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manh-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 0-23999

MANHATTAN ASSOCIATES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Georgia			58-2373424
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
2300 Windy Ridge Parkway, Tenth Floor
Atlanta, Georgia			30339
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s Telephone Number, Including Area Code: (770) 955-7070

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock

MANH

Nasdaq Global Select Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Registrant’s class of capital stock outstanding as of October 31, 2020, the latest practicable date, is as follows: 63,526,398 shares of common stock, $0.01 par value per share.

MANHATTAN ASSOCIATES, INC.

FORM 10-Q

Quarter Ended September 30, 2020

TABLE OF CONTENTS

PART I

	Financial Information

Item 1.	Financial Statements.

Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019		3

Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2020 and 2019 (unaudited)		4

Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 2020 and 2019 (unaudited)		5

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)		6

Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended September 30, 2020 and 2019 (unaudited)		7

Notes to Condensed Consolidated Financial Statements (unaudited)		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	27

Item 4.	Controls and Procedures.	28

	PART II

	OTHER INFORMATION

Item 1.	Legal Proceedings.	29

Item 1A.	Risk Factors.	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29

Item 3.	Defaults Upon Senior Securities.	29

Item 4.	Mine Safety Disclosures.	29

Item 5.	Other Information.	29

Item 6.	Exhibits.	30

Signatures.		31

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	September 30, 2020			December 31, 2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	166,254		$	110,678
Accounts receivable, net of allowance of $3,794 and $2,826, at September 30, 2020 and December 31, 2019, respectively		105,339			100,937
Prepaid expenses and other current assets		16,795			20,426
Total current assets		288,388			232,041

Property and equipment, net		17,930			22,725
Operating lease right-of-use assets		31,145			35,896
Goodwill, net		62,244			62,237
Deferred income taxes		4,386			6,814
Other assets		12,888			12,566
Total assets	$	416,981		$	372,279

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	18,038		$	20,561
Accrued compensation and benefits		33,158			45,991
Accrued and other liabilities		19,363			19,325
Deferred revenue		113,205			94,371
Income taxes payable		1,325			1,348
Total current liabilities		185,089			181,596

Operating lease liabilities, long-term		27,613			32,416
Other non-current liabilities		16,302			15,989

Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2020 and 2019		-			-
Common stock, $0.01 par value; 200,000,000 shares authorized; 63,526,106 and 63,456,986 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		635			635
Retained earnings		206,735			159,490
Accumulated other comprehensive loss		(19,393	)		(17,847	)
Total shareholders' equity		187,977			142,278
Total liabilities and shareholders' equity	$	416,981		$	372,279

See accompanying Notes to Condensed Consolidated Financial Statements.

Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020		2019
	(unaudited)			(unaudited)		(unaudited)		(unaudited)
Revenue:
Cloud subscriptions	$	21,064		$	14,242	$	56,827	$	31,110
Software license		13,233			15,486		28,649		39,621
Maintenance		37,305			37,763		108,947		111,185
Services		73,470			91,626		232,654		274,208
Hardware		4,685			3,158		12,213		8,896
Total revenue		149,757			162,275		439,290		465,020
Costs and expenses:
Cost of software license		527			748		1,673		1,963
Cost of cloud subscriptions, maintenance and services		64,672			73,618		201,382		211,151
Research and development		20,454			22,614		63,713		65,824
Sales and marketing		11,399			12,125		34,196		41,426
General and administrative		15,536			16,236		45,666		48,091
Depreciation and amortization		2,193			1,937		6,796		5,710
Total costs and expenses		114,781			127,278		353,426		374,165
Operating income		34,976			34,997		85,864		90,855
Other (loss) income, net		(891	)		810		371		368
Income before income taxes		34,085			35,807		86,235		91,223
Income tax provision		9,119			8,700		19,535		22,219
Net income	$	24,966		$	27,107	$	66,700	$	69,004

Basic earnings per share	$	0.39		$	0.42	$	1.05	$	1.07
Diluted earnings per share	$	0.39		$	0.42	$	1.04	$	1.06

Weighted average number of shares:
Basic		63,524			64,247		63,541		64,591
Diluted		64,427			64,992		64,298		65,112

See accompanying Notes to Condensed Consolidated Financial Statements.

Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020			2019
	(unaudited)		(unaudited)			(unaudited)			(unaudited)
Net income	$	24,966	$	27,107		$	66,700		$	69,004
Foreign currency translation adjustment		1,589		(1,925	)		(1,546	)		(1,688	)
Comprehensive income	$	26,555	$	25,182		$	65,154		$	67,316

See accompanying Notes to Condensed Consolidated Financial Statements.

Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2020			2019
	(unaudited)			(unaudited)
Operating activities:
Net income	$	66,700		$	69,004
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,796			5,710
Equity-based compensation		24,068			23,646
Loss (gain) on disposal of equipment		15			(436	)
Deferred income taxes		2,409			(1,331	)
Unrealized foreign currency loss (gain)		415			(570	)
Changes in operating assets and liabilities:
Accounts receivable, net		(3,799	)		(9,178	)
Other assets		2,331			(7,042	)
Accounts payable, accrued and other liabilities		(15,446	)		16,271
Income taxes		547			576
Deferred revenue		18,832			15,696
Net cash provided by operating activities		102,868			112,346

Investing activities:
Purchase of property and equipment		(1,928	)		(11,358	)
Net maturities of investments		-			1,439
Net cash used in investing activities		(1,928	)		(9,919	)

Financing activities:
Purchase of common stock		(43,523	)		(86,459	)
Net cash used in financing activities		(43,523	)		(86,459	)

Foreign currency impact on cash		(1,841	)		(1,476	)

Net change in cash and cash equivalents		55,576			14,492
Cash and cash equivalents at beginning of period		110,678			99,126
Cash and cash equivalents at end of period	$	166,254		$	113,618

See accompanying Notes to Condensed Consolidated Financial Statements.

Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

													Accumulated
							Additional						Other			Total
	Common Stock						Paid-In			Retained			Comprehensive			Shareholders'
	Shares			Amount			Capital			Earnings			Loss			Equity
For the Three Months Ended September 30, 2020
Balance, June 30, 2020 (unaudited)		63,518,968		$	635		$	-		$	173,125		$	(20,982	)	$	152,778
Repurchase of common stock		(3,963	)		-			(9,012	)		8,644			-			(368	)
Restricted stock units issuance		11,101			-			-			-			-			-
Equity-based compensation		-			-			9,012			-			-			9,012
Foreign currency translation adjustment		-			-			-			-			1,589			1,589
Net income		-			-			-			24,966			-			24,966
Balance, September 30, 2020 (unaudited)		63,526,106		$	635		$	-		$	206,735		$	(19,393	)	$	187,977

For the Nine Months Ended September 30, 2020
Balance, December 31, 2019 (audited)		63,456,986		$	635		$	-		$	159,490		$	(17,847	)	$	142,278
Repurchase of common stock		(561,901	)		(6	)		(24,062	)		(19,455	)		-			(43,523	)
Restricted stock units issuance		631,021			6			(6	)		-			-			-
Equity-based compensation		-			-			24,068			-			-			24,068
Foreign currency translation adjustment		-			-			-			-			(1,546	)		(1,546	)
Net income		-			-			-			66,700			-			66,700
Balance, September 30, 2020 (unaudited)		63,526,106		$	635		$	-		$	206,735		$	(19,393	)	$	187,977

For the Three Months Ended September 30, 2019
Balance, June 30, 2019 (unaudited)		64,322,067		$	643		$	-		$	170,668		$	(16,624	)	$	154,687
Repurchase of common stock		(432,995	)		(4	)		(8,002	)		(28,215	)		-			(36,221	)
Restricted stock units issuance		11,456			-			-			-			-			-
Equity-based compensation		-			-			8,002			-			-			8,002
Foreign currency translation adjustment		-			-			-			-			(1,925	)		(1,925	)
Net income		-			-			-			27,107			-			27,107
Balance, September 30, 2019 (unaudited)		63,900,528		$	639		$	-		$	169,560		$	(18,549	)	$	151,650