Manhattan Associates Q2 Earnings Call Highlights

Key Points

• Record Q2 performance: Revenue rose 9% year over year to $298 million, driven by 26% cloud growth to $127 million. RPO increased 23% to $2.47 billion, while adjusted EPS rose 6% to $1.39.
• Cloud and AI momentum: On-premises conversions generated more than 40% of new cloud bookings, and Manhattan Active Agents reached over 10% of the installed base through pilots or subscriptions. The company reported a 100% pilot-to-subscription conversion rate so far, although AI remains a small revenue contributor.
• 2026 outlook raised: Manhattan increased its full-year revenue outlook to $1.16 billion-$1.166 billion, with adjusted EPS of $5.44-$5.50 and an adjusted operating margin target of about 35.1%. New product editions are also intended to expand the company’s addressable market and support additional cloud conversions.

Manhattan Associates NASDAQ: MANH reported record second-quarter and first-half results for 2026, citing accelerating cloud revenue, three consecutive quarters of record bookings and growth in remaining performance obligations amid what executives described as a volatile global macroeconomic environment.

President and Chief Executive Officer Eric Clark said the company’s momentum was driven by continued product innovation and sales-and-marketing investments announced a year ago. Those investments included product-focused sales specialists, teams dedicated to on-premises-to-cloud conversions and renewals, expanded partner channels, and forward-deployed engineers supporting the company’s agentic artificial intelligence offerings.

“Three consecutive quarters of record bookings give us confidence that our go-to-market approach is working,” Clark said.

Cloud Growth and Bookings Momentum

Second-quarter total revenue rose 9% year over year to $298 million. Excluding license and maintenance revenue, which has been declining as customers transition to cloud subscriptions, total revenue increased 13%.

Cloud revenue increased 26% to $127 million, while services revenue rose 3% to $133 million. Chief Financial Officer Linda said cloud revenue outperformed expectations because of strong execution and upsells, which can generate revenue more quickly. About $1 million of implementation work also shifted from the third quarter into the second quarter.

Remaining performance obligations, or RPO, totaled $2.47 billion at quarter-end, up 23% from a year earlier and 5% sequentially. Foreign exchange was an approximately $3 million headwind to sequential RPO growth and a roughly $9 million headwind to year-over-year RPO growth, Linda said.

Clark said conversions from on-premises software to Manhattan Active accounted for more than 40% of new cloud bookings during the quarter. New logos represented more than 25% of new cloud bookings, while the company’s win rate remained above 70%. Sales to existing customers also accelerated, he said.

Executives said the stronger conversion activity represented less than 2% of the company’s conversion base during the quarter. Fewer than 25% of the company’s on-premises customer base had begun the conversion process, Clark said, leaving what he characterized as a sizable opportunity.

• Adjusted operating profit was $104 million, producing a 34.9% adjusted operating margin.
• Adjusted earnings per share increased 6% to $1.39.
• GAAP earnings per share declined 9% to $0.85, reflecting about $8 million, or $0.11 per share, in restructuring expense.
• Operating cash flow rose 22% to $91 million, while free-cash-flow margin was 30.1%.
• The company ended the quarter with $186 million in cash and no debt.

Manhattan repurchased $125 million of shares during the quarter and $275 million year to date. It had $225 million remaining under its share repurchase authorization announced in March.

AI Adoption Begins to Contribute

Clark said Manhattan Active Agents are becoming a more meaningful differentiator in customer discussions and contributed to both deal activity and pipeline growth. The offering includes prebuilt agents that can be activated immediately, as well as an Agent Foundry that allows customers to build and deploy custom agents with assistance from Manhattan’s forward-deployed engineers.

The company said the agents are embedded in its cloud-native platform, reducing the need for customers to implement external data lakes. Clark said the technology combines deterministic workflows with probabilistic AI, using probabilistic models primarily for exception handling where they add value.

Since launching in the first quarter, Active Agents have reached more than 10% of the company’s Active install base through pilots or subscriptions. Manhattan said it has experienced a 100% conversion rate from AI pilot programs to subscriptions so far, though Clark cautioned that the offering has been commercially available for only two quarters and that the company does not yet have enough data to provide revenue guidance.

Linda said AI agents contributed to the company’s cloud revenue upside during the second quarter, but remained a relatively small contributor and were expected to remain so through the rest of 2026. Unlike other applications that generate revenue as deployments ramp, AI agents can be activated at full subscription value on the first day, executives said.

Clark cited customer operating results that included an 87% reduction in short picks at a healthcare products distributor, a 49% reduction in late shipment departures at a regional grocer, and a 21% reduction in order cycle time at the same grocer.

New Editions Expand Addressable Market

Manhattan also announced three editions of its Manhattan Active solutions: Enterprise Premier, Enterprise and Essentials. Clark said the initiative changes packaging and pricing rather than introducing new products.

Enterprise Premier represents the company’s full-featured offering for the most complex supply chain and commerce operations. Enterprise is designed to give lower-volume or lower-complexity warehouse-management customers access to Active Warehouse rather than the company’s SCALE product, with a more prescribed feature set, lower subscription pricing and a rapid implementation methodology.

The Essentials edition is intended to extend warehouse, transportation, order-management and store capabilities to smaller companies, less complex sites within large enterprises and additional geographic markets at a lower cost than the Premier offering.

Clark described the editions as “a ladder, not a menu of different products,” allowing customers to begin on the Active platform and add functionality over time without replatforming. He said the initiative should create additional conversion opportunities among on-premises customers and broaden the market for smaller sites at existing enterprise clients.

The company began introducing the packaging to its sales organization during its midyear sales meeting. Clark said management does not expect material sales disruption because Manhattan was already pursuing similar customer segments with SCALE.

Raised 2026 Outlook

Management raised its full-year outlook for revenue, operating margin and earnings per share. The company expects RPO to finish toward the high end of its prior $2.62 billion to $2.68 billion target range, representing growth of 18% to 20%.

Manhattan now expects full-year revenue of $1.16 billion to $1.166 billion, with a midpoint of $1.163 billion. The outlook represents 11% growth excluding license and maintenance attrition and 8% growth on an all-in basis. The forecast assumes foreign exchange will be neutral for the full year, compared with prior expectations for a one-percentage-point tailwind.

The company raised its cloud revenue midpoint to $505.5 million, representing 24% growth, and expects services revenue to rise 2% to $513.5 million. It forecast a full-year adjusted operating margin of about 35.1% and adjusted EPS of $5.44 to $5.50.

For the third quarter, Manhattan reaffirmed its total revenue target of $294 million to $298 million and expects adjusted EPS of $1.45. It is targeting approximately $287 million of revenue and adjusted EPS of $1.37 for the fourth quarter, accounting for retail peak-seasonality effects.

About Manhattan Associates (NASDAQ:MANH)

Manhattan Associates, Inc NASDAQ: MANH is a provider of supply chain and omnichannel commerce software solutions designed to optimize the flow of goods, information and funds across enterprise operations. Its flagship offerings include warehouse management, transportation management, order management and omnichannel fulfillment applications. These solutions are delivered through a cloud-native platform called Manhattan Active, which enables retailers, manufacturers, carriers and third-party logistics providers to orchestrate inventory, manage distribution and improve customer service in real time.

Key product areas include Manhattan Active Warehouse Management, which automates and optimizes warehouse operations from receiving through shipping; Manhattan Active Transportation Management, supporting carrier selection, routing and freight payment; and Manhattan Active Omni, which unifies order capture, inventory visibility and fulfillment across stores, distribution centers and e-commerce channels.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.