MANHATTAN ASSOCIATES INC

Previous wording

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three months ended March 31, 2024 and 2023, including the notes to those statements, included elsewhere in this quarterly report. We also recommend the following discussion be read in conjunction with management’s discussion and analysis and consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2023. Statements in the following discussion that are not statements of historical fact are “forward-looking statements.” Actual results may differ materially from the results predicted in such forward-looking statements, for a variety of factors. See “Forward-Looking Statements” below.

Current wording

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023, including the notes to those statements, included elsewhere in this quarterly report. We also recommend the following discussion be read in conjunction with management’s discussion and analysis and consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2023. Statements in the following discussion that are not statements of historical fact are “forward-looking statements.” Actual results may differ materially from the results predicted in such forward-looking statements, for a variety of factors. See “Forward-Looking Statements” below.

Previous wording

In the three months ended March 31, 2024, we generated $254.6 million in total revenue. The revenue mix for the three months ended March 31, 2024 was: cloud subscriptions 30%; software license 1%; maintenance 14%; services 52%; and hardware 3%.

Current wording

In the three and six months ended June 30, 2024, we generated $265.3 million and $519.9 million in total revenue, respectively. The revenue mix for the three months ended June 30, 2024 and six months ended June 30, 2024 was: cloud subscriptions 31%; software license 1%; maintenance 13%; services 52%; and hardware 3%.

Previous wording

We have three geographic reportable segments: North and Latin America (the “Americas”), Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC). Geographic revenue is based on the location of the sale. Our international revenue was approximately $83.7 million for the three months ended March 31, 2024, which represents approximately 33% of our total revenue for the three months ended March 31, 2024. International revenue includes all revenue derived from sales to customers outside the United States. At March 31, 2024, we employed approximately 4,700 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Current wording

We have three geographic reportable segments: North and Latin America (the “Americas”), Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC). Geographic revenue is based on the location of the sale. Our international revenue was approximately $88.8 million and $172.5 million for the three and six months ended June 30, 2024, respectively, which represents approximately 33% of our total revenue for both three and six months ended June 30, 2024. International revenue includes all revenue derived from sales to customers outside the United States. At June 30, 2024, we employed approximately 4,700 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Previous wording

While we remain cautious about the global economy, our results for the first three months of 2024 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory and omnichannel commerce solutions is in synergistic alignment with current market demand. We believe that this alignment is contributing to our strong financial results, higher demand and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

Current wording

While we remain cautious about the global economy, our results for the first six months of 2024 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory and omnichannel commerce solutions is in synergistic alignment with current market demand. We believe that this alignment is contributing to our strong financial results, higher demand and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

Previous wording

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Adoption of our Manhattan Active® cloud solutions continues to increase nicely, with cloud revenue up 36% over the same quarter in the prior year. Cloud revenue now represents about 97% of our total software revenue. Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Current wording

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Adoption of our Manhattan Active® cloud solutions continues to increase, with cloud revenue up 35% over the same quarter in the prior year. Cloud revenue now represents about 96% of our total software revenue. Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Previous wording

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In both the three months ended March 31, 2024, approximately 67% of our total revenue was generated in the United States, 18% in EMEA, and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that approximately 77% of every supply chain software solutions dollar invested is spent in North America and Western Europe; consequently, the health of the U.S. and the Western European economies have a meaningful impact on our financial results.

Current wording

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In both the three and six months ended June 30, 2024, approximately 67% of our total revenue was generated in the United States, 18% in EMEA, and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that approximately 78% of every supply chain software solutions dollar invested is spent in North America and Western Europe; consequently, the health of the U.S. and the Western European economies have a meaningful impact on our financial results.

Previous wording

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased to $78.0 million in the three months ended March 31, 2024 from $57.2 million for the same period in the prior year, representing a 36% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Current wording

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased to $160.4 million during the six months ended June 30, 2024 from $118.2 million for the same period in the prior year, representing a 36% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Previous wording

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and not included in RPO. RPO provides insight into our contracted backlog of future business. As of March 31, 2024, our RPO was approximately $1.5 billion, an increase of 31% over March 31, 2023 on strong demand.

Current wording

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and not included in RPO. RPO provides insight into our contracted backlog of future business. As of June 30, 2024, our RPO was approximately $1.6 billion, an increase of 29% over June 30, 2023 on strong demand.

Previous wording

Cloud Subscriptions and Software License Revenue. In the three months ended March 31, 2024, cloud subscriptions revenue was 97% of total cloud and software license revenue. In the three months ended March 31, 2024, cloud subscriptions revenue totaled $78.0 million or 30% of total revenues. The Americas, EMEA, and APAC segments recognized $61.1 million, $14.5 million, and $2.4 million in cloud subscriptions revenue, respectively, in the three months ended March 31, 2024. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles. Approximately 31% of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed during the three months ended March 31, 2024 was with new customers and 69% was with existing customers. We define new customers as entities from which we either have never earned revenue or have not recognized revenue in the last five years.

Current wording

Cloud Subscriptions and Software License Revenue. In the three months ended June 30, 2024, cloud subscriptions revenue totaled $82.4 million or 31% of total revenues. The Americas, EMEA, and APAC segments recognized $64.7 million, $15.4 million, and $2.3 million in cloud subscriptions revenue, respectively, in the three months ended June 30, 2024. In the six months ended June 30, 2024, cloud subscriptions revenue was 96% of total cloud and software license revenue. In the six months ended June 30, 2024, cloud subscriptions revenue totaled $160.4 million or 31% of total revenues. The Americas, EMEA, and APAC segments recognized $125.8 million, $29.9 million, and $4.7 million in cloud subscriptions revenue, respectively, in the six months ended June 30, 2024. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles.

Previous wording

In the three months ended March 31, 2024, license revenue totaled $2.8 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $1.8 million, $0.5 million, and $0.5 million in license revenue, respectively, in the three months ended March 31, 2024.

Current wording

In the three months ended June 30, 2024, license revenue totaled $3.1 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $2.4 million, $0.4 million, and $0.3 million in license revenue, respectively, in the three months ended June 30, 2024. In the six months ended June 30, 2024, license revenue totaled $5.9 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $4.3 million, $0.8 million, and $0.8 million in license revenue, respectively, in the six months ended June 30, 2024.

Previous wording

Maintenance Revenue. Our maintenance revenue for the three months ended March 31, 2024 totaled $35.0 million, or 14% of total revenue. The Americas, EMEA and APAC segments recognized $27.9 million, $4.7 million, and $2.4 million, respectively, in maintenance revenue in the three months ended March 31, 2024. For maintenance, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software upgrades, when and if available, which include additional or improved functionality and technological advances incorporating emerging supply chain and industry initiatives.

Current wording

Maintenance Revenue. Our maintenance revenue for the three months ended June 30, 2024 totaled $35.3 million, or 13% of total revenue. The Americas, EMEA and APAC segments recognized $28.6 million, $4.6 million, and $2.1 million, respectively, in maintenance revenue in the three months ended June 30, 2024. In the six months ended June 30, 2024, maintenance revenue totaled $70.2 million, or 13% of total revenue. The Americas, EMEA, and APAC segments totaled $56.5 million, $9.2 million, and $4.5 million in maintenance revenue, respectively, in the six months ended June 30, 2024. For maintenance, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software upgrades, when and if available, which include additional or improved functionality and technological advances incorporating emerging supply chain and industry initiatives.

Previous wording

Services Revenue. In the three months ended March 31, 2024, our services revenue totaled $132.2 million, or 52% of total revenue. The Americas, EMEA, and APAC segments recognized $99.1 million, $26.8 million, and $6.3 million, respectively, in services revenue in the three months ended March 31, 2024.

Current wording

Services Revenue. In the three months ended June 30, 2024, our services revenue totaled $136.8 million, or 52% of total revenue. The Americas, EMEA, and APAC segments recognized $102.5 million, $26.6 million, and $7.7 million, respectively, in services revenue in the three months ended June 30, 2024. In the six months ended June 30, 2024, services revenue totaled $269.0 million, or 52% of total revenue. The Americas, EMEA, and APAC segments totaled $201.6 million, $53.4 million, and $14.0 million in services revenue, respectively, in the six months ended June 30, 2024.

Previous wording

Hardware Revenue. Our hardware revenue, which we recognize net of related costs, totaled $6.5 million in the three months ended March 31, 2024 representing 3% of total revenue. As a convenience for our cloud and software customers, we resell a variety of hardware products developed and manufactured by third parties. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-authorized reseller agreements, pursuant to which we are entitled to purchase hardware products and services at discount prices. We generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we do not maintain hardware inventory.

Current wording

Hardware Revenue. Our hardware revenue, which we recognize net of related costs, totaled $7.8 million in the three months ended June 30, 2024 representing 3% of total revenue. For the six months ended June 30, 2024, hardware revenue totaled $14.3 million, or 3% of total revenue. As a convenience for our cloud and software customers, we resell a variety of hardware products developed and manufactured by third parties. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-authorized reseller agreements, pursuant to which we are entitled to purchase hardware products and services at discount prices. We generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we do not maintain hardware inventory.

Previous wording

We continue to invest significantly in research and development (R&D) to provide leading Unified Omnichannel Commerce and Digital Supply Chain solutions to enable global retailers, manufacturers, wholesalers, distributors, and logistics providers to successfully manage accelerating and fluctuating demands as well as the increasing complexity and volatility of their local and global supply chains, retail store operations and points of sale. Our R&D expenses were $35.0 million for the three months ended March 31, 2024.

Current wording

We continue to invest significantly in research and development (R&D) to provide leading Unified Omnichannel Commerce and Digital Supply Chain solutions to enable global retailers, manufacturers, wholesalers, distributors, and logistics providers to successfully manage accelerating and fluctuating demands as well as the increasing complexity and volatility of their local and global supply chains, retail store operations and points of sale. Our R&D expenses were $35.3 million and $70.3 million for the three and six months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024, we generated cash flow from operating activities of $54.7 million. Our cash and cash equivalents at March 31, 2024 totaled $207.5 million, with no debt on our balance sheet. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D in our Unified Omnichannel Commerce and Digital Supply Chain solutions to drive revenue and earnings growth. In addition, during the three months ended March 31, 2024, we repurchased approximately $73.4 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In April 2024, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock.

Current wording

For the three and six months ended June 30, 2024, we generated cash flow from operating activities of $73.3 million and $128.0 million, respectively. Our cash and cash equivalents at June 30, 2024 totaled $202.7 million, with no debt on our balance sheet. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D in our Unified Omnichannel Commerce and Digital Supply Chain solutions to drive revenue and earnings growth. In addition, during the six months ended June 30, 2024, we repurchased approximately $75.0 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In July 2024, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock.

Previous wording

In the following table, we present a summary of our consolidated results for the three months ended March 31, 2024 and 2023.

Current wording

In the following table, we present a summary of our consolidated results for the three and six months ended June 30, 2024 and 2023.

Previous wording

We have three geographic reportable segments: the Americas, EMEA, and APAC. Geographic revenue information is based on the location of sale. The revenues represented below are from external customers only. The geography-based expenses include costs of personnel, direct sales, marketing expenses, and general and administrative costs to support the business. There are certain corporate expenses included in the Americas segment that we do not charge to the other segments, including R&D, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. Included in the Americas costs are all R&D costs, including the costs associated with our operations in India. During the three months ended March 31, 2024 and 2023, we derived the majority of our revenues from sales to customers within our Americas segment. In the following table, we present a summary of revenue and operating income by segment:

Current wording

We have three geographic reportable segments: the Americas, EMEA, and APAC. Geographic revenue information is based on the location of sale. The revenues represented below are from external customers only. The geography-based expenses include costs of personnel, direct sales, marketing expenses, and general and administrative costs to support the business. There are certain corporate expenses included in the Americas segment that we do not charge to the other segments, including R&D, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. Included in the Americas costs are all R&D costs, including the costs associated with our operations in India. During the three and six months ended June 30, 2024 and 2023, we derived the majority of our revenues from sales to customers within our Americas segment. In the following table, we present a summary of revenue and operating income by segment:

Previous wording

Diluted earnings per share: $0.86 for the first quarter of 2024 compared to $0.62 for the first quarter of 2023;

Current wording

Diluted earnings per share: $0.85 for the second quarter of 2024 compared to $0.63 for the second quarter of 2023;

Previous wording

Days sales outstanding: 74 days at March 31, 2024, compared to 70 days at December 31, 2023;

Current wording

Days sales outstanding: 66 days at June 30, 2024, compared to 74 days at March 31, 2024;

Previous wording

Cash: $207.5 million at March 31, 2024, compared to $270.7 million at December 31, 2023;

Current wording

Cash: $202.7 million at June 30, 2024, compared to $207.5 million at March 31, 2024;

Previous wording

Share repurchases: In the three months ended March 31, 2024, we reduced our common shares outstanding through the repurchase of approximately 0.3 million shares of our common stock, under the share repurchase program authorized by our board of directors for a total investment of $73.4 million. In April 2024, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock.

Current wording

Share repurchases: In the three months ended June 30, 2024, we reduced our shares of common stock outstanding through the repurchase of approximately 0.3 million shares of our common stock, under the share repurchase program authorized by our Board of Directors for a total investment of $75.0 million. In July 2024, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $75.0 million of our common stock.

Previous wording

Below we discuss our consolidated results of operations for the first quarters of 2024 and 2023.

Current wording

Below we discuss our consolidated results of operations for the second quarters of 2024 and 2023.

Previous wording

Cloud Subscriptions Revenue. In the first quarter of 2024, cloud subscriptions revenue increased $20.8 million compared to the same quarter in the prior year. Our customers have demonstrated a clear preference for cloud-based solutions, including existing customers that are migrating from on-premise to cloud-based offerings. Cloud subscriptions revenue for the Americas, EMEA and APAC segments increased $14.8 million, $5.2 million and $0.8 million in the first quarter of 2024, respectively.

Current wording

Cloud Subscriptions Revenue. In the second quarter of 2024, cloud subscriptions revenue increased $21.4 million compared to the same quarter in the prior year. Our customers have demonstrated a clear preference for cloud-based solutions, including existing customers that are migrating from on-premise to cloud-based offerings. Cloud subscriptions revenue for the Americas, EMEA and APAC segments increased $15.1 million, $5.6 million and $0.7 million in the second quarter of 2024, respectively.

Previous wording

Software License Revenue. Software license revenue decreased $2.5 million in the first quarter of 2024 compared to the same quarter in the prior year on strong market preference for our cloud-native solutions. The perpetual license sales percentage mix across our product suite in the first quarter ended March 31, 2024 was over 80% warehouse management solutions.

Current wording

Software License Revenue. Software license revenue decreased $0.7 million in the second quarter of 2024 compared to the same quarter in the prior year on strong market preference for our cloud-native solutions. The perpetual license sales percentage mix across our product suite in the second quarter ended June 30, 2024 was over 80% warehouse management solutions.

Previous wording

Maintenance Revenue. Maintenance revenue decreased $0.7 million in the first quarter of 2024 compared to the same quarter in the prior year. Across the Americas, EMEA, and APAC segments, maintenance revenue remained relatively flat.

Current wording

Maintenance Revenue. Maintenance revenue decreased $0.6 million in the second quarter of 2024 compared to the same quarter in the prior year. Across the Americas, EMEA, and APAC segments, maintenance revenue remained relatively flat.

Previous wording

Hardware Revenue. Hardware sales decreased $0.1 million in the first quarter of 2024 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware is largely dependent upon customer-specific desires, which fluctuate.

Current wording

Hardware Revenue. Hardware sales increased $1.9 million in the second quarter of 2024 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware is largely dependent upon customer-specific desires, which fluctuate.

Previous wording

Cost of Cloud Subscriptions, Maintenance and Services. Costs of cloud subscriptions, maintenance and services consist primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $15.6 million increase in the quarter ended March 31, 2024 compared to the same quarter in the prior year was principally due to a $14.3 million increase in compensation and other personnel-related expenses and a $1.3 million increase in computer infrastructure cost.

Current wording

Cost of Cloud Subscriptions, Maintenance and Services. Costs of cloud subscriptions, maintenance and services consist primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $11.3 million increase in the quarter ended June 30, 2024 compared to the same quarter in the prior year was principally due to a $10.8 million increase in compensation and other personnel-related expenses and a $0.8 million increase in computer infrastructure cost.

Previous wording

Cost of Software License. Cost of software license consists of the costs associated with software reproduction; media, packaging and delivery; documentation, and other related costs; and royalties on third-party software sold with or as part of our products. Cost of software license remained relatively flat in the first quarter of 2024 compared with the same quarter in the prior year.

Current wording

Cost of Software License. Cost of software license consists of the costs associated with software reproduction; media, packaging and delivery; documentation, and other related costs; and royalties on third-party software sold with or as part of our products. Cost of software license remained relatively flat in the second quarter of 2024 compared with the same quarter in the prior year.

Previous wording

R&D expenses primarily consist of salaries and other personnel-related costs for personnel involved in our R&D activities. R&D expenses for the quarter ended March 31, 2024 increased by $4.2 million, compared to the same quarter of 2023 principally due to an increase in compensation and other personnel-related expenses.

Current wording

R&D expenses primarily consist of salaries and other personnel-related costs for personnel involved in our R&D activities. R&D expenses for the quarter ended June 30, 2024 increased by $3.7 million, compared to the same quarter of 2023 principally due to a $3.8 million increase in compensation and other personnel-related expenses.

Previous wording

Sales and Marketing. Sales and marketing expenses include salaries, commissions, travel and other personnel-related costs and the costs of our marketing and alliance programs and related activities. Sales and marketing expenses increased $1.9 million in the quarter ended March 31, 2024 compared to the same quarter in the prior year primarily due to a $1.0 million increase in compensation and other personnel-related expenses and a $0.8 million increase in marketing and campaign program expenses.

Current wording

Sales and Marketing. Sales and marketing expenses include salaries, commissions, travel and other personnel-related costs and the costs of our marketing and alliance programs and related activities. Sales and marketing expenses increased $0.6 million in the quarter ended June 30, 2024 compared to the same quarter in the prior year primarily due to a $0.8 million increase in compensation and other personnel-related expenses.

Previous wording

General and Administrative (G&A). G&A expenses consist primarily of salaries and other personnel-related costs of executive, financial, human resources, information technology, and administrative personnel, as well as facilities, legal, insurance, accounting, and other administrative expenses. G&A expenses increased $1.3 million, in the current year quarter compared to the same quarter in the prior year, primarily due to a $1.6 million increase in compensation and other personnel-related expenses.

Current wording

General and Administrative (G&A). G&A expenses consist primarily of salaries and other personnel-related costs of executive, financial, human resources, information technology, and administrative personnel, as well as facilities, legal, insurance, accounting, and other administrative expenses. G&A expenses increased $0.9 million, in the current year quarter compared to the same quarter in the prior year, primarily due to a $1.3 million increase in compensation and other personnel-related expenses.

Previous wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for the first quarter of 2024 and 2023 was $1.5 million.

Current wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for the second quarter of 2024 and 2023 was $1.5 million and $1.3 million, respectively.

Previous wording

Operating income in the first quarter of 2024 was $57.6 million compared to $47.1 million in the same quarter in the prior year. Operating margin was 22.6% for the first quarter of 2024 versus 21.3% for the same quarter in the prior year. Operating income and margin increased primarily due to increased cloud subscriptions and services revenues.

Current wording

Operating income in the second quarter of 2024 was $68.2 million compared to $50.5 million in the same quarter in the prior year. Operating margin was 25.7% for the second quarter of 2024 versus 21.9% for the same quarter in the prior year. Operating income and margin increased primarily due to increased cloud and services revenue growth combined with operating leverage as our cloud business continues to scale.

Previous wording

Condensed Consolidated Financial Summary - First Quarter 2024

Current wording

Condensed Consolidated Financial Summary – First Six Months of 2024

Previous wording

Services Revenue. Services revenue increased $16.0 million in the first quarter of 2024 compared to the same quarter in the prior year. Services revenue for the Americas, EMEA and APAC segments increased $12.3 million, $2.7 million, and $1.0 million, respectively, compared to the same quarter in the prior year, primarily driven by the increase in cloud subscriptions. The percentage of professional services revenue that relates to cloud subscriptions in the first quarter of 2024 and 2023 was approximately 73% and 64%, respectively. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Current wording

Services Revenue. Services revenue increased $28.2 million in the six months ended June 30, 2024 compared to the same period in the prior year. Services revenue for the Americas, EMEA and APAC segments increased $22.0 million, $3.7 million and $2.5 million in the six months ended June 30, 2024, respectively, compared with the same period in the prior year, primarily driven by the increase in cloud subscriptions. The percentage of professional services revenue that relates to cloud subscriptions in six months ended June 30, 2024 and 2023 was approximately 74% and 66%, respectively. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Previous wording

Other income, net. Other income, net primarily includes interest income, foreign currency gains and losses, and other non-operating expenses. Other income, net increased $0.8 million in the first quarter of 2024 compared to the same quarter in the prior year due to a $0.4 million increase in interest income and a $0.3 million increase in foreign currency gains. The increase of foreign currency gains is mainly due to gains or losses on intercompany transactions denominated in foreign currencies with subsidiaries due to the fluctuation of the U.S. dollar relative to other foreign currencies, primarily the Indian Rupee. We recorded net foreign currency losses of $0.6 million in the first quarter of 2024, and $0.8 million of net foreign currency losses in the same quarter in the prior year.

Current wording

Other income, net. Other income, net increased $0.7 million in the six months ended June 30, 2024 compared to the same period in the prior year primarily due to a $0.2 million decrease in foreign currency losses and a $0.4 million increase in interest income. The decrease of foreign currency losses is mainly due to gains or losses on intercompany transactions denominated in foreign currencies with subsidiaries due to the fluctuation of the U.S. dollar relative to other foreign currencies, primarily the Indian Rupee. We recorded net foreign currency losses of $1.1 million in the first six months of 2024, and $1.3 million of net foreign currency losses in the first six months of 2023.

Previous wording

Income tax provision. Our effective income tax rate was 8.2% and 17.9% for the quarters ended March 31, 2024 and 2023, respectively. The decrease in the effective tax rate for the three months ended March 31, 2024 is due to an increase of excess tax benefits on restricted stock vestings and a decrease of expense from a favorable tax law change allowing creditability of foreign tax.

Current wording

Income tax provision. Our effective income tax rate was 16.6% and 20.6% for the six months ended June 30, 2024 and 2023, respectively. The decrease in the effective tax rate for the six months ended June 30, 2024 is due to an increase of excess tax benefits on restricted stock vesting and a decrease of expense from a favorable tax law change allowing creditability of foreign tax.

Previous wording

During the first three months of 2024, we funded our business exclusively through cash generated from operations. Our cash and cash equivalents as of March 31, 2024 included $138.3 million held in the U.S. and $69.2 million held by our foreign subsidiaries. We believe that our cash balances in the U.S. are sufficient to fund our U.S. operations. In the future, if we elect to repatriate the unremitted earnings of our foreign subsidiaries, we would not be subject to additional U.S. income taxes on such earnings, but we could be subject to additional local withholding taxes.

Current wording

During the first six months of 2024, we funded our business exclusively through cash generated from operations. Our cash and cash equivalents as of June 30, 2024 included $124.6 million held in the U.S. and $78.1 million held by our foreign subsidiaries. We believe that our cash balances in the U.S. are sufficient to fund our U.S. operations. In the future, if we elect to repatriate the unremitted earnings of our foreign subsidiaries, we would not be subject to additional U.S. income taxes on such earnings, but we could be subject to additional local withholding taxes.

Previous wording

Cash flow from operating activities totaled $54.7 million and $58.7 million in the three months ended March 31, 2024 and 2023, respectively. Typical factors affecting our cash provided by operating activities include our level of revenue and earnings for the period, the timing and amount of employee bonus and income tax payments, and the timing of cash collections from our customers which is our primary source of operating cash flow. Cash flow from operating activities for the three months ended March 31, 2024 decreased $4.0 million compared to the same period in the prior year, which is mainly due to an increase in bonus payments and the timing of cash collections from our customers.

Current wording

Cash flow from operating activities totaled $128.0 million and $99.3 million in the six months ended June 30, 2024 and 2023, respectively. Typical factors affecting our cash provided by operating activities include our level of revenue and earnings for the period, the timing and amount of employee bonus and income tax payments, and the timing of cash collections from our customers which is our primary source of operating cash flow. Cash flow from operating activities for the six months ended June 30, 2024 increased $28.7 million compared to the same period in the prior year, which is mainly due to an increase in earnings and the timing of cash collections from our customers.

Previous wording

Cash flow used in investing activities totaled $2.3 million and $0.7 million in the three months ended March 31, 2024 and 2022, respectively. Our investing activities for both the three months ended March 31, 2024 and 2023 consisted of capital spending to support company growth.

Current wording

Cash flow used in investing activities totaled $4.5 million and $1.7 million in the six months ended June 30, 2024 and 2022, respectively. Our investing activities for both the six months ended June 30, 2024 and 2023 consisted of capital spending to support company growth.