Supply chain software provider Manhattan Associates (NASDAQ:MANH) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 5.7% year on year to $270.4 million. The company expects the full year’s revenue to be around $1.14 billion, close to analysts’ estimates. Its non-GAAP profit of $1.21 per share was 6.7% above analysts’ consensus estimates.
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Manhattan Associates (MANH) Q4 CY2025 Highlights:
- Revenue: $270.4 million vs analyst estimates of $264.7 million (5.7% year-on-year growth, 2.2% beat)
- Adjusted EPS: $1.21 vs analyst estimates of $1.13 (6.7% beat)
- Adjusted Operating Income: $91.37 million vs analyst estimates of $87.06 million (33.8% margin, 5% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $5.12 at the midpoint, missing analyst estimates by 3.6%
- Operating Margin: 24.8%, up from 23.7% in the same quarter last year
- Billings: $310.2 million at quarter end, up 8.8% year on year
- Market Capitalization: $10.23 billion
StockStory’s Take
Manhattan Associates delivered a fourth quarter that exceeded Wall Street’s expectations, driven by robust cloud revenue growth and a resurgence in its services segment. Management attributed the strong finish to increased adoption of its cloud-based supply chain solutions, accelerated customer migrations, and expansion into new verticals beyond retail. CEO Eric Clark highlighted the company’s ability to secure both new customers and expansions from existing clients, noting that “more than 75% of our new cloud bookings were generated from net new logos.” The introduction of AI-powered features and streamlined implementation processes also contributed to improved customer outcomes and higher overall bookings.
Looking forward, Manhattan Associates’ guidance reflects a cautious approach as it continues to invest in developing AI tools and expanding its services capacity. Management pointed to the commercial launch of its AI agent platform and a strengthened pipeline for cross-selling and customer renewals as key growth drivers for the year ahead. CFO Dennis Story emphasized the company’s recurring revenue visibility, stating, “Our assumptions for ramped ARR are as follows. If a renewal is set to occur, during this four-year period, it renews at current pricing with no churn or price increases assumed.” However, the company acknowledged that increased hiring and higher investment in sales and services will affect margins in the near term.
Key Insights from Management’s Remarks
Management credited fourth quarter momentum to new customer wins, accelerated cloud migrations, and the commercial launch of its AI agents platform, while also expanding into non-retail verticals.
- Cloud revenue acceleration: The company’s cloud-based solutions saw rapid adoption, highlighted by 20% cloud revenue growth and a 23% increase in ramped annual recurring revenue. Management attributed this to faster customer migrations and a growing preference for unified supply chain platforms.
- AI agent platform launch: Manhattan Associates launched its AI-powered agent suite, allowing customers to build and deploy supply chain automation tools directly within its platform. Early adopters reported productivity gains, and management expects cross-sell opportunities with new and existing clients.
- Diverse vertical expansion: While retail remains a core market, management highlighted new wins in sectors such as home improvement, medical distribution, and life sciences, signaling broader traction for its cloud solutions beyond traditional retail customers.
- Services segment rebound: The company’s services business returned to growth as new programs and expanded headcount enabled faster implementation times and increased upsell activity, particularly for clients transitioning from on-premises to cloud solutions.
- Sales and marketing investments: Manhattan Associates reorganized its global sales team, introduced a new partner program, and added senior leadership, all aimed at boosting selling velocity and pipeline development for 2026 and beyond.
Drivers of Future Performance
Manhattan Associates’ outlook is shaped by continued cloud adoption, further deployment of AI-powered features, and renewed investment in services and sales capacity.
- AI agent adoption and monetization: Management expects the commercial rollout of its agentic AI suite to drive incremental subscription bookings, with early customer pilots aimed at converting into long-term contracts. Success in this initiative could accelerate cross-sell and upsell opportunities across the installed base.
- Customer migrations and renewals: The company is prioritizing on-premises to cloud migrations and upcoming renewal cycles, supported by dedicated migration teams and enhanced sales programs. Management believes that a healthy pipeline and strong retention rates will underpin recurring revenue growth, but notes some lumpiness in large deal timing.
- Margin impact from investment: Increased hiring in services and expanded sales and marketing efforts are expected to support growth but may limit further operating margin expansion in the short term. Management views these investments as essential to sustaining double-digit cloud growth and meeting demand for new AI-driven products.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of adoption and monetization for Manhattan Associates’ new AI agent offerings, (2) progress on migrating legacy customers to cloud-based solutions and the resulting effect on recurring revenue, and (3) the impact of expanded services and sales investments on both customer acquisition and margin trends. Execution in cross-selling and pipeline conversion will also be closely monitored.
Manhattan Associates currently trades at $172.63, up from $169.73 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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