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MANHATTAN ASSOCIATES INC (MANH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered top- and bottom-line beats versus Wall Street: revenue $262.8M vs ~$256.6M consensus and adjusted EPS $1.19 vs ~$1.03 consensus; management highlighted 21% cloud revenue growth and strong bookings; adjusted operating margin was 34.7% . EPS beat $0.16 and revenue beat ~$$6.2M*.
  • RPO rose 25% year-over-year to ~$1.891B, with ~38% expected to convert to revenue within 24 months; win rates held ~70% and ~50% of new cloud bookings came from net new logos .
  • Guidance: full-year revenue and adjusted operating margin maintained; adjusted EPS raised to $4.54–$4.64 (from $4.45–$4.55), driven by buybacks; Q2 revenue guided to $263–$265M and Q2 adjusted EPS to $1.13 .
  • Cloud growth and Agentic AI momentum (Maven, Manhattan Assist) are key narratives; services remain cautious amid macro/tariff uncertainty but performed slightly better than expected in Q1, a near-term swing factor for the stock .

What Went Well and What Went Wrong

What Went Well

  • Strong beats: adjusted EPS $1.19 vs ~$1.03 consensus; revenue $262.8M vs ~$$256.6M consensus; adjusted operating margin expanded >340 bps YoY to 34.7% in Q1 . EPS +$0.16 and revenue +$~6.2M beat*.
  • Bookings/RPO momentum: RPO +25% YoY to ~$1.9B; pipeline balanced by industry/geo; ~50% new cloud bookings from net new logos; competitive win rates ~70% .
  • Strategic/AI positioning: “Manhattan is the only vendor named by industry analysts as a leader across the supply chain commerce ecosystem” and Google Cloud Partner of the Year, underscoring Agentic AI innovation (Maven deflecting 40%+ chats; expanded Assist features) .

Management quotes:

  • “Manhattan is off to a solid start to ‘25, posting better-than-expected top and bottom line results.” – CEO Eric Clark .
  • “We experienced strength from new customers with approximately 50% of new cloud bookings generated from net new logos.” – Eric Clark .
  • “Adjusted operating margin…34.7%…up over 340 basis points year-over-year.” – CFO Dennis Story .

What Went Wrong

  • Services softness: revenue down 8% YoY to $121.1M on budget constraints and timing shifts; management remains cautious on near-term services growth given T&M flexibility .
  • RPO conversion pacing: 38% expected to convert within 24 months vs historical ~40%, reflecting longer ramps on larger global deals .
  • One-off/non-GAAP noise: unusual health insurance claim (+$4.7M recovery in Q1) and restructuring ($2.9M) adjusted out of non-GAAP; these items contributed to GAAP/non-GAAP differences .

Financial Results

Headline Financials

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$266.7 $255.8 $262.8
GAAP Diluted EPS ($)$1.03 $0.77 $0.85
Adjusted Diluted EPS ($)$1.35 $1.17 $1.19

Revenue Mix by Stream ($USD Millions)

StreamQ3 2024Q4 2024Q1 2025
Cloud Subscriptions$86.5 $90.3 $94.3
Software License$3.8 $5.5 $9.3
Maintenance$34.5 $33.6 $32.1
Services$137.0 $119.5 $121.1
Hardware$4.9 $7.0 $5.9
Total Revenue$266.7 $255.8 $262.8

Operating and Cash Metrics

MetricQ3 2024Q4 2024Q1 2025
GAAP Operating Income ($USD Millions)$75.1 $60.7 $63.2
Adjusted Operating Income ($USD Millions)$98.9 $90.3 $91.3
Adjusted Operating Margin (%)—35.3% 34.7%
Operating Cash Flow ($USD Millions)$62.3 $104.7 $75.3
Deferred Revenue ($USD Millions)$252.5 $278.0 $296.6
RPO ($USD Millions)$1,686.4 $1,780.4 $1,891.4

Geographic Revenue ($USD Millions)

RegionQ3 2024Q4 2024Q1 2025
Americas$205.9 $194.4 $194.6
EMEA$48.1 $48.9 $55.5
APAC$12.7 $12.5 $12.6
Total$266.7 $255.8 $262.8

KPIs

KPIQ3 2024Q4 2024Q1 2025
DSO (days)69 74 72
Cash ($USD Millions)$215.0 $266.2 $205.9
Shares Repurchased (000s)195 156 539
Cash Paid for Buybacks ($USD Millions)$49.7 $43.5 $100.0
Free Cash Flow Margin (%)—39.7% 28%
Adjusted EBITDA Margin (%)—35.9% 35%

Consensus vs Actual (Q1 2025)

MetricConsensusActual# of Estimates
Primary EPS ($)$1.03*$1.19*8*
Revenue ($USD Millions)$256.6*$262.8*8*
EBITDA ($USD Millions)$81.0*$67.6*—

Values marked with * were retrieved from S&P Global.

Guidance Changes

Full-Year 2025 Guidance vs Prior

MetricPrior (1/28/2025)Current (4/22/2025)Change
Total Revenue ($USD Millions)$1,060–$1,070 $1,060–$1,070 Maintained
Adjusted Operating Margin (%)33.0–33.5 33.0–33.5 Maintained
GAAP EPS ($)$3.05–$3.15 $3.06–$3.16 Raised slightly
Adjusted EPS ($)$4.45–$4.55 $4.54–$4.64 Raised
Cloud Revenue ($USD Millions)$405–$410 $405–$410 Maintained
Services Revenue ($USD Millions)$494–$500 $494–$500 Maintained
Maintenance Revenue ($USD Millions)$118–$120 $118–$120 Maintained
Diluted Share Count (Millions)~62.7 ~61.5 Lower (buybacks)
Tax Rate (%)~21% ~21% Maintained

Quarterly 2025 Targets (Introduced/Updated)

MetricPrior (Q4 call)Current (Q1 call)Change
Q2 Revenue ($USD Millions)~$266.5 $263–$265 Lower
Q3 Revenue ($USD Millions)~$273 ~$271 (midpoint) Slightly lower
Q4 Revenue ($USD Millions)~$269 ~$267 (midpoint) Slightly lower
Q2 Adjusted EPS ($)—$1.13 Introduced
Q3 Adjusted EPS ($)—$1.16 Introduced
Q4 Adjusted EPS ($)—$1.12 Introduced
Q2 GAAP EPS ($)—$0.75 Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesLeader in POS and OMS; expanding cloud-native portfolio; investment in R&D ($138M FY’24) Maven deflects 40%+ chats; Assist expanded; Google Cloud Partner of the Year; EPF launched Strengthening
Services demand/macroFY’25 services trough in Q1; budget pullbacks; partner mix rising Services -8% YoY but “better than expected”; near-term caution persists Stabilizing but cautious
Cloud bookings & RPORecord bookings; RPO $1.8B (+25% YoY) exiting Q4 RPO ~$1.9B (+25% YoY); ~50% bookings net-new logos; win rates ~70% Sustained strength
Tariffs/macroNo direct tariff impact expected; macro choppiness impacting services Tariffs increase inventory cost; Manhattan’s precision helps customers; macro caution reiterated Heightened focus
Product performance (Omni/POS/TMS/Planning)Significant POS wins; first Supply Chain Planning customer; strong TMS deals Luxury department store win breadth; EPF for B2B promises; store systems rationalization Broadening
Regional trendsBalanced mix; EMEA variance quarter to quarter EMEA strong in Q1; FX tailwind <1% Mixed but healthy
FXHeadwind to RPO in Q4; noisy for 2025 guide ~$2M revenue headwind in Q1; <1% tailwind for FY revenue guide Volatile
R&D executionContinued increase in R&D spend and innovation Focus on simplification to accelerate deployments/time-to-value Ongoing investment

Management Commentary

  • “Our unified cloud product portfolio is superior, offering best-in-class functionality. Manhattan is the only vendor named by industry analysts as a leader across the supply chain commerce ecosystem.” – Eric Clark .
  • “Cloud revenue increased 21% to $94 million…Adjusted operating margin…34.7%…up over 340 bps YoY.” – Dennis Story .
  • “Our Q1 competitive win rates remain consistent at about 70%, and…~50% of new cloud bookings generated from net new logos.” – Eric Clark .
  • “We are reiterating our full year RPO, total revenue and operating margin outlooks…we are increasing our EPS outlook.” – Dennis Story .
  • “We continue to put our customers first as we deliver industry-leading innovation and simplification…already improving customer experiences while enabling Manhattan and its customers to move and grow faster.” – Eric Clark .

Q&A Highlights

  • Pipeline/linearity: Q1 bookings were balanced by product/vertical/geo; pipeline “strong” at quarter start; ~50% of new cloud bookings from net-new logos .
  • Investments: Maintaining adjusted op margin midpoint; incremental spend focused on sales & marketing and continued R&D .
  • RPO conversion cadence: ~38% of RPO recognized over next 24 months vs ~40% prior, reflecting longer ramps on large global deals; cloud subs growth target ~20% remains intact .
  • FX: FY revenue guide embeds <1% tailwind; Q1 revenue experienced ~$2M FX headwind .
  • Large deals/POS: Luxury department store win; highly competitive; sales cycle a little over a year; broader POS momentum .

Estimates Context

  • Q1 2025 vs consensus: Revenue $262.8M vs ~$256.6M*; Primary EPS $1.19 vs ~$1.03*; EBITDA $67.6M vs ~$81.0M* (note: company does not guide/report EBITDA; SPGI figures shown for context). Values marked with * were retrieved from S&P Global.
  • Implications: Street likely raises FY EPS after company increased adjusted EPS guidance to $4.54–$4.64; revenue guide maintained but quarterly distribution modestly tempered for Q2/Q3/Q4 .

Key Takeaways for Investors

  • Cloud momentum + bookings breadth underpin durable double-digit growth; 20%+ cloud subscription growth trajectory reiterated despite macro noise .
  • Q1 beat-and-raise (EPS) with expanding adjusted operating margin supports near-term positive sentiment; watch Q2 services trajectory vs cautious outlook .
  • RPO +25% YoY and ~5.5–6 year average contract duration provide multi-year visibility; ~38% 24-month conversion suggests ramp profiles are extending on larger deals .
  • AI differentiation (Maven, Assist) and unified platform wins (luxury dept store POS/Omni, EPF) are catalysts for cross-sell and TAM expansion .
  • Capital returns: $100M Q1 buyback and authority replenishment to $100M; diluted share count expected ~61.5M—accretive to EPS .
  • Risk monitor: services budgets/timing and tariff/macro uncertainty; FX volatility persists; management prudently maintained margin guidance .
  • Medium-term thesis: cloud subs to surpass services revenue by end of 2026; continued R&D and S&M investment should sustain win rates and operating leverage .