Supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) reported Q2 FY2023 results topping Consensus expectations, with revenue up 20.4% year on year to $231 million. Manhattan Associates made a GAAP profit of $39.6 million, improving from its profit of $30.8 million in the same quarter last year.

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Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

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Sales Growth

As you can see below, Manhattan Associates's revenue growth has been over the last two years, growing from $166.1 million in Q2 FY2021 to $231 million this quarter.

This quarter, Manhattan Associates's quarterly revenue was up a very solid 20.4% year on year, above the company's historical trend. However, its growth did slow down compared to last quarter as the company's revenue increased by just $10 million in Q2 compared to $22.9 million in Q1 2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Ahead of the earnings results announcement, the analysts covering the company were expecting sales to grow 6.38% over the next 12 months.

In volatile times like these, we look for robust businesses with strong pricing power. Overlooked by most investors, this company is one of the highest-quality software companies in the world, and its software products have been the gold standard in critical industries for decades. The result is an impressive business that's up an incredible 18,000%+ since its IPO. You can find it on our platform for free.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Manhattan Associates's free cash flow came in at $39.6 million in Q2, down 23.3% year on year.

Manhattan Associates has generated $188.4 million in free cash flow over the last 12 months, an impressive 22.3% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.

Key Takeaways from Manhattan Associates's Q2 Results

Sporting a market capitalization of $11.9 billion, more than $153.3 million in cash on hand, and positive free cash flow over the last 12 months, we believe that Manhattan Associates is attractively positioned to invest in growth.

This was a classic "beat and raise" quarter for the company. We enjoyed seeing Manhattan Associates exceed analysts' revenue and non-GAAP EPS expectations this quarter. We were also glad that its full-year revenue and non-GAAP EPS guidance were raised and both came in higher than Wall Street's expectations. Zooming out, we think this was an impressive quarter that should delight shareholders. The market was likely expecting more, however, and the stock is down 2.01% after reporting, trading at $189.45 per share.

Manhattan Associates may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, and what's happened in the latest quarter. We cover this and more in our full company report, and it's free.

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The author has no position in any of the stocks mentioned in this report.