Manhattan Associates Q2 Earnings: Record Growth Amid Caution

Manhattan Associates ((MANH)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Manhattan Associates painted a picture of robust performance in the second quarter, marked by record results in cloud revenue and new logo bookings. The company showcased innovative product developments and improved operating margins. However, there was a note of caution regarding the macroeconomic environment and a decline in services revenue, which the company is addressing through strategic investments in sales and marketing.

Record Second Quarter Results

Manhattan Associates reported a record-breaking second quarter, achieving a 22% growth in cloud revenue and a 26% year-over-year increase in remaining performance obligations (RPO), surpassing the $2 billion milestone. This impressive performance underscores the company’s strong market position and growth trajectory.

New Logo and Cloud Bookings Success

The company saw significant success in new cloud bookings, with over 70% generated from net new logos. New logos now represent approximately 35% of the current pipeline, highlighting Manhattan Associates’ ability to attract new business and expand its customer base.

Innovative Product Developments

Manhattan Associates announced new AI capabilities and the launch of the Agentic AI platform. The company received positive customer feedback for its Manhattan Assist and Agent Foundry products, showcasing its commitment to innovation and customer satisfaction.

Operating Margin Improvement

The company’s adjusted operating margin improved by 210 basis points to 37.1% year-over-year. This increase was driven by strong cloud revenue growth and operating leverage, reflecting efficient management and operational excellence.

Expanding Partnerships

Manhattan Associates expanded its partnerships with industry giants Google and Shopify. The collaboration with Google Cloud Marketplace is already influencing large deals, positioning the company for further growth and market penetration.

Sales and Marketing Investment

The company is strategically increasing its investment in sales and marketing. This includes promoting Bob Howell to Chief Sales Officer and hiring new sales leaders, aiming to bolster its market presence and drive future growth.

Macro Environment Caution

Despite the positive results, Manhattan Associates remains cautious about the macroeconomic environment. Ongoing tariff issues and general market uncertainty are impacting services revenue growth, prompting the company to remain vigilant.

Services Revenue Decline

Services revenue declined by 6% year-over-year due to customer budgetary constraints, which have shifted services work to future periods. The company is addressing this challenge through strategic planning and investment.

FX Impact

Foreign exchange volatility continues to impact RPO growth, with a $29 million tailwind to sequential RPO growth and a $28 million tailwind to year-over-year RPO growth. This highlights the ongoing challenges posed by currency fluctuations.

Forward-Looking Guidance

Manhattan Associates provided an optimistic outlook for the remainder of the fiscal year. The company anticipates full-year 2025 revenue to be in the range of $1.071 billion to $1.075 billion, with a midpoint of $1.073 billion. The company remains optimistic about long-term opportunities, given its strong product portfolio and market-leading innovations in AI and supply chain management. Adjusted operating margin guidance was increased to a midpoint of 35%, and adjusted earnings per share for the year were raised to a midpoint of $4.80.

In conclusion, Manhattan Associates’ earnings call highlighted a strong performance and strategic initiatives aimed at sustaining growth. While the company remains cautious about the macroeconomic environment, its innovative product developments, strategic partnerships, and increased sales efforts position it well for future success.