Supply chain software provider Manhattan Associates (NASDAQ: MANH) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 3.4% year on year to $275.8 million. The company expects the full year’s revenue to be around $1.08 billion, close to analysts’ estimates. Its non-GAAP profit of $1.36 per share was 14.6% above analysts’ consensus estimates.
Is now the time to buy MANH? Find out in our full research report (it’s free for active Edge members).
Manhattan Associates (MANH) Q3 CY2025 Highlights:
- Revenue: $275.8 million vs analyst estimates of $271.4 million (3.4% year-on-year growth, 1.6% beat)
- Adjusted EPS: $1.36 vs analyst estimates of $1.19 (14.6% beat)
- Adjusted Operating Income: $103.4 million vs analyst estimates of $94.82 million (37.5% margin, 9.1% beat)
- The company slightly lifted its revenue guidance for the full year to $1.08 billion at the midpoint from $1.07 billion
- Management raised its full-year Adjusted EPS guidance to $4.96 at the midpoint, a 3.3% increase
- Operating Margin: 27.5%, in line with the same quarter last year
- Billings: $273.2 million at quarter end, up 6.1% year on year
- Market Capitalization: $12.38 billion
StockStory’s Take
Manhattan Associates’ third quarter saw sales growth driven by robust momentum in its cloud offerings and continued strength in services revenue. However, the market responded negatively to the results, with management citing seasonal weakness in net new customer wins and the timing of large deals as key challenges. CEO Eric Clark noted, “Q3 seasonality, coupled with general lumpiness of large deals, pressured net new logos, which were about 17% of our new cloud bookings in Q3, but still represent 50% of new cloud bookings year-to-date.” Despite these factors, the company’s core business fundamentals remained intact, and customer demand for cloud migration continued to support revenue.
Looking ahead, Manhattan Associates’ guidance reflects expectations for ongoing cloud subscription growth, increased cross-sell with existing customers, and the rollout of new AI-driven products. Management pointed to a significant upcoming renewal cycle and proactive conversion efforts as drivers of future bookings and revenue. CFO Dennis Story highlighted the company’s aim to balance margin expansion with investment, stating, “We expect our adjusted operating margin to expand between 50 to 75 basis points…while also increasing investment in our business, particularly in sales and marketing.” Initiatives such as the Agentic AI early access program and a dedicated renewals team are expected to further accelerate cloud adoption and broaden the reach of Manhattan’s unified supply chain platform.
Key Insights from Management’s Remarks
Management attributed third quarter performance to robust cloud adoption, proactive customer conversion strategies, and early traction for AI-powered products, while acknowledging seasonal and deal-related volatility.
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Cloud momentum sustained: Cloud revenue rose 21% year-on-year, supported by strong customer demand for Manhattan Active solutions and high win rates, with 70% of competitive deals closed in the company’s favor. Management emphasized the importance of conversions from on-premise to cloud as a key source of new bookings.
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Conversion strategy acceleration: The company launched a dedicated conversion program targeting on-premise customers, resulting in a substantial pipeline of fixed-fee, fixed-timeline conversion deals. Early outcomes led to about 30 new pipeline deals in Q3, with management expecting further acceleration as more cohorts are targeted in upcoming quarters.
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AI agent rollout in progress: Manhattan launched its Agentic AI early access program across warehouse, transportation, store, and contact center solutions. Early customer feedback highlighted rapid deployment and productivity gains, with general availability for the initial set of AI agents expected in early 2026.
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Services revenue stabilized: While services revenue declined year-on-year due to budget constraints shifting work to future periods, the segment outperformed expectations thanks to operational execution and timing of project completions. Management anticipates services growth returning in 2026, underpinned by backlog strength and increased conversions.
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Leadership and organizational changes: The appointment of Greg Betz as Chief Operating Officer, with experience from Microsoft’s global cloud onboarding, is set to enhance operational frameworks around conversions and renewals, as well as partnership development with key technology and system integrator partners.
Drivers of Future Performance
Manhattan Associates’ outlook is grounded in anticipated cloud subscription growth, a major renewal cycle, and accelerated AI adoption, balanced against ongoing macro uncertainty.
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Renewal and conversion pipeline: Management expects the upcoming renewal cycle for warehouse management customers to re-energize remaining performance obligations (RPO) and drive substantial new bookings, as renewal contracts are re-upped at larger scales. Proactive conversion programs are expanding both cloud and services revenue, with early results showing strong customer receptivity.
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AI-driven product adoption: The company is rolling out its Agentic AI solutions, with initial deployments already highlighting productivity improvements for users. Management believes that embedding AI agents in core workflows will differentiate Manhattan’s platform and support both revenue growth and margin preservation, though pricing and revenue impact will be clarified in the next quarter.
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Sales force and partner investments: Continued hiring of specialized sales talent and the strengthening of system integrator partnerships are expected to broaden market reach. Management also highlighted the implementation of a dedicated renewals team to maximize cross-sell opportunities, aiming for balanced growth while maintaining industry-leading margins.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will closely monitor (1) the pace of customer conversions from on-premise to cloud and the resulting impact on subscription growth, (2) adoption rates and margin effects from the Agentic AI product suite as it moves toward general availability, and (3) the effectiveness of recently expanded sales and partner initiatives in broadening Manhattan’s market reach. The outcome of the major renewal cycle and its influence on remaining performance obligations will also be a key indicator of execution.
Manhattan Associates currently trades at $186, down from $205.32 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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