Manhattan Associates Q3 Earnings Call Highlights

Key Points

• Strong Q3 performance: Revenue rose 11% year over year to $306 million, while cloud revenue increased 28% to $134 million and surpassed services revenue for the first time. Adjusted EPS grew 14% to $1.55.
• Demand momentum continued: Remaining performance obligations increased 25% to $2.59 billion, bookings reached a fourth consecutive quarterly record, and the company’s win rate remained above 70%. AI subscriptions, customer expansions and partner-sourced deals also contributed to growth.
• Outlook raised: Manhattan increased its full-year revenue, adjusted margin, EPS and RPO-growth forecasts, including a 21% RPO growth target. Management said consensus expectations for 2027—including 20% cloud revenue growth and further margin expansion—are generally appropriate.

Manhattan Associates NASDAQ: MANH reported third-quarter results that exceeded its expectations, driven by accelerating cloud revenue, record bookings and growth in remaining performance obligations, or RPO. The company raised its full-year revenue, profitability and RPO outlook while saying it believes consensus expectations for 2027 are generally appropriate.

Total third-quarter revenue increased 11% year over year to $306 million, marking the company’s first quarter above $300 million in revenue. Cloud revenue rose 28% to $134 million, surpassing services revenue for the first time. Services revenue grew 1% to $134 million.

“Manhattan delivered record Q3 and year-to-date results,” President and CEO Eric Clark said. He cited 28% cloud revenue growth, a 25% increase in RPO to $2.6 billion and the company’s fourth consecutive quarter of record bookings.

Bookings, RPO and Customer Activity

Manhattan ended the quarter with RPO of $2.59 billion, up 25% from a year earlier and 5% sequentially. CFO Linda Pinne said 40% of RPO is expected to be recognized as revenue over the next 24 months, compared with 39% at the end of the second quarter. She attributed the increase to strong deal volume and faster deployments.

New logos represented about 35% of new cloud bookings, while the company’s win rate remained above 70%, Clark said. Year-to-date deal volume has already exceeded Manhattan’s total deal volume for all of 2025.

Clark said bookings momentum was diversified across new logos, customer expansions and renewals. The company’s dedicated renewal organization has helped drive cross-selling, upselling and pricing conversations, he said, with multi-product and artificial intelligence additions increasingly occurring at renewal.

Examples of third-quarter customer activity included a U.S. grocer becoming a new Active Warehouse and Active AI customer, a medical technology company converting from an on-premises deployment to Active Warehouse, and an energy transmission and distribution company becoming a new Active Warehouse and Active Transportation customer.

Management said it expects the mix of new logos, on-premises-to-cloud conversions and expansions to trend toward roughly one-third each over time. Clark said new logos remain the largest category year to date, though all three areas are making meaningful contributions.

AI, Editions and Partner Expansion

Clark said Manhattan’s embedded Active AI products contributed to third-quarter deal flow, including an AI upsell through the Google Cloud Marketplace. The company said it has maintained a 100% conversion rate from AI pilots to AI subscriptions, though it remains early in the product’s commercialization.

Management highlighted customer outcomes from Active Agents, including a third-party logistics provider that reduced wave planning time by 50%, appointment-booking clerical time by 80% and wave-failure investigation time by nearly 70%. A retailer reduced invoice write-offs by almost 20% and invoice-resolution time by more than 70%, according to the company.

Clark also said a meaningful number of customers have begun skipping the pilot phase and going directly to AI subscriptions. Manhattan does not plan to report AI revenue by product on a quarterly basis, but Pinne said AI contributed to third-quarter performance and that the company expects to provide more detail during its fourth-quarter discussion of 2027.

During the quarter, Manhattan introduced its Editions packaging structure, including Essentials for lower-complexity supply chains, Enterprise for mid-range needs and Enterprise Premier for more sophisticated customers. The company closed several Active Warehouse Enterprise Edition transactions that historically may have been sold as Active Scale deployments, Clark said.

Manhattan also closed its first Essentials Edition deal. Clark said the prospect was not in the pipeline at the beginning of the quarter and approached the company after the Editions announcement. He said the company expects Editions to expand its addressable market, shorten sales cycles and support additional partner-sourced activity, though material impact is more likely in the second half of the coming year.

Partner-sourced deals rose more than fourfold year to date from the prior year. Clark said partners are increasing hiring and training investments, while Manhattan has added measurement and competitive structures intended to encourage partners to achieve higher-tier status.

Profitability and Capital Allocation

Adjusted operating profit was $115 million, representing an adjusted operating margin of 37.6%. Pinne said strong cloud growth offset higher go-to-market investments and bonus accruals. Adjusted earnings per share rose 14% to $1.55, while GAAP EPS increased 8% to $1.04.

Operating cash flow totaled $69 million, producing a 22.1% free-cash-flow margin. Manhattan ended the quarter with $199 million in cash and no debt. The company repurchased $50 million of shares during the quarter, bringing year-to-date buybacks to a record $325 million. It had $175 million remaining under its repurchase authorization.

Raised 2026 Outlook and Initial 2027 Commentary

Manhattan raised its full-year RPO growth outlook to 21%, from its previous target range of 18% to 20%. It now expects full-year revenue of $1.176 billion to $1.178 billion, representing 12% growth excluding license and maintenance attrition, or 9% growth on an all-in basis.

• Fourth-quarter total revenue is targeted at about $291 million.
• Fourth-quarter cloud revenue is expected to be $136 million, with services revenue of $122 million.
• Full-year adjusted operating margin guidance increased to a 35.3% midpoint, with fourth-quarter adjusted operating margin targeted at 36.1%.
• Full-year adjusted EPS guidance increased to $5.54 to $5.56, while fourth-quarter adjusted EPS is expected to be $1.38.

For 2027, Pinne said the company believes consensus estimates are generally appropriate, including 20% cloud revenue growth, low-single-digit services revenue growth and continued operating-margin expansion. Manhattan plans to provide formal 2027 guidance with its fourth-quarter results.

Clark also announced that Juan Perez will join Manhattan’s board effective Jan. 28. Perez most recently served as executive vice president and chief information officer at Salesforce and previously held technology leadership roles at UPS.

About Manhattan Associates (NASDAQ:MANH)

Manhattan Associates, Inc develops supply chain commerce software for retailers, wholesalers, manufacturers and logistics providers. Its solutions help organizations plan, execute and optimize inventory, warehouse, transportation and omnichannel fulfillment operations.

The company's product portfolio includes warehouse management, transportation management, order management, inventory optimization, labor management and point-of-sale capabilities. Manhattan Associates also provides tools that support warehouse automation, store fulfillment, distributed order management and customer engagement across digital and physical retail channels.

Founded in 1990 and headquartered in Atlanta, Georgia, Manhattan Associates serves customers across North America, Europe, Asia-Pacific and other international markets.

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.