Manhattan Associates Shares Plunge 24% After Weak Earnings Report and Growth Concerns
On January 29, 2025, shares of Manhattan Associates, Inc. (NASDAQ: MANH) experienced a dramatic decline, plummeting 24% to a low of $72.26. This alarming drop was a direct result of the company's latest earnings report, which revealed significant challenges facing its services business and provided a less-than-optimistic outlook for the fiscal year 2025.
The earnings report disclosed that the company’s revenue for the fourth quarter of 2024 came in at $119.5 million, which represented a meager growth of just 0.3% compared to the same quarter last year. This figure also fell short of analysts' predictions by approximately $2 million and reflected a worrying trend for investors who have closely monitored the company since it had previously assured them of robust growth prospects tied to the expansion of its cloud services.
Historically, Manhattan Associates has maintained that an increase in sales from its cloud solutions would lead to a corresponding growth in its services sector. The company's position was built on the premise that expanding cloud adoption and the frequency of customer upgrades would drive demand for consulting, training, and implementation services. However, the recent financial disclosures have raised questions about the validity of these claims.
Following the announcements, it was revealed that delays in professional services and deferred deals had severely impacted performance, necessitating revisions of revenue forecasts. Manhattan anticipates that services revenue will not only face challenges in the first quarter of 2025 but is also expected to hit its lowest point during this time. Company officials forecast that it might take until mid-2025 before any meaningful growth resumes in this sector.
Furthermore, approximately 10% of customers who are undergoing implementations have chosen to scale back their projected service engagements, exacerbating the concerns surrounding future revenues. The overall outlook for FY 2025 indicates a modest growth of only 2% to 3% for total revenues, accompanied by projections for GAAP EPS to decrease between 10% to 13%.
This grim portrayal of the company’s future prospects sparked a massive sell-off of shares, leading to a loss of over $4 billion in market capitalization for shareholders. The sudden decline prompted shareholder rights firm, Hagens Berman, to launch an investigation into whether the company may have misled investors regarding the sustainability of its growth strategy. Reed Kathrein, a partner at Hagens Berman, stated, "We’re assessing whether Manhattan Associates communicated misleading information about its revenue and growth potential to investors."
As the dust settles on this shocking revelation, affected investors have been urged to reach out to the law firm to explore potential actions regarding their losses. Those with insider knowledge about the company's practices are also encouraged to provide information that could aid the investigation.
In the wake of these developments, Manhattan Associates now faces increased scrutiny, and the road to recovery for the company will depend on its ability to rectify its service shortcomings and reassure investors. As the market continues to react to these announcements, stakeholders will need to watch closely for any updates that may signal a shift in the company's trajectory.
The earnings report disclosed that the company’s revenue for the fourth quarter of 2024 came in at $119.5 million, which represented a meager growth of just 0.3% compared to the same quarter last year. This figure also fell short of analysts' predictions by approximately $2 million and reflected a worrying trend for investors who have closely monitored the company since it had previously assured them of robust growth prospects tied to the expansion of its cloud services.
Historically, Manhattan Associates has maintained that an increase in sales from its cloud solutions would lead to a corresponding growth in its services sector. The company's position was built on the premise that expanding cloud adoption and the frequency of customer upgrades would drive demand for consulting, training, and implementation services. However, the recent financial disclosures have raised questions about the validity of these claims.
Following the announcements, it was revealed that delays in professional services and deferred deals had severely impacted performance, necessitating revisions of revenue forecasts. Manhattan anticipates that services revenue will not only face challenges in the first quarter of 2025 but is also expected to hit its lowest point during this time. Company officials forecast that it might take until mid-2025 before any meaningful growth resumes in this sector.
Furthermore, approximately 10% of customers who are undergoing implementations have chosen to scale back their projected service engagements, exacerbating the concerns surrounding future revenues. The overall outlook for FY 2025 indicates a modest growth of only 2% to 3% for total revenues, accompanied by projections for GAAP EPS to decrease between 10% to 13%.
This grim portrayal of the company’s future prospects sparked a massive sell-off of shares, leading to a loss of over $4 billion in market capitalization for shareholders. The sudden decline prompted shareholder rights firm, Hagens Berman, to launch an investigation into whether the company may have misled investors regarding the sustainability of its growth strategy. Reed Kathrein, a partner at Hagens Berman, stated, "We’re assessing whether Manhattan Associates communicated misleading information about its revenue and growth potential to investors."
As the dust settles on this shocking revelation, affected investors have been urged to reach out to the law firm to explore potential actions regarding their losses. Those with insider knowledge about the company's practices are also encouraged to provide information that could aid the investigation.
In the wake of these developments, Manhattan Associates now faces increased scrutiny, and the road to recovery for the company will depend on its ability to rectify its service shortcomings and reassure investors. As the market continues to react to these announcements, stakeholders will need to watch closely for any updates that may signal a shift in the company's trajectory.
Topics Business Technology）
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