This article first appeared on GuruFocus.
Total Revenue: $276 million, up 3% year-over-year.
Cloud Revenue: $105 million, increased 21% year-over-year.
Services Revenue: $133 million, declined 3% year-over-year.
Remaining Performance Obligations (RPO): $2.1 billion, up 23% year-over-year.
Adjusted Operating Margin: 37.5%, up about 40 basis points year-over-year.
Adjusted Earnings Per Share (EPS): $1.36, up 1% year-over-year.
GAAP EPS: $0.96, down 7% year-over-year.
Operating Cash Flow: $93 million, increased 49% year-over-year.
Free Cash Flow Margin: 32%.
Cash and Cash Equivalents: $264 million, with zero debt.
Share Repurchases: $50 million in Q3, $200 million year-to-date.
2025 Revenue Guidance: $1.03 billion to $1.077 billion.
2025 Adjusted Operating Margin Guidance: 35.6% midpoint.
2025 Adjusted EPS Guidance: $4.96 midpoint.
2026 Cloud Revenue Growth Expectation: 20%.
Release Date: October 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Manhattan Associates Inc (NASDAQ:MANH) reported a 21% increase in cloud revenue, driving top-line outperformance and earnings leverage.
The company experienced a 23% year-over-year increase in Remaining Performance Obligations (RPO) to $2.1 billion, indicating strong future revenue potential.
Win rates remained robust at 70%, with significant strength in selling to existing customers and a growing pipeline of conversion opportunities.
The company launched a dedicated renewal team and a conversion program, showing proactive efforts to convert on-premise customers to cloud solutions.
Manhattan Associates Inc (NASDAQ:MANH) is investing in agentic AI across its solutions, with plans for general availability in early 2026, which could enhance operational efficiency and customer value.
Q3 seasonality and the lumpiness of large deals pressured net new logos, which were only 17% of new cloud bookings in Q3.
Services revenue declined by 3% year-over-year, reflecting budgetary constraints and shifting services work to future periods.
The global macro environment remains volatile, which could impact future performance and cause actual results to differ from projections.
Some customers are electing longer ramp timelines for contract implementation, potentially delaying revenue recognition.
The company faces challenges in converting its large on-premise customer base to cloud solutions, requiring strategic investments and consultative approaches.
Story Continues
Q: Can you share more about your level of optimism regarding RPO levels and visibility into that metric as we move into 2026 and beyond? A: Eric Clark, President and CEO, explained that the third-quarter RPO showed double-digit growth when normalized for FX, with a 23% year-over-year increase. Looking forward, the renewal cycle provides clarity and optimism, as major renewals are expected over the next 18 months, which will renew at a larger scale, giving confidence in future RPO levels.
Q: Could you elaborate on your conversion strategies for moving on-prem customers to the cloud, and how do you see the mix of cloud for your WMS customer base evolving? A: Eric Clark highlighted the proactive and consultative approach to conversions, focusing on a cohort of warehouse customers for fixed fee, fixed timeline conversions to Active Warehouse. This strategy has generated significant pipeline growth and early wins, with expectations for more closures in Q4. The approach is being expanded to other cohorts, including transportation management.
Q: How is the fourth quarter shaping up in terms of RPO or bookings compared to last year? A: Eric Clark noted that while software business linearity typically trends towards the third month of a quarter, some deals pushed into the next quarter, giving a quicker start. Compared to last year, a similar pattern of a lower Q3 followed by a strong Q4 is expected.
Q: What impact do you expect agentic AI to have internally and externally, and how will it affect gross margins? A: Eric Clark stated that internally, agentic AI is providing leverage across departments, allowing for more features and competitive advantage. Externally, the unique cloud-native platform allows for rapid deployment of AI agents, resonating well with customers. The intention is to preserve margins, with more details on pricing and revenue impact to be shared in the next call.
Q: Could you discuss the feedback from the early access program on agentic AI and its potential impact on gross margins? A: Eric Clark shared that feedback has been positive, with customers surprised by the quick deployment of standard agents. The ability to build custom agents is also generating interest. The intention is to preserve margins, and more information on pricing and revenue impact will be provided in the next call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.