Manhattan Associates Leads in Warehouse Management Niche and Enjoys High Switching Costs

Manhattan Associates is the clear leader in the warehouse management systems, or WMS, software niche, in our view. Supply chains are complex and any disruption to warehouse operations could have a significant ripple effect among all nodes in the chain, which is captured in sticky customer relationships. When normalized for COVID-19, we view the company as capable of driving low-double-digit revenue growth annually over the next five years, with earnings growth of approximately 18% during that time. In 2017, Manhattan Associates introduced cloud versions of its software. We see a years-long mix shift from on-premises to cloud adoption.