Manhattan Associates (MANH) Q2 2012 Earnings Call July 24, 2012 4:30 pm ET Executives Dennis B. Story - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer Peter F. Sinisgalli - Chief Executive Officer, President and Director Eddie Capel - Chief Operating officer and Executive Vice President Analysts Yun S. Kim - ThinkEquity LLC, Research Division Eric Lemus Mark W. Schappel - The Benchmark Company, LLC, Research Division Alan Weinfeld Presentation Operator
In addition, our comments will cover certain non-GAAP financial measures. These measures are not in accordance with, or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that this presentation of certain non-GAAP measures facilitates investors' understanding of our historical operating trends with useful insight into our profitability, exclusive of unusual adjustments. Our Form 8-K filed today with the SEC and available from our website, manh.com, contains important disclosure about our use of non-GAAP measures. In addition, our earnings release filed with the Form 8-K reconciles our non-GAAP measures to the most directly comparable GAAP measures.Now, I'll turn the call over to Pete. Peter F. Sinisgalli Thanks, and welcome to our second quarter 2012 earnings call. I'll start the call by taking you through an overview of the quarter. Dennis will follow with details of our financial results. I'll return for a general business update and then, we'll be happy to answer your questions. We're quite pleased with our second quarter financial results and continued to be encouraged about the near-term and long-term prospects. Dennis will provide financial details shortly. But essentially, all of our Q2 financial metrics were good. License revenue in Q2 was a little below our expectations as a few large deals slipped into Q3. But offsetting the large deal slippage was a strong showing of mid-sized deals, allowing us to post license revenue of $15.3 million. We had $2-million-plus deals closed in the quarter, both with new customers and led by our Warehouse Management systems. And of the large deals that slipped, none were lost to competitors and we hope to see them all closed over the next few quarters. Our license revenue pipelines and activity levels for Q3, Q4 and 2013 are all encouraging. Our Professional Services businesses posted another very strong quarter, and our maintenance revenue continues to compound, contributing to our best revenue quarter in history. Strong revenue, combined with tight expense management, allowed us to deliver record earnings as well.
Adjusted EPS was $0.76, $0.09 better than our previous record set in Q3 of last year. Other important long-term strategic indicators were also quite positive. Our investments in research and development over the past few years are paying off as indicated by our continued strength versus our competitors.Our win-loss rate continues to be strong and in the first half of 2012, it was about 67%, meaning we won 2 out of every 3 deals we competed in. Importantly, we won the big strategic deals and if you measure our win rate as a percent of dollars that we competed for, our win rate was about 80%. And to further support our sales momentum, implementations of our scope, supply chain process platform solution to -- continued to be quite successful. Due to our strong first half results and a positive outlook for the balance of 2012, we are raising our EPS guidance for the year by about $0.10 a share. In a separate announcement also released today, our board of directors set in motion a succession plan for Eddie Capel who will succeed Manhattan's CEO on January 1, 2013. The board and I have worked together over a number of years, developing a plan for a smooth transition of the CEO role. Eddie joined Manhattan's 12 years ago and has deep experience in all areas of our business. To help them prepare for the CEO role, he was appointed chief operating officer in January of 2011. In the COO role, most of the company reports to him. Eddie is very well prepared for this next step in his career. He and I will work closely together over the balance of the year to ensure a smooth handoff of responsibilities, and I'll remain on Manhattan Associates Board of Directors at least until next year's shareholder meeting. Read the rest of this transcript for free on seekingalpha.com