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MANHATTAN ASSOCIATES INC (MANH)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter with total revenue $272.4M (+2.7% YoY) and strong non-GAAP EPS $1.31; both beat S&P Global consensus: revenue $263.7M and EPS $1.13. Adjusted operating margin expanded 210 bps YoY to 37.1%. RPO reached $2.01B (+26% YoY) with net-new logos >70% of cloud bookings and win rates >70% vs top competitors . Estimates marked with * below (S&P Global).
  • Guidance raised: FY25 total revenue to $1.071–$1.075B (from $1.060–$1.070B), GAAP EPS to $3.23–$3.31 (from $3.06–$3.16), and adjusted EPS to $4.76–$4.84 (from $4.54–$4.64). FY25 adjusted operating margin midpoint increased to 35.0% (from 33.25%) .
  • Demand drivers: cloud subscription revenue +22% YoY; RPO strength driven by broad-based pipeline, new logos (~35% of pipeline), and multi-product unification (WMS/TMS/OMS) momentum; Google Cloud Marketplace influenced the largest Q2 deal; Shopify OMS connector live with enterprise retailers .
  • Near-term watch items: services revenue (-6% YoY) remains a macro-sensitive T&M lever; FY tax rate raised to 22.5% (vs 21%), an $0.08 2H headwind but +$30M 2025 cash flow benefit; Q3 guide implies sequential EPS down on seasonality/tax, with Q4 further seasonal step-down .

What Went Well and What Went Wrong

  • What Went Well

    • Cloud strength and margin leverage: cloud revenue +22% YoY to $100.4M; adjusted operating margin 37.1% (+210 bps YoY) on scale benefits .
    • RPO quality and breadth: RPO $2.01B (+26% YoY, +6% QoQ) with >70% win rates and >70% of new cloud bookings from net-new logos; pipeline broad across retail, logistics, luxury, F&B, automation, and healthcare .
    • Strategic GTM/partners: expanded alliances (Google Cloud Marketplace influenced largest Q2 deal; Shopify OMS connector live), new sales leadership and hiring surge to accelerate velocity .
    • Quote: “Solid demand drove Q2 cloud revenue growth of 22% and RPO surpassing the $2 billion milestone” — CEO Eric Clark .

  • What Went Wrong

    • Services softness persists: services revenue declined 6% YoY to $128.9M; management remains cautious given T&M flexibility and macro uncertainty .
    • Health insurance claim noise: additional $3.0M expense in Q2 tied to an unusual health insurance claim; excluded from non-GAAP but a recurring 2025 adjustment item .
    • Higher tax rate and 2H seasonality: FY tax rate increased to 22.5% (Q3 25%), tempering EPS; retail peak seasonality drives lower Q4 margins and EPS .

Financial Results

MetricQ2 2024Q1 2025Q2 2025 (Actual)Q2 2025 (Consensus)*
Revenue ($M)$265.3 $262.8 $272.4 $263.7*
GAAP Diluted EPS$0.85 $0.85 $0.93 N/A
Adjusted Diluted EPS (Non-GAAP)$1.18 $1.19 $1.31 $1.13*
ProfitabilityQ2 2024Q1 2025Q2 2025
GAAP Operating Income ($M)$68.2 $63.2 $73.8
Adjusted Operating Income ($M)$92.9 $91.3 $101.1
Adjusted Operating Margin %——37.1%

Segment revenue by geography ($M):

RegionQ2 2024Q1 2025Q2 2025
Americas$205.96 $194.62 $206.61
EMEA$46.92 $55.54 $52.30
APAC$12.45 $12.63 $13.51
Total$265.32 $262.79 $272.42

Selected KPIs:

KPIQ2 2025YoY
Cloud Subscription Revenue$100.4M +22%
RPO (end of period)$2,013.8M +26%
Services Revenue$128.9M -6%
DSO70 days —
Cash & Equivalents$230.6M —
Deferred Revenue$299.8M +16% YoY (CFO)
Operating Cash Flow$74.0M +1% YoY
Share Repurchases262,341 shares; $49.6M in Q2; $149.6M YTD —

Beat/miss vs. S&P Global consensus (Q2 2025): revenue +$8.7M beat; adjusted EPS +$0.18 beat [GetEstimates Q2 2025 data].

Note: Consensus values marked with * are from S&P Global. Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (4/22)Current Guidance (7/22)Change
Total RevenueFY2025$1.060–$1.070B $1.071–$1.075B Raised
GAAP Operating MarginFY202522.5–23.1% 24.1–24.6% Raised
Adjusted Operating MarginFY202533.0–33.5% 34.8–35.3% Raised
GAAP EPSFY2025$3.06–$3.16 $3.23–$3.31 Raised
Adjusted EPSFY2025$4.54–$4.64 $4.76–$4.84 Raised
Cloud Revenue (midpoint)FY2025—$408.5M midpoint (implied) Initiated detail
Services Revenue (midpoint)FY2025—$497M midpoint Initiated detail
Maintenance Revenue (midpoint)FY2025—$128M midpoint Updated
RPO (ex-FX)FY2025$2.11–$2.15B (target) $2.11–$2.15B (target) Maintained
Tax RateFY2025~21% (implied prior) 22.5% FY; Q3 25% Raised
Q3 Total RevenueQ3 2025—$270–$272M Provided
Q4 Total RevenueQ4 2025—~$267M midpoint Provided
Q3 Adjusted EPSQ3 2025—~$1.17; GAAP ~$0.77 Provided
Q4 Adjusted EPSQ4 2025—~$1.13 Provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Macro & tariffsCautious on turbulent macro backdrop in 2024; restructuring in Jan-25 to align services with demand amid short-term macro uncertainty Macro remains volatile; services growth cautious due to T&M flexibility; tariffs cited as ongoing uncertainty Stable cautious tone
Cloud growth durabilityExited 2024 with strong bookings; guided 2025 growth Confident in sustaining 20%+ cloud growth multi-year, supported by RPO, renewals, cross-sell, and acceleration levers Positive
Unification (WMS/TMS/OMS)Unified platform positioning emphasized Doubling down on unified functional advantages; >80% of MATM buyers also have MAWM over last 5 quarters Strengthening
AI/Agentic AIAI capabilities highlighted at Momentum (context) Announced purpose-built agents per app and Agent Foundry; Assist enhancements with customer docs; expected release later this year Accelerating
Partnerships—Expanded GTM with Google Cloud Marketplace (influenced largest Q2 deal) and Shopify OMS connector live Expanding
Regional & vertical breadthDiverse end markets across geos Wins across logistics, grocery, luxury, beverage/snacks, automation, healthcare; Americas led revenue Broad-based
Services delivery—Cautious; customers adjusting rollout pace; focus on conversions to drive services/cloud Mixed

Management Commentary

  • Strategy and positioning: “Our unified cloud platform allows us to increase our leadership advantage over our competitors, expand our addressable market, and drive optimal results for our customers.” — Eric Clark, CEO .
  • Demand and bookings: “RPO increasing 26% year-over-year and surpassing the $2 billion milestone… Win rates against our top five competitors… over 70%… more than 70% of our new cloud bookings were generated from net new logos.” — Eric Clark .
  • AI roadmap: “Starting this fall, each Manhattan Active Platform application will include purpose-built agents… Agent Foundry enables our customers to build their own agents within our platform.” — Eric Clark .
  • Margin and cash: “Adjusted operating margin of 37.1%… operating cash flow increased 1% to $74 million… deferred revenue increased 16% to $300 million… ended the quarter with $231 million in cash and zero debt.” — CFO Dennis Story .
  • Tax/cash flow update: “Annual tax rate increasing to 22.5%... likely benefit operating cash flow by approximately $30 million in 2025.” — CFO .

Q&A Highlights

  • Unification flywheel: Management is “doubling down” on unified features and customer co-innovation; unification logos (MAWM+MATM and others) more than doubled YoY; expected to drive higher ROI and cross-sell .
  • Sustaining 20%+ cloud growth: Confidence underpinned by large RPO, pipeline, 2026+ renewal cycle (higher run-rates, cross-sell, pricing), and accelerating deployments; customers may speed rollouts .
  • GTM investments: New CSO, product-specialized leaders (POS, TMS), most new sales hires in a decade; Google/Shopify channels already contributing; intent to boost market awareness (CMO search) .
  • Conversions & services: ~20% of on-prem base has started cloud conversion; conversions remain a focus and can pull services/cloud forward; services guidance conservative given T&M flexibility .
  • Macro & linearity: No material intra-quarter linearity change; typical Q3 seasonal softness and Q4 seasonal strength expected .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: Revenue $272.4M vs $263.7M* (+$8.7M); Adjusted EPS $1.31 vs $1.13* (+$0.18). GAAP EPS $0.93 (no consensus provided here). Beat driven by 22% cloud growth and operating leverage; FX modest 1-pt tailwind to YoY revenue, limited H1 impact .
  • Estimate revisions: Raised FY25 revenue, margin, and EPS imply upward revisions to Street models; raise tax rate to 22.5% offsets some EPS, but +$30M OCF likely boosts FCF. Services held conservative; quarterly cadence: Q3/Q4 EPS ~$1.17/$1.13 adjusted and GAAP EPS Q3 ~$0.77 guide suggests seasonal step-downs .

Note: Consensus values marked with * are from S&P Global. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat and raise: Broad-based demand, 22% cloud growth, and 210 bps YoY adj. margin expansion delivered a clean top/bottom-line beat; FY25 revenue, margin, and EPS all raised — a positive setup for estimate revisions and sentiment .
  • RPO depth de-risks outlook: $2.01B RPO (+26% YoY) with >70% win rates and high net-new mix underpins multi-quarter visibility; management still flags macro/services caution, but cloud trajectories remain intact .
  • AI as a competitive moat: Near-term native agents and Agent Foundry could expand value per seat and cross-sell, supporting sustained 20%+ cloud growth ambitions into the renewal wave starting 2026 .
  • GTM acceleration: Expanded partnerships (Google/Shopify) and sales specialization should increase velocity and brand awareness in POS/TMS where Manhattan sees share-gain runway .
  • Watch services and tax: T&M services remain macro-sensitive; higher FY tax rate (22.5%) trims EPS but improves 2025 cash flow by ~$30M, supporting ongoing buybacks and optionality .
  • Trading lens: Into Q3/Q4, seasonal EPS step-down and higher tax may temper near-term prints, but beat/raise plus AI/unification catalysts and RPO strength argue for buying weakness ahead of the 2026 renewal upcycle .

Appendix: Additional Context and Press Releases

  • July 15, 2025: “Autonomous Agents Set to Revolutionize Transportation Management” — survey highlights AI readiness gaps and TMS modernization tailwinds; aligns with management’s Agentic AI roadmap .