Manhattan Associates Earnings: Strong Cloud Results Shine While Pipeline Builds

Narrow-moat Manhattan Associates reported first-quarter results above guidance and our expectations. The firm again raised its outlook for 2023 as it capitalizes on cross-selling opportunities and demonstrates its product resilience in the face of macroeconomic headwinds. Impressively, 25% of its cloud business in the quarter was generated from net new logos as verticals that are increasingly using a direct-to-consumer model recognize cost-reductions and operating efficiencies from Manhattan’s cloud-native platform. While macroeconomic challenges persist, Manhattan has invested to diversify its business and is less reliant on retail. We believe the decision is paying off, resulting in an outlook raise from management. We are raising our fair value estimate to $162 per share from $155 and view shares as fairly valued.