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Manhattan Associates Beats Street, Raises Guidance; Stock Jumps

Supply chain software developer Manhattan Associates ( MANH ) beat Wall Street’s first-quarter earnings and revenues estimates, then raised its full-year 2016 guidance after the market close Tuesday. Investors responded by bidding up the stock more than 7% after hours. Manhattan stock rose a fraction Tuesday and just fell short of a three-month high. CEO Eddie Capel said in the company’s earnings release, “(Manhattan’s) investment in multichannel, retail store and distribution management solutions continue to drive growth and extend our market leadership position in a subdued world economy.” Manhattan said that its Q1 non-GAAP earnings rose 23.5% to 42 cents per share on revenue of $149.9 million, up 12%. Analysts polled by Thomson Reuters had expected 39 cents and $145.5 million. For the year, Manhattan raised its adjusted EPS guidance to a range of $1.73 to $1.76, up 14% to 16%, from an earlier 11%-13% range. And it raised its revenue range to $615 million to $620 million, up 10.5% to 11.5% from an earlier 9.5%-10.5% outlook. Analysts had modeled $1.71 EPS minus items , up 12.5%, on revenue up 10% to $612 million.

No Slouch, But Manhattan Associates’ EPS Growth May Have Eased To 15%

Investors are hoping fast-growing supply-chain software developer Manhattan Associates ( MANH ) will say something Tuesday to help re-accelerate growth. Not that Manhattan is any slouch, but the 15% improvement in first-quarter earnings that it’s expected to disclose after Tuesday’s market close would be its slowest year-to-year growth rate in 15 quarters. Six of those 15 quarters have topped 30% earnings growth, including Q3 and Q4 2015, and all but two of the last 15 topped 20%. While still 25% off a record high 77.75 set Dec. 7, Manhattan Associates stock was up more than 1.5% in afternoon trading in the stock market today , near 58 and 31% above its 44.27 nadir hit Feb. 8 during this year’s software slump. Most of its bigger enterprise-software rivals have been faring better, with the biggest, Oracle ( ORCL ) up fractionally, 9% off recent highs. Enterprise software maker SAP ( SAP ) was also up fractionally and just 2% off a recent high, while Salesforce.com ( CRM ) was up more than 1%, just 7% off its recent high. The entire IBD Computer Software-Enterprise industry group, which does not include Oracle as a member, is about 9% off its Nov. 9 high. Oracle is a member of IBD’s Computer Software-Database group, which is 22% off an August high. Among the re-accelerants that management might discuss Tuesday is just how much its new distribution management (DM) tools announced last week might contribute to revenue. Its new DM Mobile platform gives users “the ability to address any operational issues, including inventory issues, directly from the floor via their tablet devices, increasing mobility and driving productivity and efficiency,” the company announced at the MODEX supply-chain management show in Atlanta. On Feb. 3, just before Manhattan stock tanked more than 20% in three trading sessions, William Blair analyst Matthew Pfau said in a research note that “the 2016 EPS guidance that management provided is conservative, and through a combination of revenue growth, operating expense leverage and share repurchases we expect Manhattan to continue to increase its EPS in excess of 15% over the next several years. “We recommend shares to long-term investors looking for a midcap software company with a strong record of execution and sustainable earnings growth opportunity.” By consensus, Pfau and four other Wall Street analysts polled by Thomson Reuters expect Manhattan to deliver Q1 earnings up 15% to 39 cents per share minus items, on revenue up 8.9% to $145.5 million. That would be a record quarter in hard dollars, but the year-over-year rate would be only slightly better than Q4’s 8% growth to $141 million and only the third time in 15 quarters that its sales growth had slipped into single digits. Over the past five years, it’s averaged 14% sales growth annually and 15% earnings growth. Manhattan guided full 2016 non-GAAP EPS to a range of $1.69 to $1.72, the midpoint slightly below analysts’ $1.71 consensus, or up 12.5% from 2015. It guided 2016 sales to a range of $609 million to $615 million, its midpoint coinciding with analysts’ $612 million consensus, up 10% from 2015. “Although the retail environment remains challenging, Manhattan has not seen a material change in IT purchasing trends from retails and the pipeline is still strong,” Pfau said. “However, we believe that management’s guidance takes into account a cautious retail IT spending environment for 2016.” While Manhattan’s core software manages warehouse inventory, its visualization tools allow users to see everything from the manufacturer’s supplies to the consumer’s purchase at the checkout counter. Pfau noted that 70% of its total license revenue comes from its basic warehouse management systems (WMS) license revenue, so WMS is a “leading indicator for sales of Manhattan’s other solutions.” License revenue, however, amounts to only 14% of its total revenue. Most of its sales, 77%, come from services related to its software licenses. “We will continue to be a serial investor in innovation,” Manhattan CEO Eddie Capel said in February.  

Salesforce.com Leads Software Stocks’ Harmony Up; Even Tableau Hums

The morning bell became music to the ears of software stock investors Thursday as Wall Street used Salesforce.com’s Q4 strength and outlook to harmonize. Salesforce.com ( CRM ), an enterprise cloud pioneer and the No. 1 maker of customer relationship management software, sang soprano, its stock gapping up 11% as soon as the conductor raised the baton on the morning after its upbeat earnings report late Wednesday. Rival SAP ( SAP ) was up 1.6% in early trade in the stock market today . Fellow enterprise software stocks Ultimate Software ( ULTI ) rose 2%, ServiceNow ( NOW ) 2.8% and Manhattan Associates ( MANH ) nearly 1%. The harmony extended to database choir: Legacy leader Oracle ( ORCL ) rose a fraction, Qlik ( QLIK ) 2.7%, Splunk ( SPLK ) 3.9% and Hortonworks ( HDP ) 1.8%. Workday ( WDAY ) leapt 5% despite a lowered price target from Wedbush. Even Tableau Software ( DATA ) was up as much as 3.5% early Thursday. Tableau stock collapsed 49.5% on Feb. 5 after the company issued soft Q4 results and an outlook of slower growth, sending the entire enterprise software sector into a tailspin. “Slowdown? What Slowdown?” asked FBN analyst Shebly Seyrafi in a Thursday research note, citing “600 seven-figure deals” signed by Salesforce.com during Q4. Salesforce set off a sectorwide rebound, but will it last? By midday, Salesforce had eased to an 8% gain, near 67.50. Most of the other stock also had eased, but remained up. Hortonworks, though, was down more than 1% and Manhattan and Splunk were down a fraction. Canaccord Genuity maintained its buy rating, but without explanation lowered its price target on Salesforce stock to 88 from 95 while praising the company. FBR, too, reportedly lowered its price target, to 82 from 88, but maintained its outperform rating. “We have pushed back against the pessimism that has permeated investors’ imaginations for the past 50 days,” wrote Canaccord analyst Richard Davis in a research note issued Thursday morning. “Salesforce decisively demonstrated that the world is far from ending, and for well-run, well-positioned companies with talented salespeople, growth is still coming in large chunks. “There was literally nothing wrong with this quarter’s print or longer-term outlook. We believe the stock’s 9% after-hours (Wednesday) pop is just the beginning of a year in which the stock delivers price appreciation that is materially better than the overall stock market.” For its fiscal Q4 ended Jan. 31, Salesforce said adjusted EPS rose 36% to 19, matching analyst consensus, on revenue up 25% to $1.81 billion vs. Wall Street’s $1.79 billion model. For fiscal Q1 2017, Salesforce expects adjusted EPS of 23-24 cents, up 47% at the midpoint and ahead of analysts’ 21-cent estimates, on sales up 25% to $1.89 billion, whereas analysts expected $1.86 billion. Brian Wieser, an analyst with Pivotal Research, noted that deferred revenue growth was up 29% in Q4, foreshadowing sales to come. “By segment, Marketing Cloud was up by 31%,” he wrote in a Thursday research note. “App Cloud and other (formerly the Platform segment) was up by 43%, Services Cloud was up by 35% and the flagship Sales Cloud was up by +12%. “Commentary about activity in the most recent quarter included reference to the company’s signing of a new nine-figure transaction as well as a renewal of another large customer, also with a nine-figure sum.” Image provided by Shutterstock .