Core Insights - Manhattan Associates, Inc. (NASDAQ: MANH) has seen a stock performance increase of 26.7% since the last coverage, which included an upgrade from hold to buy amid tariff concerns [1] Group 1: Company Performance - The management of Manhattan Associates has recently raised its expectations for future performance [1] Group 2: Investment Strategy - Triba Research focuses on identifying high-quality businesses with sustainable, double-digit returns, emphasizing strong competitive advantages, low debt levels, and skilled management teams [1]

Core Viewpoint - Air Canada anticipates a C$375 million (approximately $269.82 million) reduction in its operating income due to labor disruptions caused by a four-day strike by flight attendants in August [1] Group 1: Financial Impact - The expected hit to operating income is significant, indicating the financial strain on the company due to labor-related issues [1] - The strike reflects ongoing labor tensions within the airline industry, which may have broader implications for operational efficiency and profitability [1] Group 2: Labor Relations - The four-day strike by flight attendants highlights the challenges Air Canada faces in managing labor relations and maintaining workforce stability [1] - Labor disruptions are becoming increasingly common in the airline sector, suggesting a need for companies to address employee concerns proactively [1]

Industry Overview - The Zacks Computer Software industry is positioned to benefit from global digital transformation, with a shift to cloud and SaaS models providing recurring revenue visibility and flexibility for users [1] - The industry is experiencing growth driven by the integration of AI and ML technologies into various applications [1] Market Trends - The global software market is projected to grow at a CAGR of 11.3% from 2025 to 2030, reaching $1,397.31 billion [2] - Increased spending on AI and cloud technologies is expected to enhance the industry's prospects, with a focus on automation, personalization, and predictive analytics [4] - Cloud computing is becoming a dominant force, with businesses adopting hybrid and multi-cloud environments for flexibility and scalability [5] - The demand for cybersecurity software is rising due to increased cyberattacks, leading to a focus on performance management monitoring tools [6] Macroeconomic Factors - Global macroeconomic weakness and supply chain volatility are concerns for the industry, with inflation potentially affecting spending among small and medium-sized businesses [7] - Worldwide IT spending is projected to reach $5.43 trillion in 2025, reflecting a 7.9% increase from 2024, which is lower than previous forecasts [7] Industry Performance - The Zacks Computer Software industry has underperformed compared to the broader Zacks Computer and Technology sector and the S&P 500 Index over the past year, gaining 18.2% compared to 18.8% and 30% respectively [11] Valuation Metrics - The industry is currently trading at a forward 12-month P/E ratio of 33.11X, higher than the S&P 500's 23.24X and the sector's 28.69X [14] Company Highlights - **Manhattan Associates (MANH)**: Reported a 22% increase in cloud revenues for Q2 2025, with total revenues up 2.7% year over year. The Zacks Consensus Estimate for 2025 earnings is $4.81 per share, indicating 1.9% growth [18][20][19] - **PTC Inc (PTC)**: Focused on AI strategy with positive customer feedback and a Zacks Consensus Estimate for fiscal 2025 earnings at $6.69 per share, indicating 31.7% growth [23][26] - **Microsoft Corporation (MSFT)**: Achieved total revenue of $281.7 billion in fiscal 2025, with AI business revenue exceeding $13 billion, growing 175% year over year. The Zacks Consensus Estimate for fiscal 2026 earnings is $15.35 per share, indicating 12.5% growth [33][34]

PART I FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial information for the reporting period [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of income, comprehensive income, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, revenue recognition, fair value measurement, equity-based compensation, income taxes, earnings per share, contingencies, reportable segments, and restructuring expenses [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (vs. Dec 31, 2024) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------------- | | Cash and cash equivalents | $230,593 | $266,230 | -$35,637 | | Total current assets | $483,346 | $503,264 | -$19,918 | | Total assets | $744,684 | $757,551 | -$12,867 | | Deferred revenue | $299,836 | $277,970 | +$21,866 | | Total current liabilities | $407,165 | $400,304 | +$6,861 | | Total shareholders' equity | $278,759 | $299,126 | -$20,367 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Income (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :------------------------------------ | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Cloud subscriptions revenue | $100,422 | $82,361 | +22.0% | $194,728 | $160,388 | +21.4% | | Software license revenue | $1,528 | $3,061 | -50.0% | $10,820 | $5,871 | +84.3% | | Maintenance revenue | $35,057 | $35,273 | -0.6% | $67,201 | $70,245 | -4.3% | | Services revenue | $128,899 | $136,831 | -5.8% | $250,026 | $269,026 | -7.1% | | Hardware revenue | $6,515 | $7,792 | -16.4% | $12,433 | $14,340 | -13.3% | | Total revenue | $272,421 | $265,318 | +2.7% | $535,208 | $519,870 | +2.9% | | Operating income | $73,788 | $68,188 | +8.2% | $136,960 | $125,818 | +8.9% | | Net income | $56,780 | $52,766 | +7.6% | $109,362 | $106,567 | +2.6% | | Basic earnings per share | $0.94 | $0.86 | +9.3% | $1.80 | $1.73 | +4.0% | | Diluted earnings per share | $0.93 | $0.85 | +9.4% | $1.78 | $1.71 | +4.1% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, reflecting total changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $56,780 | $52,766 | $109,362 | $106,567 | | Foreign currency translation adjustment, net of tax | $3,265 | $11 | $4,597 | -$716 | | Comprehensive income | $60,045 | $52,777 | $113,959 | $105,851 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Net cash provided by operating activities | $149,310 | $128,000 | +$21,310 | | Net cash used in investing activities | -$4,871 | -$4,538 | -$333 | | Net cash used in financing activities | -$186,638 | -$189,546 | +$2,908 | | Net change in cash and cash equivalents | -$35,637 | -$68,032 | +$32,395 | | Cash and cash equivalents at end of period | $230,593 | $202,709 | +$27,884 | - Repurchase of common stock was the principal use of cash for financing activities, totaling **$186.6 million** in the first six months of 2025[21](index=21&type=chunk)[145](index=145&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement outlines changes in the company's equity accounts, including common stock, retained earnings, and comprehensive income Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric (in thousands) | Balance, Dec 31, 2024 | Repurchase of common stock (6 months) | Net income (6 months) | Foreign currency translation adjustment (6 months) | Balance, June 30, 2025 | | :------------------------------------ | :-------------------- | :------------------------------------ | :-------------------- | :------------------------------------------------- | :--------------------- | | Common Stock Amount | $609 | -$10 | - | - | $604 | | Retained earnings | $329,439 | -$134,321 | $109,362 | - | $304,480 | | Accumulated other comprehensive loss | -$30,922 | - | - | $4,597 | -$26,325 | | Total Shareholders' Equity | $299,126 | -$186,638 | $109,362 | $4,597 | $278,759 | - The company repurchased **983,828 shares** of common stock for **$186.6 million** during the six months ended June 30, 2025[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Basis of Presentation and Principles of Consolidation](index=9&type=section&id=1.%20Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) This note describes the accounting policies and consolidation principles used in preparing the financial statements - The company expects to adopt **ASU 2023-09** (Income Taxes) in its **2025 Annual Report on Form 10-K** and **ASU 2024-03/2025-01** (Expense Disaggregation Disclosures) in its **2028 Annual Report on Form 10-K**[29](index=29&type=chunk)[30](index=30&type=chunk) [2. Revenue Recognition](index=9&type=section&id=2.%20Revenue%20Recognition) This note details the company's policies and methods for recognizing revenue across its various streams - Cloud subscriptions (SaaS and hosting) revenue is recognized over the contract period[32](index=32&type=chunk) - Services revenue is generally billed hourly and recognized over time as performed, or based on proportion performed for fixed-fee contracts[33](index=33&type=chunk) - As of June 30, 2025, remaining performance obligations (RPO) were approximately **$2.0 billion**, with over **98%** representing cloud native subscriptions with non-cancelable terms greater than one year[41](index=41&type=chunk) [3. Fair Value Measurement](index=13&type=section&id=3.%20Fair%20Value%20Measurement) This note explains the methodologies used to measure the fair value of financial instruments and assets - Cash and cash equivalents totaled **$230.6 million** at June 30, 2025, with cash equivalents consisting of highly liquid money market funds classified at **Level 1** of the fair value hierarchy[47](index=47&type=chunk) [4. Equity-Based Compensation](index=13&type=section&id=4.%20Equity-Based%20Compensation) This note outlines the accounting treatment and impact of equity-based compensation plans on the financial statements Equity-Based Compensation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | RSUs granted | 8,984 | 8,521 | 495,334 | 547,849 | | Equity-based compensation expense (in thousands) | $24,300 | $24,700 | $53,100 | $46,800 | [5. Income Taxes](index=14&type=section&id=5.%20Income%20Taxes) This note provides information on the company's income tax provisions, effective tax rates, and deferred tax assets and liabilities Effective Tax Rate | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective tax rate | 23.8% | 23.6% | 21.3% | 16.6% | - The increase in the effective tax rate for both periods is primarily due to a decrease in excess tax benefits on restricted stock awards that vested[51](index=51&type=chunk) [6. Basic and Diluted Net Income Per Share](index=14&type=section&id=6.%20Basic%20and%20Diluted%20Net%20Income%20Per%20Share) This note presents the calculation of basic and diluted earnings per share for the reporting periods Basic and Diluted Net Income Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic earnings per share | $0.94 | $0.86 | $1.80 | $1.73 | | Diluted earnings per share | $0.93 | $0.85 | $1.78 | $1.71 | | Basic weighted average shares (in thousands) | 60,612 | 61,421 | 60,741 | 61,523 | | Diluted weighted average shares (in thousands) | 61,074 | 62,118 | 61,300 | 62,305 | [7. Contingencies](index=14&type=section&id=7.%20Contingencies) This note discloses potential liabilities arising from legal proceedings, claims, and other uncertain events - The company is a party to a consolidated class action lawsuit (Prime v. Manhattan Associates, Inc., et al. and City of Orlando Police Officers' Pension Fund v. Manhattan Associates, Inc., et al.) alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5[60](index=60&type=chunk) - The company denies the material allegations, intends to defend itself vigorously, and maintains insurance that may cover liability up to policy limits[60](index=60&type=chunk) [8. Reportable Segments](index=16&type=section&id=8.%20Reportable%20Segments) This note provides financial information about the company's operating segments, including revenue and operating income by geography - The company operates in **three geographic segments**: Americas, EMEA, and APAC, with the Americas segment charging royalty fees to other segments[61](index=61&type=chunk)[62](index=62&type=chunk) Segment Revenue and Operating Income (in thousands) | Revenue Type | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------------------- | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Cloud subscriptions | Americas | $77,281 | $64,665 | +20% | $151,392 | $125,797 | +20% | | | EMEA | $19,675 | $15,371 | +28% | $36,882 | $29,872 | +23% | | | APAC | $3,466 | $2,325 | +49% | $6,454 | $4,719 | +37% | | Total Revenue | Americas | $206,606 | $205,955 | +0% | $401,221 | $402,267 | +0% | | | EMEA | $52,301 | $46,918 | +11% | $107,843 | $93,538 | +15% | | | APAC | $13,514 | $12,445 | +9% | $26,144 | $24,065 | +9% | | Total Operating Income | Americas | $48,051 | $45,300 | +6% | $81,913 | $81,987 | +0% | | | EMEA | $19,807 | $17,195 | +15% | $43,510 | $33,079 | +32% | | | APAC | $5,930 | $5,693 | +4% | $11,537 | $10,752 | +7% | - International revenue (sales outside the US) was approximately **$91.5 million** for Q2 2025 and **$183.0 million** for H1 2025, representing about **34%** of total revenue for both periods[64](index=64&type=chunk)[73](index=73&type=chunk) [9. Restructuring Expense](index=19&type=section&id=9.%20Restructuring%20Expense) This note details the nature and financial impact of restructuring activities undertaken by the company - In January 2025, the company incurred a restructuring expense of approximately **$2.9 million** pretax (**$2.2 million** after-tax) due to eliminating about **100 positions**[66](index=66&type=chunk)[138](index=138&type=chunk) - The expense was primarily for employee severance and outplacement services, recorded in the Americas segment[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025. It covers business overview, future expectations, key performance metrics, detailed revenue analysis by type and segment, product development, cash flow, and a comprehensive discussion of operating results, liquidity, and capital resources [Business Overview](index=20&type=section&id=Business%20Overview) This section provides an overview of the company's operations, products, and primary revenue sources - The company develops, sells, deploys, services, and maintains software solutions for supply chains, inventory, and omnichannel operations[71](index=71&type=chunk) - Principal revenue sources are cloud subscriptions, software licenses, maintenance, professional services, and hardware sales[75](index=75&type=chunk) Revenue Mix by Source | Revenue Source | % of Total Revenue (3 Months Ended June 30, 2025) | % of Total Revenue (6 Months Ended June 30, 2025) | | :-------------------- | :------------------------------------------------ | :------------------------------------------------ | | Cloud subscriptions | 37% | 36% | | Software license | 1% | 2% | | Maintenance | 13% | 13% | | Services | 47% | 47% | | Hardware | 2% | 2% | [Future Expectations](index=20&type=section&id=Future%20Expectations) This section outlines the company's strategic goals and outlook amidst the global economic environment - The company remains cautious about the turbulent global macro environment but notes strong demand for cloud solutions and favorable secular tailwinds like digital transformation[74](index=74&type=chunk) - Strategic goals include focusing on employees and customer success, investing in innovation to expand products and market, developing cloud business, and expanding global sales and marketing teams[76](index=76&type=chunk)[85](index=85&type=chunk) [Cloud Subscription](index=22&type=section&id=Cloud%20Subscription) This section discusses the performance and growth trends of the company's cloud subscription revenue - Cloud revenue increased **22%** YoY in Q2 2025, representing about **95%** of total software revenue[77](index=77&type=chunk) - Customers are increasingly adopting Manhattan Active® cloud solutions, with existing customers migrating from on-premise to cloud[77](index=77&type=chunk) [Global Economic Trends and Industry Factors](index=22&type=section&id=Global%20Economic%20Trends%20and%20Industry%20Factors) This section analyzes the impact of global economic conditions and industry trends on the company's business - Approximately **66%** of total revenue in Q2 and H1 2025 was generated in the United States[78](index=78&type=chunk) - Global geopolitical and economic volatility is expected to continue shaping enterprise software buying decisions, potentially extending sales cycles for large cloud subscriptions[79](index=79&type=chunk)[80](index=80&type=chunk) [Key Performance Metrics](index=22&type=section&id=Key%20Performance%20Metrics) This section highlights critical financial and operational metrics used to evaluate the company's performance - Cloud subscriptions revenue increased **22%** YoY to **$194.7 million** in H1 2025, driven by strong demand[82](index=82&type=chunk) - Remaining Performance Obligations (RPO) were approximately **$2.0 billion** as of June 30, 2025, a **26%** increase YoY, with over **98%** from cloud native subscriptions[83](index=83&type=chunk) [Revenue](index=22&type=section&id=Revenue) This section provides a detailed breakdown and analysis of the company's revenue streams [Cloud Subscriptions and Software License Revenue](index=22&type=section&id=Cloud%20Subscriptions%20and%20Software%20License%20Revenue) This section analyzes the performance and trends of cloud subscriptions and software license revenue by segment Cloud Subscriptions Revenue by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Americas | $77,281 | $64,665 | +20% | $151,392 | $125,797 | +20% | | EMEA | $19,675 | $15,371 | +28% | $36,882 | $29,872 | +23% | | APAC | $3,466 | $2,325 | +49% | $6,454 | $4,719 | +37% | | Total | $100,422 | $82,361 | +22% | $194,728 | $160,388 | +21% | Software License Revenue by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Americas | $908 | $2,430 | -63% | $2,358 | $4,259 | -45% | | EMEA | $327 | $362 | -10% | $7,863 | $848 | +827% | | APAC | $293 | $269 | +9% | $599 | $764 | -22% | | Total | $1,528 | $3,061 | -50% | $10,820 | $5,871 | +84% | - In H1 2025, **60%** of new non-cancelable cloud subscriptions were with new customers, and **40%** with existing customers[87](index=87&type=chunk) [Maintenance Revenue](index=23&type=section&id=Maintenance%20Revenue) This section discusses the trends and expectations for the company's maintenance revenue Maintenance Revenue by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Americas | $27,786 | $28,621 | -3% | $53,701 | $56,497 | -5% | | EMEA | $5,071 | $4,531 | +12% | $9,242 | $9,205 | +0% | | APAC | $2,200 | $2,121 | +4% | $4,258 | $4,543 | -6% | | Total | $35,057 | $35,273 | -1% | $67,201 | $70,245 | -4% | - Maintenance revenue is expected to decline as customers convert to cloud subscriptions, with substantially all customers renewing or converting[90](index=90&type=chunk) [Services Revenue](index=23&type=section&id=Services%20Revenue) This section examines the performance and factors influencing the company's professional services revenue Services Revenue by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Americas | $94,167 | $102,469 | -8% | $181,664 | $201,584 | -10% | | EMEA | $27,186 | $26,632 | +2% | $53,538 | $53,403 | +0% | | APAC | $7,546 | $7,730 | -2% | $14,824 | $14,039 | +6% | | Total | $128,899 | $136,831 | -6% | $250,026 | $269,026 | -7% | - The decrease in services revenue is primarily due to customer budgetary constraints shifting services work to future periods[110](index=110&type=chunk)[130](index=130&type=chunk) - Approximately **76%** of professional services revenue in Q2 2025 and **75%** in H1 2025 related to cloud subscriptions[112](index=112&type=chunk)[130](index=130&type=chunk) [Hardware Revenue](index=25&type=section&id=Hardware%20Revenue) This section reviews the performance and variability of the company's hardware sales revenue Hardware Revenue by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------- | :--------------------------- | :--------------------------- | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Americas | $6,464 | $7,770 | -17% | $12,106 | $14,130 | -14% | | EMEA | $42 | $22 | +91% | $318 | $210 | +51% | | APAC | $9 | - | - | $9 | - | - | | Total | $6,515 | $7,792 | -16% | $12,433 | $14,340 | -13% | - Hardware sales are largely dependent on customer-specific desires and fluctuate[113](index=113&type=chunk)[131](index=131&type=chunk) [Product Development](index=25&type=section&id=Product%20Development) This section outlines the company's investments and focus areas in research and development - R&D expenses were **$34.9 million** for Q2 2025 and **$70.2 million** for H1 2025[97](index=97&type=chunk) - R&D focuses on expanding and integrating new products, including cloud-based solutions, and enhancing existing solutions in supply chain, inventory optimization, omnichannel, and point-of-sale[97](index=97&type=chunk)[98](index=98&type=chunk) [Cash Flow and Financial Condition](index=25&type=section&id=Cash%20Flow%20and%20Financial%20Condition) This section summarizes the company's cash generation, liquidity, and capital allocation strategies - Cash flow from operating activities was **$74.0 million** for Q2 2025 and **$149.3 million** for H1 2025[100](index=100&type=chunk) - Cash and cash equivalents totaled **$230.6 million** at June 30, 2025, with no debt[100](index=100&type=chunk) - Primary uses of cash include R&D investments in Unified Omnichannel Commerce and Digital Supply Chain solutions and share repurchases[100](index=100&type=chunk)[101](index=101&type=chunk) - The Board of Directors approved replenishing the share repurchase authority to an aggregate of **$100.0 million** in July 2025[100](index=100&type=chunk)[111](index=111&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section provides a comprehensive analysis of the company's financial performance for the reporting periods [Condensed Consolidated Financial Summary - Second Quarter 2025](index=28&type=section&id=Condensed%20Consolidated%20Financial%20Summary%20-%20Second%20Quarter%202025) This section presents a detailed financial summary and analysis of the company's performance for the second quarter of 2025 Condensed Consolidated Financial Summary - Second Quarter 2025 (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | YoY Change | % of Total Revenue (Q2 2025) | % of Total Revenue (Q2 2024) | | :-------------------- | :-------- | :-------- | :--------- | :----------------------------- | :----------------------------- | | Cloud subscriptions | $100,422 | $82,361 | +22% | 37% | 31% | | Software license | $1,528 | $3,061 | -50% | 1% | 1% | | Maintenance | $35,057 | $35,273 | -1% | 13% | 13% | | Services | $128,899 | $136,831 | -6% | 47% | 52% | | Hardware | $6,515 | $7,792 | -16% | 2% | 3% | | Total revenue | $272,421 | $265,318 | +3% | 100% | 100% | - Operating income for Q2 2025 was **$73.8 million** (**27.1% margin**), up from **$68.2 million** (**25.7% margin**) in Q2 2024, primarily due to increased cloud subscriptions revenue[111](index=111&type=chunk)[121](index=121&type=chunk) - Cost of cloud subscriptions, maintenance, and services decreased by **$3.8 million** due to lower compensation and travel expenses, partially offset by increased computer infrastructure costs[114](index=114&type=chunk) - G&A expenses increased by **$4.9 million**, primarily due to a **$3.0 million** unusual health insurance claim and **$1.8 million** in compensation[118](index=118&type=chunk) - Effective income tax rate increased slightly to **23.8%** in Q2 2025 from **23.6%** in Q2 2024 due to decreased excess tax benefits on restricted stock awards[123](index=123&type=chunk) [Condensed Consolidated Financial Summary – First Six Months of 2025](index=32&type=section&id=Condensed%20Consolidated%20Financial%20Summary%20%E2%80%93%20First%20Six%20Months%20of%202025) This section presents a detailed financial summary and analysis of the company's performance for the first six months of 2025 Condensed Consolidated Financial Summary – First Six Months of 2025 (in thousands) | Revenue Type | H1 2025 | H1 2024 | YoY Change | % of Total Revenue (H1 2025) | % of Total Revenue (H1 2024) | | :-------------------- | :-------- | :-------- | :--------- | :----------------------------- | :----------------------------- | | Cloud subscriptions | $194,728 | $160,388 | +21% | 36% | 31% | | Software license | $10,820 | $5,871 | +84% | 2% | 1% | | Maintenance | $67,201 | $70,245 | -4% | 13% | 13% | | Services | $250,026 | $269,026 | -7% | 47% | 52% | | Hardware | $12,433 | $14,340 | -13% | 2% | 3% | | Total revenue | $535,208 | $519,870 | +3% | 100% | 100% | - Operating income for H1 2025 was **$137.0 million** (**25.6% margin**), up from **$125.8 million** (**24.2% margin**) in H1 2024, primarily due to increased cloud subscriptions revenue[126](index=126&type=chunk)[139](index=139&type=chunk) - Cost of cloud subscriptions, maintenance, and services decreased by **$8.4 million** due to lower compensation, performance-based compensation, and travel expenses, partially offset by increased computer infrastructure costs[132](index=132&type=chunk) - G&A expenses increased by **$7.9 million**, primarily due to a **$3.0 million** signing bonus, **$0.7 million** recruiting fees, and **$4.1 million** additional stock compensation for a new CEO[136](index=136&type=chunk) - Effective income tax rate increased to **21.3%** in H1 2025 from **16.6%** in H1 2024 due to decreased excess tax benefits on restricted stock vesting[141](index=141&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and manage its capital - The company funded its business exclusively through cash generated from operations in H1 2025[142](index=142&type=chunk) - Cash and cash equivalents at June 30, 2025, included **$138.4 million** in the U.S. and **$92.2 million** in foreign subsidiaries[142](index=142&type=chunk) - Cash flow from operating activities increased by **$21.3 million** in H1 2025 compared to H1 2024, mainly due to timing of cash collections[143](index=143&type=chunk) - Principal use of cash in financing activities was **$186.6 million** for common stock repurchases in H1 2025[145](index=145&type=chunk) - Priorities for cash use include continued investment in product development, funding global teams for growth, and share repurchases[101](index=101&type=chunk)[146](index=146&type=chunk) [Aggregate Contractual Obligations](index=36&type=section&id=Aggregate%20Contractual%20Obligations) This section outlines the company's significant contractual commitments and their expected payment timelines - Cloud infrastructure obligations are approximately **$219.2 million** over the next **5 years**[147](index=147&type=chunk) - Obligations for internal software subscriptions are approximately **$28.7 million** over the next **7 years**[147](index=147&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the accounting policies and estimates that require significant judgment and can materially impact financial results - No significant changes to critical accounting policies and estimates in H1 2025[148](index=148&type=chunk) [Forward-Looking Statements](index=36&type=section&id=Forward-Looking%20Statements) This section cautions readers about the inherent risks and uncertainties associated with forward-looking business projections - Forward-looking statements are subject to risks and uncertainties, including market volatility, competition, dependence on cloud subscriptions, software defects, IT security, AI risks, litigation, international operations, and geopolitical developments[149](index=149&type=chunk)[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section states that there were no material changes to the company's quantitative and qualitative disclosures about market risk compared to its annual report on Form 10-K for the year ended December 31, 2024 - No material changes to market risk disclosures compared to the **2024 Form 10-K**[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section details the company's disclosure controls and procedures, confirming their effectiveness as of June 30, 2025, and reports no material changes in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=39&type=section&id=Disclosure%20Controls%20and%20Procedures) This section describes the company's controls designed to ensure timely and accurate disclosure of financial information - Disclosure controls and procedures were evaluated and deemed effective as of **June 30, 2025**[155](index=155&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - No material changes in internal control over financial reporting during **Q2 2025**[156](index=156&type=chunk) PART II OTHER INFORMATION This section includes additional information not covered in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings.) This section addresses the company's involvement in legal proceedings, stating that while it is party to litigation, it does not currently believe any proceeding will have a material adverse impact on its financial position or operations. It refers to Note 7 for details on a specific class action lawsuit - The company is involved in litigation but does not currently believe any legal proceeding will have a material adverse impact on its business, financial position, results of operations, or cash flows[161](index=161&type=chunk) - Details of a class action lawsuit are incorporated by reference from **Note 7**[161](index=161&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors.) This section directs readers to review the risk factors previously disclosed in the company's annual report on Form 10-K for the year ended December 31, 2024, and its quarterly report on Form 10-Q for the quarter ended March 31, 2025 - Readers should consider risk factors from the **2024 Form 10-K** and **Q1 2025 10-Q**[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section provides details on common stock repurchases made under the company's publicly announced program during the second quarter of 2025 Common Stock Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :----------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------- | | May 1 - May 31, 2025 | 161,293 | $188.46 | 161,293 | $69,602,376 | | June 1 - June 30, 2025 | 101,048 | $190.00 | 101,048 | $50,403,673 | | Total | 262,341 | - | 262,341 | - | [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section confirms that no events occurred during the quarter ended June 30, 2025, that would require a response regarding defaults upon senior securities - No defaults upon senior securities occurred in **Q2 2025**[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This section states that the disclosure requirements for mine safety are not applicable to the company - Not applicable[166](index=166&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information.) This section provides other relevant information, specifically addressing Rule 10b5-1 trading plans [Rule 10b5-1 Trading Plans](index=40&type=section&id=Rule%2010b5-1%20Trading%20Plans) This section provides information regarding Rule 10b5-1 trading plans adopted or terminated by company insiders - No Rule 10b5-1 trading plans were adopted or terminated by directors or officers in **Q2 2025**[167](index=167&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed as part of the Form 10-Q, including various certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (**Exhibits 31.1, 31.2, 32**) and Inline XBRL documents (**Exhibits 101.INS, SCH, CAL, DEF, LAB, PRE, 104**)[168](index=168&type=chunk) [Signatures](index=42&type=section&id=Signatures.) This section contains the required signatures of the company's principal executive and financial officers, certifying the accuracy and completeness of the quarterly report - The report is signed by Eric A. Clark (President and CEO) and Dennis B. Story (EVP, CFO, and Treasurer) on **July 25, 2025**[172](index=172&type=chunk)

Core Insights - Manhattan Associates reported better-than-expected second-quarter financial results, with earnings of $1.31 per share surpassing the analyst consensus estimate of $1.13 per share and quarterly sales of $272.42 million exceeding the estimate of $263.61 million [1][2] Financial Performance - The company achieved record second-quarter results, with cloud revenue growth of 22% and RPO surpassing the $2 billion milestone [2] - Manhattan Associates raised its FY2025 adjusted EPS guidance from $4.54-$4.64 to $4.76-$4.84 and increased its sales guidance from $1.06 billion-$1.07 billion to $1.07 billion [2] Market Reaction - Following the earnings announcement, Manhattan Associates shares gained 6.2%, trading at $215.41 [3] - Analysts adjusted their price targets for Manhattan Associates, with Truist Securities raising it from $210 to $230, DA Davidson from $225 to $250, and Loop Capital from $200 to $210 [8]

Group 1 - The conference call is for Manhattan Associates' Q2 2025 earnings, indicating the company's ongoing financial performance review [2][3] - Michael Bauer, Head of Investor Relations, introduces the call and mentions that forward-looking statements regarding future events and financial performance will be made [3][4] - Eddie Capel, Executive Chairman, and Eric Clark, President and CEO, are key participants in the call, suggesting a structured leadership approach to discussing the company's results [1][3]

Core Insights - Manhattan Associates reported revenue of $272.42 million for the quarter ended June 2025, marking a year-over-year increase of 2.7% and exceeding the Zacks Consensus Estimate by 3.47% [1] - The company's EPS for the same period was $1.31, up from $1.18 a year ago, representing a surprise of 16.96% over the consensus estimate of $1.12 [1] Revenue Breakdown - Software license revenue was $1.53 million, falling short of the estimated $1.94 million, reflecting a significant year-over-year decline of 50.1% [4] - Hardware revenue reached $6.52 million, slightly above the estimated $6.47 million, but showed a year-over-year decrease of 16.4% [4] - Services revenue was reported at $128.9 million, exceeding the estimate of $125.36 million, yet down 5.8% compared to the previous year [4] - Maintenance revenue was $35.06 million, surpassing the estimate of $29.93 million, with a minor year-over-year decline of 0.6% [4] - Cloud subscriptions generated $100.42 million, exceeding the average estimate of $99.53 million, and represented a year-over-year increase of 21.9% [4] Stock Performance - Over the past month, shares of Manhattan Associates have returned +3.7%, compared to a +5.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Manhattan Associates reported quarterly earnings of $1.31 per share, exceeding the Zacks Consensus Estimate of $1.12 per share, and showing an increase from $1.18 per share a year ago, resulting in an earnings surprise of +16.96% [1][2] Financial Performance - The company achieved revenues of $272.42 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.47%, and up from $265.32 million year-over-year [2] - Over the last four quarters, Manhattan Associates has consistently exceeded consensus EPS estimates [2] Stock Performance - Shares of Manhattan Associates have declined approximately 26.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.2% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.16 on revenues of $270.53 million, and for the current fiscal year, it is $4.57 on revenues of $1.06 billion [7] - The trend of earnings estimate revisions prior to the earnings release was mixed, which may influence future stock performance [6] Industry Context - The Computer - Software industry, to which Manhattan Associates belongs, is currently ranked in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenue for Q2 was $272 million, up 3% year-over-year [28] - Cloud revenue increased 22% to $100 million, while services revenue declined 6% to $129 million [29] - Adjusted operating profit was $101 million with an adjusted operating margin of 37.1%, up 210 basis points year-over-year [31] - Adjusted earnings per share (EPS) for Q2 was $1.31, up 11%, and GAAP EPS was $0.93, up 9% [31] Business Line Data and Key Metrics Changes - RPO (Remaining Performance Obligations) increased 26% year-over-year to $2.01 billion [29] - More than 70% of new cloud bookings were generated from net new logos, with new logos representing approximately 35% of the current pipeline [12][29] - The company experienced strong cross-selling results, with roughly 80% of customers that bought MATM also purchasing or having previously purchased MAWM [24] Market Data and Key Metrics Changes - The company reported solid performance across diverse end markets, including retail, grocery, food distribution, life sciences, and technology [12] - FX volatility provided a $29 million tailwind to sequential RPO growth and a $28 million tailwind to year-over-year RPO growth [28] Company Strategy and Development Direction - The company is strategically increasing investment in sales and marketing to accelerate sales velocity and drive market share gains [13] - New partnerships with Google and Shopify are expected to enhance product accessibility and drive quicker adoption of solutions [16][17] - The company is focused on enhancing its unified product platform and has created a product council to co-innovate with customers [25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term opportunities despite a volatile global macro environment [10] - The company is raising its full-year total revenue, operating margin, and EPS outlook based on strong first-half performance [34] - Management expressed confidence in sustaining 20% growth in cloud subscription revenue, supported by a large booked business in RPO [48] Other Important Information - The company ended Q2 with $231 million in cash and zero debt, having invested $50 million in share repurchases during the quarter [32] - The average contract duration remains at 5.5 to 6 years, with some customers opting for longer ramp timelines [30] Q&A Session Summary Question: On supply chain unification and potential enhancements - Management is doubling down on investment in unification through engineering teams and customer engagement [44][46] Question: Confidence in sustaining 20% growth in cloud subscription revenue - Management remains confident due to a solid booked business in RPO and ongoing pipeline strength [48] Question: Insights on go-to-market investments and their potential impact - New hires and partnerships are expected to enhance market awareness and drive revenue growth [56][59] Question: Status of on-premise to cloud migration - Approximately 20% of on-premise customers have started the conversion to cloud, with ongoing efforts to accelerate this process [67] Question: Impact of ERP migrations on new customer acquisitions - ERP changes are creating opportunities for new customer pipelines as companies reassess their supply chain needs [70] Question: Trends in CIOs' investment decisions post-Liberation Day - Forward-leaning companies are continuing to invest in supply chain solutions, recognizing their strategic importance [89] Question: Updates on marketing efforts and market awareness - The company is actively searching for a Chief Marketing Officer to enhance market presence [91]

Financial Data and Key Metrics Changes - Total revenue for Q2 was $272 million, up 3% year-over-year [27] - Cloud revenue increased 22% to $100 million, while services revenue declined 6% to $129 million [28] - Adjusted operating profit was $101 million with an adjusted operating margin of 37.1%, up 210 basis points year-over-year [30] - Adjusted earnings per share (EPS) for Q2 was $1.31, up 11%, and GAAP EPS was $0.93, up 9% [30] - Free cash flow margin was 26% with a 38% adjusted EBITDA margin [30] Business Line Data and Key Metrics Changes - RPO (Remaining Performance Obligations) increased 26% year-over-year to $2.01 billion [28] - More than 70% of new cloud bookings were generated from net new logos, with new logos representing approximately 35% of the current pipeline [12] - The average contract duration remains at 5.5 to 6 years, with 38% of RPO expected to be recognized as revenue over the next 24 months [29] Market Data and Key Metrics Changes - The company experienced strength from new customers across diverse end markets, including retail, grocery, life sciences, and technology [12] - Win rates against top five competitors remained consistent at over 70% [12] Company Strategy and Development Direction - The company is strategically increasing investment in sales and marketing to accelerate sales velocity and drive market share gains [13] - New partnerships with Google and Shopify are expected to enhance product accessibility and customer acquisition [15][16] - The company is focused on unifying its product portfolio to drive cross-selling opportunities, with 80% of customers purchasing multiple products [24] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term opportunities despite a volatile global macro environment [11] - The company is raising its full-year total revenue, operating margin, and EPS outlook based on strong first-half performance [33] - Management expressed confidence in sustaining 20% growth in cloud subscription revenue, supported by a large booked business in RPO [46] Other Important Information - The company has zero debt and ended the quarter with $231 million in cash [31] - A share repurchase program of $150 million has been executed year-to-date, with an additional $100 million approved by the Board [31] Q&A Session Summary Question: On supply chain unification and potential enhancements - Management is doubling down on investment in unification through dedicated engineering teams and customer engagement initiatives [41][44] Question: Confidence in sustaining cloud subscription revenue growth - Management remains confident in sustaining 20% growth due to a solid booked business and expanding total addressable market (TAM) [46][49] Question: Go-to-market investment areas and their potential impact - New hires and partnerships are expected to enhance market awareness and drive revenue growth, particularly in POS and TMS markets [56] Question: Status of on-premise to cloud migration - Approximately 20% of on-premise customers have started the conversion to cloud, with ongoing efforts to accelerate this process [65] Question: Impact of ERP migrations on new customer acquisition - ERP migrations are creating opportunities for new customer acquisitions as companies reassess their supply chain needs [67] Question: Trends in the macro environment and customer investment behavior - CIOs are increasingly recognizing the importance of investing in supply chain solutions despite macro uncertainties [85] Question: Updates on marketing initiatives and awareness - The company is actively searching for a Chief Marketing Officer to enhance market presence and awareness [88]