Manhattan Associates CEO talks Q2 beat, AI plans

Manhattan Associates (MANH) stock soared after the company surpassed second-quarter earnings expectations, beating estimates on both revenue and profit. Manhattan Associates CEO Eddie Capel joins Market Domination to discuss the results.

Capel attributes the strong performance to broad-based demand, highlighting the company's global presence with 18 offices worldwide and "a pretty broad portfolio of supply chain management software." He notes that this combination creates balance and diversification, which "frankly is one of the things that enabled us to deliver such a good quarter."

On the AI front, Manhattan Associates has recently launched "production-ready AI capability in our applications," marking their first step into AI adoption to enhance customer productivity. "We're excited for the opportunity for sure... but we are taking a pragmatic approach to releasing capabilities that we think our customers will really be able to use and frankly we'll be able to monetize," Capel told Yahoo Finance.

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This post was written by Angel Smith

Video Transcript

On an otherwise week day for Wall Street.

Manhattan Associates is a stand out to the upside.

The company reporting second quarter earnings and beating estimates on that quarter here to break down the report and talk about the supply chain landscape is Manhattan Associates.

CEO Eddie Capel.

Good to see Eddie.

Thanks for being here.

My pleasure, Julie.

Good to see you.

So let's talk about the quarter a little bit and sort of what was driving what you guys did.

Now you do supply chain.

Um, you do cloud services.

You do other types of, uh, software related services.

Where was the demand coming from in the quarter?

Yeah, really, Really Across the board.

So, um, you know, we have 18 offices around the world, a pretty broad portfolio of supply chain management software, everything from execution software, retail store systems planning and inventory optimisation software.

And we had a really nice balance quarter across the geographies across the product product suite and and across verticals.

And I think, uh, you know that frankly, is one of the things that enabled us to deliver such a good quarter was that that balance?

And, uh, and that diversification Eddie I, uh I wanted to take a bigger trend we've been discussing today on the show.

You know, as you saw Eddie Alphabet reported and disappointed and Tesla reported and disappointed.

And there's some strategies, Eddie, you were kind of bringing up the A I theme today and and just wondering whether investors are rethinking that theme.

And maybe investors are are looking at all that a I spend Eddie and they decided, you know, let's hold the brakes here.

Maybe it's more of an expense than a revenue generator.

I'm just interested as a CEO yourself, Eddie.

How do you think about the mega trend of a I?

How are you all, um, integrating that technology into your own business?

Mm.

Yeah, we we you know, we're We're we're bullish on a I for sure.

Uh, both from an internal and an external perspective.

So our own usage of internal usage of A I, you know, we're beginning to experiment and and, you know, really adopt uh uh, that technology, But But this month, we've launched our first production ready, uh, a I capabilities within our applications.

Um, the the the first release is specifically focused around, uh, customer Centricity intelligent chat bots.

Um, uh, experiential capabilities for call centre associates and so forth, you know, really focused on being able to, um, provide the consumer, uh, with a great experience, Uh, with the, uh, you know, with our retail customers helping with call deflection answering real world questions, not those chat bots that, you know, get get you to the, uh, to the point where you ask the real important question, and then they and then they fall over.

So, uh, we're we're excited about the opportunities for sure.

And we've built a set of products and a framework that allows for a really in depth, uh, generative A I capabilities to be adopted.

But we are taking a pragmatic approach to releasing capabilities that we think our customers will really be able to to use.

And frankly, we'll be able to monetize well, and I wanna pick up on that monetization piece, Eddie, because I don't know if you've been hearing the discussions we've been having on the show here.

But when you look at a a name like alphabet today, some of the disappointment seems to be that all of these a i investments aren't yet bearing fruit.

And what's more, it's not clear when they will.

Um, so do you think that expectations have gotten us ahead of themselves and for you in particular?

When will we start to see that monetization?

Yeah, So we've really, um I think they are ahead of themselves.

But, you know, there's no question about that.

The promise is there for sure.

And I think it is an inevitable.

It is inevitable that all of us will look back.

Um, you know, in the not too distant future and say, How do we live without Janitor Bay?

I much like we can't live without the Internet today, but but in terms of, you know, the M, our specific monetization.

As I said, we we launched our first, uh, saleable gene of a I capabilities this month.

And we expect this year certainly to be able to see revenues flowing through, uh, from those capabilities.

Um, finally, I want to ask you a bigger question about the supply chain and the sort of inventory cycle and where we are now.

Um, we just did our Yahoo Finance chart book and one of the charts we got from Bank of America had to do with the days per sales of inventory and that there was sort of a destocking cycle that now is normalising again, all the way on the right side of this chart.

Sort of.

I guess I wanted to ask you post pandemic with the whip sawing that we've seen in supply chains and inventory where we are now on that normalisation process.

Yeah, I, I think we are normalising.

There's no question about that.

I think the bull whip effect and and so forth is is smoothed out.

Um, and we are, and we are normalising.

You know the challenge, though, For every retailer, uh, every wholesaler every manufacturer is how much inventory do I start to meet the the the insatiable appetite of the consumer for faster deliveries, faster deliveries and faster deliveries.

You've got to have obviously inventory at the right place at the right time to be able to satisfy that, you know that need look over the last.

Let's call it 15 years we've gone from placing an order and expecting that package to show up on our doorstep.

Call it a week later.

Uh, today we're in a world.

Hey, we can place an order at 8 p.m. and it's on our doorstep before we wake up in the morning.

Now, I think you've got to solve that inventory problem.

Inventory has to be at the right place at the right time.

So our view is that solve for that problem is sophisticated software that understands where that demand is and can balance uh, that the, uh the location of the inventory being in the right place at the right time to solve for that demand.

Um, but I think the big picture of inventory normalisation and inventory levels, you know, has has settled down for sure.

Eddie.

So good to have you on the show today.

Thanks for joining us.

Thank you, Josh.

Really appreciate it.

Thank you, Julie.

Bye bye.