Supply chain software solutions firm Manhattan Assoc (MANH 46.27, -4.31) trades about 8.5% lower this afternoon after last night reporting mixed Q1 results and lowering FY17 revenue guidance.
For those who may not be familiar, MANH designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through customers’ networks or from their fulfillment centers, customers can reap the rewards of the omni-channel marketplace.
Now, in terms of why the stock is seeing such a negative reaction to the mixed Q1 report, a good place to start looking is the continuation of contracting revenues. While MANH beat market expectations on the bottom line with earnings per share (EPS) of $0.42, revenues were below street expectations, falling 4.3% compared to a year ago to $143.5 million.
This under-performance can be traced back to the company’s customers, namely retailers. With customers such as Chico’s, Ulta Beauty, Five Below and Staples, often times MANH can be at the mercy of its customer’s markets. Management pointed to that much in the report, stating that they expect retail market headwinds to persist throughout 2017 as many retailers address strategic challenges with their enterprise transformations.
In light of that commentary, MANH management decided to dial back FY17 revenue expectations. Now, the company sees FY17 revenues in the range of $606-620 million compared to the prior expectation between $622-632 million. The bottom line is still expected to come in at $1.89-1.93 per share, but it appears that the mixed Q1 print along with the updated revenue outlook for the full year are enough to drag shares lower today.