and P/S ratio of 3.7. Manhattan Associates, Inc. had an annual average earning growth of 9% over the past 10 years. GuruFocus rated Manhattan Associates, Inc. the business predictability rank of 3.5-star.



Highlight of Business Operations:

Services revenue. Our services business consists of professional services (consulting and customer training) and customer support services and software enhancements (CSSE). Services revenue totaled $71.9 million, or 75% of total revenue, with gross margins of 54.6% for the three months ended September 30, 2012, and $211.6 million, or 75% of total revenue, with gross margins of 55.3%, for the nine months ended September 30, 2012. Professional services accounted for approximately 65% of total services revenue and approximately 50% of total revenue in the three and nine months ended September 30, 2012. Our operating margin profile may be lower than those of various other technology companies due to our large services revenue mix as a percentage of total revenue. While we believe our services margins are very strong, they do lower our overall operating margin profile as services margins are inherently lower than license revenue margins.

Services revenue. Services revenue increased $8.3 million, or 13%, in the third quarter of 2012 compared to the same quarter in the prior year due to a $5.7 million increase in professional services revenue and a $2.6 million increase in customer support and software enhancements. The increase in services revenue was primarily due to customer-specific initiatives in conjunction with customer upgrade activity and large license deals signed. Services revenue for the Americas, EMEA, and APAC segments increased $6.5 million, $1.5 million, and $0.3 million, respectively, in the third quarter of 2012 compared to the third quarter of 2011.

Operating income for the third quarter of 2012 was $21.7 million compared to $19.4 million for the third quarter of 2011. Operating margins were 22.6% for the third quarter of 2012 versus 22.7% for the same quarter in the prior year. Operating income and margin for the quarter ended September 30, 2011 included a $2.5 million recovery of a previously impaired auction rate security investment. Excluding the recovery of the previously impaired investment, operating income and margins increased primarily due to strong revenue growth and expense management in the current quarter in addition to favorable foreign currency translation effects of $0.9 million for the three months ended September 30, 2012, primarily due to the weakening of the Indian Rupee versus the U.S. dollar during the three months ended September 30, 2012 compared to the same period in the prior year.

Services revenue. Services revenue increased $28.1 million, or 15%, in the nine months ended September 30, 2012 compared to the same period in the prior year due to a $20.5 million increase in professional services revenue and a $7.7 million increase in customer support and software enhancements. The increase in services revenue was primarily due to customer-specific initiatives in conjunction with customer upgrade activity and implementation services for large license deals signed. Services revenue for the Americas, EMEA and APAC segments increased $21.9 million, $2.8 million and $3.4 million, respectively, in the nine months ended September 30, 2012 compared to the same period in the prior year.

Operating income for the nine months ended September 30, 2012 was $61.0 million compared to $45.2 million for the nine months ended September 30, 2011. Operating margins were 21.7% for the first nine months of 2012 versus 18.4% for the first nine months of 2011. Operating income and margin for the nine months ended September 30, 2011 included a $2.5 million recovery of a previously impaired auction rate security investment discussed above. Operating income and margins increased due to strong revenue growth and expense management during the year in addition to favorable foreign currency translation effects of $2.4 million for the nine months ended September 30, 2012, primarily due to the weakening of the Indian Rupee versus the U.S. dollar during the nine months ended September 30, 2012 compared to the same period in the prior year.

Read the The complete Report



Stocks Discussed: MANH,
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