MANHATTAN ASSOCIATES INC (MANH)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025, including the notes to those statements, included elsewhere in this quarterly report. We also recommend the following discussion be read in conjunction with management’s discussion and analysis and consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2025. Statements in the following discussion that are not statements of historical fact are “forward-looking statements.” Actual results may differ materially from the results predicted in such forward-looking statements, for a variety of factors. See “Forward-Looking Statements” below.

References in this filing to the “Company,” “Manhattan,” “Manhattan Associates,” “we,” “our,” and “us” refer to Manhattan Associates, Inc., our predecessors, and our wholly owned and consolidated subsidiaries.

Business Overview

We develop, sell, deploy, service and maintain software solutions designed to manage supply chains, inventory, and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers, government agencies, and other organizations. Our customers include many of the world’s premier and most profitable brands. Our proprietary applications architecture is highly differentiated among enterprise application providers, particularly within the Omni Channel and Supply Chain categories, through which we deliver a versionless yet highly extensible experience for our customers. With AI-driven insights and zero downtime updates, we deliver innovation seamlessly into customer environments without the need for planned maintenance windows.

Our business model is singularly focused on the development and implementation of complex commerce enablement software solutions that are designed to optimize supply chains, and retail store operations including point-of-sale (POS) effectiveness and efficiency for our customers.

We have five principal sources of revenue:

•
cloud subscriptions, including software as a service (SaaS) and hosting of software;

•
licenses of our software;

•
customer support services and software enhancements (collectively, “maintenance”) related to software licenses;

•
professional services, including solutions planning and implementation, related consulting, customer training, and reimbursements from customers for out-of-pocket expenses (collectively, “services”); and

•
hardware sales.

In the three and six months ended June 30, 2026, we generated $297.8 million and $580.0 million in total revenue. The revenue mix for the three and six months ended June 30, 2026 was: cloud subscriptions 42%; software license 1%; maintenance 10%; services 45%; and hardware 2%.

We have three geographic reportable segments: North, Latin, and South America (the “Americas”), Europe, the Middle East, and Africa (EMEA), and Asia-Pacific (APAC). Geographic revenue is based on the location of the sale. Our international revenue was approximately $102.1 million and $198.9 million for the three and six months ended June 30, 2026, which represents approximately 34% of our total revenue for both the three and six months ended June 30, 2026. International revenue includes all revenue derived from sales to customers outside the United States. At June 30, 2026, we employed approximately 4,100 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Future Expectations

While we remain cautious about the global economy, including with respect to macroeconomic uncertainty and global instability resulting from the military conflict involving the United States, Israel, and Iran and the ongoing war between Russia and Ukraine, our results for the first six months of 2026 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale, and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory, and omnichannel commerce solutions is in synergistic alignment with current market demand. We believe this alignment is contributing to our strong financial results, higher demand, and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

Going forward, we are investing in our cloud business, including enterprise investments in innovation, and strategic operating expenses to support growth objectives.

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For the remainder of 2026, our five strategic goals remain to:

•
Focus on customer success and drive sustainable long-term growth;

•
Invest in innovation to expand our products and total addressable market;

•
Expand our Manhattan Active suite of cloud solutions;

•
Develop and grow our cloud business and cloud subscription revenue; and

•
Expand our global sales and marketing teams.

Cloud Subscription

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Demand for our Manhattan Active® cloud solutions continues to grow nicely, with cloud revenue up 26% over the same quarter in the prior year. Cloud revenue represents about 98% of our total software revenue.

Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Global Economic Trends and Industry Factors

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In the three and six months ended June 30, 2026, approximately 66% of our total revenue was generated in the United States, 19% in EMEA, and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that approximately 80% of every supply chain software solutions dollar invested is spent in North America and Europe; consequently, the health of the U.S. and the European economies have a meaningful impact on our financial results.

We sell technology-based solutions with total pricing, including software and services, in many cases exceeding $1.0 million. Our software is often a part of our customers’ and prospects’ much larger capital commitment associated with facilities expansion and business improvement. We believe that, given the mission critical nature of our software, combined with a challenging global macro environment, our current sales cycles for large cloud subscriptions in our target markets could be extended. While demand for our solutions is solid, the current business climate within the United States and geographic regions in which we operate may affect customers’ and prospects’ decisions regarding timing of strategic capital expenditures.

While we are encouraged by our results, we remain cautious regarding the pace of global economic growth. We believe global geopolitical and economic volatility likely will continue to shape customers’ and prospects’ enterprise software buying decisions.

Key Performance Metrics

We regularly review metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe cloud subscriptions revenue growth and remaining performance obligation (RPO) growth are the leading indicators of our business performance, primarily derived from cloud subscription fees that customers pay for our Unified Omnichannel Commerce and Digital Supply Chain solutions.

Cloud Subscriptions Revenue Growth

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased to $243.8 million in the six months ended June 30, 2026 from $194.7 million for the same period in the prior year, representing a 25% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Remaining Performance Obligations

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 99% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and are not included in RPO. RPO provides insight into our contracted backlog of future business. As of June 30, 2026, our RPO was approximately $2.5 billion, an increase of 23% over June 30, 2025 on strong demand.

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Revenue

Cloud Subscriptions and Software License Revenue. In the three months ended June 30, 2026, cloud subscriptions revenue totaled $126.7 million or 42% of total revenues. The Americas, EMEA, and APAC segments recognized $97.6 million, $24.3 million, and $4.8 million in cloud subscriptions revenue, respectively, in the three months ended June 30, 2026. In the six months ended June 30, 2026, cloud subscriptions revenue totaled $243.8 million or 42% of total revenues. The Americas, EMEA, and APAC segments recognized $187.1 million, $47.3 million, and $9.4 million in cloud subscriptions revenue, respectively, in the six months ended June 30, 2026. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles. During the three and six months ended June 30, 2026, approximately 25% and 40%, respectively, of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed was with new customers, and 75% and 60%, respectively, was with existing customers. We define new customers as entities from which we either have never earned revenue or have not recognized revenue in the last five years.

In the three months ended June 30, 2026, license revenue totaled $2.0 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $1.2 million, $0.6 million, and $0.2 million in license revenue, respectively, in the three months ended June 30, 2026. In the six months ended June 30, 2026, license revenue totaled $4.2 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $3.0 million, $0.8 million, and $0.4 million in license revenue, respectively, in the six months ended June 30, 2026.

Our Unified Omnichannel Commerce and Digital Supply Chain solutions are focused on core omnichannel operation (e-commerce, retail store operations and POS), supply chain commerce operations (Warehouse Management, Transportation Management, and Labor Management), and demand forecasting and replenishment, which are intensely competitive markets characterized by rapid technological change. We are a market leader in the supply chain management and omnichannel software solutions market as defined by industry analysts such as ARC Advisory Group and Gartner. Our goal is to extend our position as a leading global supply chain solutions provider by growing our cloud subscriptions revenues fast

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements, trend analyses, and other information contained in the following discussion relative to markets for our products and trends in revenue, gross margins, and anticipated expense levels, as well as other statements including words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and other similar expressions constitute forward-looking statements. These forward-looking statements are subject to business and economic risks and uncertainties, including those discussed under the caption “Risk Factors” in Item 1A of this Form 10-K, and our actual results of operations may differ materially from those contained in the forward-looking statements.

This section of our Annual Report on Form 10-K discusses our financial condition, results of operations, and liquidity and capital resources for the fiscal years ended December 31, 2025 and 2024, and year-to-year comparisons between fiscal 2025 and fiscal 2024 in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). A discussion of our financial condition, results of operations, and liquidity and capital resources for the fiscal year ended December 31, 2024 and 2023 and year-to-year comparisons between fiscal 2024 and fiscal 2023 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 7, 2025.

Business Overview

We develop, sell, deploy, service and maintain software solutions designed to manage supply chains, inventory and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers and other organizations. Our customers include many of the world’s premier and most profitable brands.

Our business model is singularly focused on the development and implementation of complex commerce enablement software solutions that are designed to optimize supply chains, and retail store operations including POS effectiveness and efficiency for our customers.

We have five principal sources of revenue:

•
cloud subscriptions, including software as a service (SaaS) and hosting of software;

•
licenses of our software;

•
customer support services and software enhancements (collectively, “maintenance”) related to software licenses;

•
professional services, including solutions planning and implementation, related consulting, customer training, and reimbursements from customers for out-of-pocket expenses (collectively, “services”); and

•
hardware sales.

In 2025, we generated $1,081.4 million in total revenue, with a revenue mix of: cloud subscriptions 38%; software license 1%; maintenance 12%; services revenue 47%; and hardware 2%.

We have three geographic reportable segments: the Americas, EMEA, and APAC. Geographic revenue is based on the location of the sale. Our international revenue was approximately $373.5 million and $346.2 million for the years ended December 2025 and 2024, respectively, which represents approximately 35%, and 33% of our total revenue for the years ended December 2025 and 2024, respectively, respectively. International revenue includes all revenue derived from sales to customers outside the United States. At December 31, 2025, we employed approximately 4,370 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, and the United Kingdom, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Future Expectations

While we remain cautious about the global economy, our results for the full year ended December 31, 2025 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory and omnichannel commerce solutions is in synergistic alignment with current market demand. We believe this alignment is contributing to our strong financial results, higher demand and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

Going forward, we are investing in our cloud business, including enterprise investments in innovation, and strategic operating expenses to support growth objectives.

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For 2026, our five strategic goals continue to be:

•
Focus on customer success and drive sustainable long-term growth;

•
Invest in innovation to expand our products and total addressable market;

•
Expand our Manhattan Active suite of cloud solutions;

•
Develop and grow our cloud business and cloud subscription revenue; and

•
Expand our global sales and marketing teams.

Cloud Subscription

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Adoption of our Manhattan Active® cloud solutions continues to increase nicely, with cloud revenue up 21% over 2024. Cloud revenue now represents about 96% of our total software revenue.

Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Global Economic Trends and Industry Factors

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In 2025, we generated approximately 65% of our total revenue in the United States, 20% in EMEA, and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that over 80% of every supply chain software solutions dollar invested is spent in North America and Europe; consequently, the health of the U.S. and European economies have a meaningful impact on our financial results.

We sell technology-based solutions with total pricing, including software and services, in many cases exceeding $1.0 million. Our software is often a part of our customers’ and prospects’ much larger capital commitment associated with facilities expansion and business improvement. We believe that, given the mission critical nature of our software, combined with a challenging global macro environment, our current sales cycles for large cloud subscriptions in our target markets could be extended. While demand for our solutions is solid, the current business climate within the United States and geographic regions in which we operate may affect customers’ and prospects’ decisions regarding timing of strategic capital expenditures.

In January 2026, the International Monetary Fund (IMF) provided a World Economic Outlook (WEO) update. The WEO update noted, “Global growth is projected at 3.3 percent in 2026 and 3.2 percent in 2027: rates similar to the estimated 3.3 percent outturn in 2025. Global headline inflation is expected to decline from an estimated 4.1 percent in 2025 to 3.8 percent in 2026 and further to 3.4 percent in 2027. The inflation projections are also broadly unchanged from those in October and envisage inflation returning to target more gradually in the United States than in other large economies.”

The WEO update projected advanced economies, which represent our primary revenue markets, would grow at about 2.4 and 2.0 percent in 2026 and 2027, while the emerging and developing economies would grow at about 4.2 percent in 2026 and 4.1 percent in 2027.

While we are encouraged by our results, we remain cautious regarding the pace of global economic growth. We believe global geopolitical and economic volatility likely will continue to shape customers’ and prospects’ enterprise software buying decisions.

Key Performance Metrics

We regularly review metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe cloud subscriptions revenue growth and remaining performance obligation (RPO) growth are the leading indicators of our business performance, primarily derived from cloud subscription fees that customers pay for our Unified Omnichannel Commerce and Digital Supply Chain solutions.

Cloud Subscriptions Revenue Growth

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased from $337.2 million in 2024 to $408.1 million in 2025, representing a 21% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Remaining Performance Obligations

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 98% of our RPO

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represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and not included in RPO. RPO provides insight into our contracted backlog of future business. As of December 31, 2025, our RPO was approximately $2.2 billion, an increase of 25% over December 31, 2024 on strong demand.

Revenue

Cloud Subscriptions and Software License revenue: In the full year ended December 31, 2025, cloud subscriptions revenue was 96% of total cloud and software license revenue. In 2025, cloud subscriptions revenue totaled $408.1 million, or 38% of total revenue. The Americas, EMEA, and APAC segments recognized $313.0 million, $80.1 million and $15.0 million in cloud subscriptions revenue, respectively, in 2025. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles. Approximately 56% of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed during 2025 was with new customers and 44% was with existing customers. We define new customers as entities from which we either have never earned revenue or have not recognized revenue in the last five years.

In 2025, license revenue totaled $14.8 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $5.6 million, $8.4 million, and $0.8 million in license revenue, respectively, in 2025.

Our Unified Omnichannel Commerce and Digital Supply Chain solutions are focused on core omnichannel operation (e-commerce, retail store operations and POS), supply chain commerce operations (Warehouse Management, Transportation Management and Labor Management), and inventory optimization, which are intensely competitive markets characterized by rapid technological change. We are a market leader in the supply chain management and omnichannel software solutions market as defined by industry analysts such as ARC Advisory Group and Gartner. Our goal is to extend our position as a leading global supply chain solutions provider by growing our cloud subscriptions revenues faster than our competitors through investment in innovation.

Maintenance Revenue: Our maintenance revenue totaled $130.0 million, or 12% of total revenue. The Americas, EMEA and APAC segments re

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