Manhattan Associates Cloud Revenue Jumps

Manhattan Associates (MANH -1.13%), a leading provider of supply chain and omnichannel commerce software, reported results for the second quarter of fiscal 2025 on July 22, 2025. The key news: the company delivered GAAP revenue and non-GAAP earnings above Wall Street estimates, propelled by cloud subscription growth and record-long-term contract bookings. The quarter’s GAAP revenue reached $272.4 million, surpassing the $263.7 million GAAP consensus, while Non-GAAP earnings per share hit $1.31, well above the $1.13 estimate. Despite this outperformance, softness in services revenue and cautious guidance for the full year signal that some challenges remain. Overall, the quarter demonstrated robust demand for Manhattan's cloud offerings and the durability of its backlog, even as macroeconomic uncertainty influences client spending.

Source: Manhattan Associates. Note: Analyst estimates provided by FactSet.

The Business: Overview and Focus

Manhattan Associates specializes in software that helps companies manage supply chains, inventory, and order fulfillment across physical and digital channels. Its primary products include cloud-based platform suites like the Manhattan Active applications, which enable real-time inventory visibility and integration for retailers, distributors, and manufacturers.

Recently, the company’s business focus has been on migrating customers toward its cloud-native, subscription-based model. This transition supports ongoing innovation, zero downtime for updates, and the ability for customers to customize software to their specific needs. Key factors driving its success include a highly differentiated software architecture, investments in research and development, scalable platforms, global reach, and a strong talent pipeline.

Quarter in Review: Financial & Operational Highlights

The most notable achievement for the period was the outperformance on GAAP revenue and non-GAAP earnings—both above Wall Street expectations. This was largely driven by a 21.8% year-over-year increase in cloud subscription revenue, which reached $100.4 million. The cloud segment remains the engine of growth, reflecting steady demand for scalable, versionless solutions that minimize operational disruption for clients.

Another significant development was the surge in remaining performance obligations (RPO)—a metric representing the value of contracted but not yet recognized revenue—which for the first time exceeded $2.01 billion. RPO increased 26% from the prior year, reinforcing the company’s visibility into future revenue streams. Average contract duration continues to span nearly six years, although the conversion rate of RPO to recognized revenue over the next two years dipped to 38%, which reflects larger and more complex deals with longer rollouts.

However, services revenue, which covers implementation and support for Manhattan’s software, declined 5.8% year-over-year on a GAAP basis. Management linked this decrease in services revenue to customer budget constraints and delayed project starts, both influenced by macroeconomic caution and the time-and-materials-based nature of service contracts. This softening led to a workforce reduction of about 100 roles and a restructuring expense of $2.9 million, which was identified as a one-time, non-recurring cost.

In profitability terms, GAAP operating income improved year over year. Cash flow from operations was $74.0 million. General and administrative costs increased from $21.1 million in Q2 2024 to $26.0 million. The company’s cash position at quarter-end was $230.6 million, providing operational flexibility going forward.

Product Momentum and Strategic Initiatives

During the quarter, Manhattan Associates advanced its Manhattan Active product family, a suite of supply chain management platforms delivered through the cloud. These include modules for order management, inventory control, and fulfillment, designed to operate without any need for disruptive system upgrades—a "versionless" model. Recent launches under the Manhattan Active umbrella include the Agentic AI-powered Manhattan Active Maven, an artificial intelligence chatbot tool, as well as new modules targeting B2B (business to business) order fulfillment.

The company secured notable wins with large omnichannel retailers, including projects that replaced legacy systems for order management, point-of-sale, customer relationship management (CRM), and chatbot features, particularly as retailers modernize technology architectures in response to emerging consumer demands.

APAC revenue increased compared to the previous quarter, while EMEA revenue declined, with the Americas region remaining the largest. Management confirmed that foreign exchange rates had a minimal impact on results in the period.

Despite the workforce restructuring early in 2025, management has pointed to ongoing investment in talent acquisition and development as critical for staying competitive and delivering innovation at scale.

Looking Ahead: Guidance and Watch Points

Management reaffirmed GAAP revenue guidance of $1.071–$1.075 billion for FY2025 and maintained its outlook for operating margin—projecting a range of 24.1% to 24.6% under GAAP and 34.8% to 35.3% on an adjusted (non-GAAP) basis. Adjusted earnings per share guidance (non-GAAP) was raised modestly to $4.76–$4.84, reflecting outperformance and updates to share buyback activity. However, the company expects a 6–8% decline in GAAP earnings per share, due to restructuring and one-time health insurance claims recognized earlier in the year.

Management’s commentary was upbeat regarding demand for cloud solutions and recurring contract wins, but it remained tentative on the service revenue outlook and flagged the ongoing impacts of macroeconomic uncertainty on customer spending patterns. Leadership did not provide specific guidance on future dividend payments.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.