Skip to main content

Manhattan Assoc(MANH-Q)
NASDAQ

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Manhattan Associates Reports Record First Quarter Results

Business Wire - Tue Apr 25, 2023

Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $221.0 million for the first quarter ended March 31, 2023. GAAP diluted earnings per share for Q1 2023 was $0.62 compared to $0.48 in Q1 2022. Non-GAAP adjusted diluted earnings per share for Q1 2023 was $0.80 compared to $0.60 in Q1 2022.

“Manhattan Associates is off to a great start to 2023. Demand is strong, customer satisfaction is solid, and our consistent investment in R&D continues to extend our leadership position. Cloud and services revenue growth exceeded our expectations. This drove better than expected top-line and earnings growth in the quarter,” said Manhattan Associates president and CEO Eddie Capel.

“While we remain appropriately cautious regarding the global economy, we continue to set aggressive growth and investment goals that are aligned to best help our customers digitally transform their businesses,” Mr. Capel concluded.

FIRST QUARTER 2023 FINANCIAL SUMMARY:

  • Consolidated total revenue was $221.0 million for Q1 2023, compared to $179.0 million for Q1 2022.
    • Cloud subscription revenue was $57.2 million for Q1 2023, compared to $37.3 million for Q1 2022.
    • License revenue was $5.4 million for Q1 2023, compared to $8.4 million for Q1 2022.
    • Services revenue was $116.2 million for Q1 2023, compared to $89.9 million for Q1 2022.
  • GAAP diluted earnings per share was $0.62for Q1 2023, compared to $0.48 for Q1 2022.
  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.80for Q1 2023, compared to $0.60 for Q1 2022.
  • GAAP operating income was $47.1 million for Q1 2023, compared to $34.0 million for Q1 2022.
  • Adjusted operating income, a non-GAAP measure, was $63.7 million for Q1 2023, compared to $48.1 million for Q1 2022.
  • Cash flow from operations was $58.7 million for Q1 2023, compared to $31.8 million for Q1 2022. Days Sales Outstanding was 65 days at March 31, 2023, compared to 77 days at December 31, 2022.
  • Cash totaled $181.6 million at March 31, 2023, compared to $225.5 million at December 31, 2022.
  • During the three months ended March 31, 2023, the Company repurchased 514,838 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $74.2 million. In April 2023, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock.

2023 GUIDANCE

Manhattan Associates provides the following revenue, operating margin and diluted earnings per share guidance for the full year 2023:

 

 

Guidance Range - 2023 Full Year

 

($'s in millions, except operating margin and EPS)

$ Range

 

% Growth Range

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue - current guidance

$856

 

$864

 

12%

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin:

 

 

 

 

 

 

 

 

 

GAAP operating margin - current guidance

18.6%

 

18.9%

 

 

 

 

 

 

Equity-based compensation

7.8%

 

7.8%

 

 

 

 

 

 

Adjusted operating margin(1) - current guidance

26.4%

 

26.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (EPS):

 

 

 

 

 

 

 

 

 

GAAP EPS - current guidance

$2.00

 

$2.06

 

-1%

 

1%

 

 

Equity-based compensation, net of tax

0.90

 

0.90

 

 

 

 

 

 

Excess tax benefit on stock vesting(2)

(0.05)

 

(0.05)

 

 

 

 

 

 

Adjusted EPS(1) - current guidance

$2.85

 

$2.91

 

3%

 

5%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and related income tax effects.

 

 

(2) Excess tax benefit on stock vesting expected to occur primarily in the first quarter of 2023.

 

 

 

 

 

Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above and guideposts in the supplemental information below, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. Those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make this earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance and guideposts, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

Manhattan Associates’ conference call regarding its first quarter financial results will be held today, April 25, 2023, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software. The Internet webcast will be available until Manhattan Associates’ second quarter 2023 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

Manhattan Associates provides adjusted operating income and margin, adjusted income tax provision, adjusted net income, and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three months ended March 31, 2023.

Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation – net of income tax effects. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers.

Manhattan Associates designs, builds and delivers leading edge cloud solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2023 Guidance” and “Guideposts,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: economic conditions, including inflation; disruption in the retail sector; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; disruption in the retail sector; risks related to our products’ technology and customer implementations; global instability, including the war in Ukraine; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

 

 

(unaudited)

 

(unaudited)

Revenue:

 

 

 

 

Cloud subscriptions

 

$57,220

 

$37,297

Software license

 

5,352

 

8,358

Maintenance

 

35,650

 

35,302

Services

 

116,170

 

89,918

Hardware

 

6,621

 

8,081

Total revenue

 

221,013

 

178,956

Costs and expenses:

 

 

 

 

Cost of cloud subscriptions, maintenance and services

 

103,327

 

83,025

Cost of software license

 

302

 

402

Research and development

 

30,794

 

27,455

Sales and marketing

 

18,065

 

14,390

General and administrative

 

19,953

 

17,965

Depreciation and amortization

 

1,487

 

1,747

Total costs and expenses

 

173,928

 

144,984

Operating income

 

47,085

 

33,972

Other income, net

 

143

 

738

Income before income taxes

 

47,228

 

34,710

Income tax provision

 

8,437

 

4,118

Net income

 

$38,791

 

$30,592

 

 

 

 

 

Basic earnings per share

 

$0.62

 

$0.48

Diluted earnings per share

 

$0.62

 

$0.48

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

Basic

 

62,211

 

63,213

Diluted

62,767

63,871

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Reconciliation of Selected GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

2022

 

 

 

 

 

 

Operating income

 

 

$47,085

 

$33,972

Equity-based compensation (a)

 

 

16,640

 

14,138

Adjusted operating income (Non-GAAP)

 

 

$63,725

 

$48,110

 

 

 

 

 

 

Income tax provision

 

 

$8,437

 

$4,118

Equity-based compensation (a)

 

 

2,409

 

2,182

Tax benefit of stock awards vested (b)

 

 

2,955

 

4,375

Adjusted income tax provision (Non-GAAP)

 

 

$13,801

 

$10,675

 

 

 

 

 

 

Net income

 

 

$38,791

 

$30,592

Equity-based compensation (a)

 

 

14,231

 

11,956

Tax benefit of stock awards vested (b)

 

 

(2,955)

 

(4,375)

Adjusted net income (Non-GAAP)

 

 

$50,067

 

$38,173

 

 

 

 

 

 

Diluted EPS

 

 

$0.62

 

$0.48

Equity-based compensation (a)

 

 

0.23

 

0.19

Tax benefit of stock awards vested (b)

 

 

(0.05)

 

(0.07)

Adjusted diluted EPS (Non-GAAP)

 

 

$0.80

 

$0.60

 

 

 

 

 

 

Fully diluted shares

 

 

62,767

 

63,871

(a)

Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include that expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives.

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

2022

 

 

 

 

 

 

Cost of services

 

 

$6,516

 

$5,137

Research and development

 

 

3,655

 

3,189

Sales and marketing

 

 

1,648

 

1,406

General and administrative

 

 

4,821

 

4,406

Total equity-based compensation

 

 

$16,640

 

$14,138

(b)

Adjustments represent the excess tax benefits and tax deficiencies of the equity awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible on our tax return for an equity award is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we exclude equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also exclude the related tax benefit (expense) generated upon their vesting.

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

181,595

 

 

$

225,463

 

Accounts receivable, net of allowance of $6,140 and $6,009, at March 31, 2023 and December 31, 2022, respectively

 

 

160,568

 

 

 

166,767

 

Prepaid expenses and other current assets

 

 

29,341

 

 

 

23,145

 

Total current assets

 

 

371,504

 

 

 

415,375

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

12,049

 

 

 

12,803

 

Operating lease right-of-use assets

 

 

16,973

 

 

 

17,794

 

Goodwill, net

 

 

62,233

 

 

 

62,230

 

Deferred income taxes

 

 

39,743

 

 

 

37,206

 

Other assets

 

 

28,341

 

 

 

24,770

 

Total assets

 

$

530,843

 

 

$

570,178

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

25,357

 

 

$

25,701

 

Accrued compensation and benefits

 

 

45,802

 

 

 

54,469

 

Accrued and other liabilities

 

 

24,452

 

 

 

24,569

 

Deferred revenue

 

 

216,312

 

 

 

208,807

 

Income taxes payable

 

 

10,830

 

 

 

2,049

 

Total current liabilities

 

 

322,753

 

 

 

315,595

 

 

 

 

 

 

 

 

Operating lease liabilities, long-term

 

 

13,044

 

 

 

14,065

 

Other non-current liabilities

 

 

13,974

 

 

 

13,718

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2023 and 2022

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 200,000,000 shares authorized; 62,026,840 and 62,191,570 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

620

 

 

 

621

 

Retained earnings

 

 

207,176

 

 

 

253,711

 

Accumulated other comprehensive loss

 

 

(26,724

)

 

 

(27,532

)

Total shareholders' equity

 

 

181,072

 

 

 

226,800

 

Total liabilities and shareholders' equity

 

$

530,843

 

 

$

570,178

 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

(unaudited)

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

38,791

 

 

$

30,592

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,487

 

 

 

1,747

 

Equity-based compensation

 

 

16,640

 

 

 

14,138

 

Loss on disposal of equipment

 

 

16

 

 

 

-

 

Deferred income taxes

 

 

(2,523

)

 

 

(3,985

)

Unrealized foreign currency loss (gain)

 

 

1,167

 

 

 

(494

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

6,730

 

 

 

(8,077

)

Other assets

 

 

(8,760

)

 

 

(10,934

)

Accounts payable, accrued and other liabilities

 

 

(10,009

)

 

 

(6,177

)

Income taxes

 

 

7,850

 

 

 

6,175

 

Deferred revenue

 

 

7,327

 

 

 

8,807

 

Net cash provided by operating activities

 

 

58,716

 

 

 

31,792

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(666

)

 

 

(1,159

)

Net cash used in investing activities

 

 

(666

)

 

 

(1,159

)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Repurchase of common stock

 

 

(101,688

)

 

 

(77,108

)

Net cash used in financing activities

 

 

(101,688

)

 

 

(77,108

)

 

 

 

 

 

 

 

Foreign currency impact on cash

 

 

(230

)

 

 

(914

)

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(43,868

)

 

 

(47,389

)

Cash and cash equivalents at beginning of period

 

 

225,463

 

 

 

263,706

 

Cash and cash equivalents at end of period

 

$

181,595

 

 

$

216,317

 

MANHATTAN ASSOCIATES, INC.

SUPPLEMENTAL INFORMATION

 

1. GAAP and adjusted earnings per share by quarter are as follows:

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

GAAP Diluted EPS

$0.48

 

$0.49

 

$0.47

 

$0.60

 

$2.03

 

$0.62

Adjustments to GAAP:

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

0.19

 

0.20

 

0.19

 

0.21

 

0.79

 

0.23

Tax benefit of stock awards vested

(0.07)

 

-

 

-

 

-

 

(0.07)

 

(0.05)

Adjusted Diluted EPS

$0.60

 

$0.69

 

$0.66

 

$0.81

 

$2.76

 

$0.80

Fully Diluted Shares

63,871

 

63,419

 

63,165

 

63,028

 

63,408

 

62,767

2. Revenues and operating income by reportable segment are as follows (in thousands):

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Revenue:

Americas

$139,540

 

$151,996

 

$156,674

 

$155,674

 

$603,884

 

$170,759

EMEA

32,151

 

31,614

 

31,843

 

33,330

 

128,938

 

39,658

APAC

7,265

 

8,314

 

9,584

 

9,099

 

34,262

 

10,596

 

$178,956

 

$191,924

 

$198,101

 

$198,103

 

$767,084

 

$221,013

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating Income:

Americas

$21,393

 

$24,507

 

$22,914

 

$30,475

 

$99,289

 

$29,647

EMEA

10,517

 

9,423

 

9,851

 

10,239

 

40,030

 

12,793

APAC

2,062

 

3,323

 

4,005

 

3,991

 

13,381

 

4,645

 

$33,972

 

$37,253

 

$36,770

 

$44,705

 

$152,700

 

$47,085

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (pre-tax):

Americas:

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

$14,138

 

$15,538

 

$14,533

 

$15,152

 

$59,361

 

$16,640

 

$14,138

 

$15,538

 

$14,533

 

$15,152

 

$59,361

 

$16,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted non-GAAP Operating Income:

Americas

$35,531

 

$40,045

 

$37,447

 

$45,627

 

$158,650

 

$46,287

EMEA

10,517

 

9,423

 

9,851

 

10,239

 

40,030

 

12,793

APAC

2,062

 

3,323

 

4,005

 

3,991

 

13,381

 

4,645

 

$48,110

 

$52,791

 

$51,303

 

$59,857

 

$212,061

 

$63,725

 

 

 

 

 

 

 

 

 

 

 

 

3. Impact of Currency Fluctuation

 

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Revenue

$(2,268)

 

$(4,568)

 

$(6,152)

 

$(5,124)

 

$(18,112)

 

$(3,084)

Costs and expenses

(2,043)

 

(3,862)

 

(5,412)

 

(5,354)

 

(16,671)

 

(3,616)

Operating income

(225)

 

(706)

 

(740)

 

230

 

(1,441)

 

532

Foreign currency gains (losses) in other income

711

 

2,056

 

1,569

 

353

 

4,689

 

(810)

 

$486

 

$1,350

 

$829

 

$583

 

$3,248

 

$(278)

Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Operating income

$470

 

$710

 

$1,166

 

$1,900

 

$4,246

 

$1,632

Foreign currency gains (losses) in other income

809

 

2,085

 

1,713

 

738

 

5,345

 

(283)

Total impact of changes in the Indian Rupee

$1,279

 

$2,795

 

$2,879

 

$2,638

 

$9,591

 

$1,349

4. Other income includes the following components (in thousands):

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Interest income

$19

 

$92

 

$112

 

$373

 

$596

 

$969

Foreign currency gains (losses)

711

 

2,056

 

1,569

 

353

 

4,689

 

(810)

Other non-operating income (expense)

8

 

95

 

(69)

 

102

 

136

 

(16)

Total other income (loss)

$738

 

$2,243

 

$1,612

 

$828

 

$5,421

 

$143

5. Capital expenditures are as follows (in thousands):

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Capital expenditures

$1,159

 

$1,084

 

$1,909

 

$2,435

 

$6,587

 

$666

6. Stock Repurchase Activity (in thousands):

 

 

2022

 

2023

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

Full Year

 

1st Qtr

Shares purchased under publicly announced buy-back program

383

 

417

 

347

 

206

 

1,353

 

515

Shares withheld for taxes due upon vesting of restricted stock units

203

 

4

 

8

 

2

 

217

 

208

Total shares purchased

586

 

421

 

355

 

208

 

1,570

 

723

 

 

 

 

 

 

 

 

 

 

 

 

Total cash paid for shares purchased under publicly announced buy-back program

$49,965

 

$50,151

 

$50,000

 

$25,234

 

$175,350

 

$74,177

Total cash paid for shares withheld for taxes due upon vesting of restricted stock units

27,143

 

528

 

1,242

 

197

 

29,110

 

27,511

Total cash paid for shares repurchased

$77,108

 

$50,679

 

$51,242

 

$25,431

 

$204,460

 

$101,688

7. Remaining Performance Obligations

 

We disclose revenue we expect to recognize from our remaining performance obligations ("RPO"). Approximately 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year (including cloud-deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Maintenance contracts are typically one year and are not included in the RPO. Our RPO as of the end of each period appears below (in thousands):

 

 

March 31, 2022

 

 

June 30, 2022

 

 

September 30, 2022

 

 

December 30, 2022

 

 

March 31, 2023

 

 

 

Remaining Performance Obligations

$

809,540

 

 

$

897,680

 

 

$

969,603

 

 

$

1,051,544

 

 

$

1,153,404

 

 

 

 

8. The 2017 U.S. Tax Cuts and Jobs Act eliminated the expensing of research and development costs as incurred for tax purposes beginning in 2022.

 

This law changes the timing of cash tax payments, increasing near-term taxable income and payments, but normalizing over time as these expenses are amortized. Our income tax payments increased by approximately $26 million in 2022 due to this law change and we expect a similar negative impact for 2023. While there is still a possibility that legislation will be enacted that defers or eliminates the requirement to capitalize these costs, our current outlook factors in higher cash taxes as we will be required to make these payments, unless the existing law is amended. This legislation does not impact earnings per share, does not create any incremental expense obligation, and does not impact our ability to operationally grow cash flow.

9. Guideposts

 

The following table shows our (i) actual 2022 cloud revenue and remaining performance obligations (“RPO”) results, (ii) revised 2023 cloud revenue guidepost, (iii) 2023 RPO guidepost published as of October 25, 2022, and (iv) guideposts published as of February 1, 2022, for cloud revenue and RPO for 2024.

 

 

 

Current Guideposts

 

 

 

($'s in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud Revenue

 

 

 

Year

 

Low

 

Mid

 

High

 

% Growth(1)

 

 

 

2022⁽²⁾

 

$176

 

$176

 

$176

 

44%

 

 

 

2023⁽³⁾

 

$238

 

$240

 

$242

 

36%

 

 

 

2024⁽⁵⁾

 

$310

 

$328

 

$345

 

37%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Remaining Performance Obligations

 

 

 

Year

 

Low

 

Mid

 

High

 

% Growth(1)

 

 

 

2022⁽²⁾

 

$1,052

 

$1,052

 

$1,052

 

50%

 

 

 

2023⁽⁴⁾

 

$1,300

 

$1,350

 

$1,400

 

28%

 

 

 

2024⁽⁵⁾

 

$1,600

 

$1,700

 

$1,800

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Year-over-year percentage growth is calculated based on the actual or forecasted mid-points.

 

 

 

(2) Amounts reflect actual results for 2022.

 

 

 

(3) Amounts reflect revised range as of April 25, 2023.

 

 

 

(4) Amounts remain unchanged from October 25, 2022.

 

 

 

(5) Amounts remain unchanged from February 1, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

These guideposts are forward-looking statements and are subject to all the risks and uncertainties applicable to our shorter-term 2023 Guidance, as stated above. In addition, the further into the future we project our financial expectations, the greater the risk that actual results will differ materially; consequently, our guideposts for the following fiscal year may be inherently more uncertain than our guideposts for this fiscal year, or than our 2023 Guidance published above.

 

Provided Content: Content provided by Business Wire. The Globe and Mail was not involved, and material was not reviewed prior to publication.