Manhattan Associates, the supply chain software provider whose stock was a wild ride several months ago, reported earnings Tuesday that were cheered by investors and possibly signaled a broader demand turnaround in that sector.
At the market close, Manhattan Associates stock (NYSE: MANH) was up $14.92/share, or 7.36%, to $217.71. It traded early in the day as high as $247.22.
According to a report on Benzinga, three analysts that checked in with reports Wednesday maintained their buy ratings on Manhattan Associates, but also with target stock prices that ranged from $210 to $250.
What is striking about Manhattan’s stock is just how much it has swung since December.
On December 12, Manhattan Associates hit a 52-week high of $312.60. In less than four months, it had declined to a 52-week low of $140.81, a period that saw its longtime CEO Eddie Capel step aside but remain as executive chairman. (Capel announced on the call that he is transitioning to board chairman, dropping the executive role).
That swing from 52-week high to 52-week low in just fourt months marked a roughly 55% decline. It also was a period coming after the company saw sluggish sales figures. The earnings report for the second quarter appears to be changing that narrative.
With the move Wednesday to more than $216, the stock is up more than 53% since that low. According to a report on Benzinga, three analysts that checked in with reports on Manhattan Associates Wednesday maintained their buy ratings, but also with target stock prices that ranged from $210 to $250.
What drove the surge in Manhattan Associates’ stock price Tuesday was an earnings report that showed strong revenue growth, so that the improvement in the bottom line–which was modest–was not just driven by cost cuts and belt tightening. The earnings report showed a sales landscape for Manhattan Associates that had greatly improved.
Total revenue of $272.4 million for the company was reported as a record for a second quarter. It was up from $265.3 million a year earlier.
But within those numbers was $100.4 million for subscriptions to Manhattan Associates’ various offerings through cloud subscriptions, up from $82.4 million. That’s a gain of 22%.
The positive signals from the cloud subscription figure were boosted further by the numbers on Remaining Performance Obligation (RPO), which is essentially a measure of future revenue that can be expected from subscriptions already under contract. That number rose to just over $2 billion from $1.6 billion a year ago, up 26%.
Bottom line numbers were improved also, though not to the level of revenue numbers. Net income for the second quarter rose to $109.4 million, up from $106.6 million.
Adjusted operating income, which is a non-GAAP measure of profitability, was $101.1 million for the second quarter. A year ago in the second quarter, it was $92.9 million.
Positive developments running through the system
Clark spelled out a quarter that produced what might be considered a “virtuous circle,” though he did not use that term.
As a contract with a Manhattan Associates customer runs its course, Clark said, “the dollars move from RPO to subscription revenue. And by the end of the contract, there’s no RPO left.”
A renewal “refreshes” the RPO, Clark added, “but it does so at a higher level for a number of reasons.” He noted that users within a contract would have been added during the life of that pact, so a renewal now has more seats.
But that isn’t new. What is new is the Manhattan Active Supply Chain Execution, rolled out in 2024 and which company executives describe as providing “unification” of its products on one platform.
And with a more unified platform, Clark said, there is a greater opportunity to cross-sell. “When they bought Warehouse Management, we didn’t have Transportation Management or Supply Chain Management or AI agents,” Clark said, the latter a reference to the agentic AI features at Manhattan Associates that received a significant amount of focus at Momentum this year.
Lots of cross-selling
Clark said in the past five quarters, 80% of Manhattan Associates customers that purchased its TMS also bought its warehouse management product, or had already done so.
“So our customers are truly experiencing the value of unification,” Clark said. “The cross-sell results that we’ve seen since launching Manhattan Active Supply Chain Execution have far exceeded what we were able to achieve with our prior platform.”
Manhattan Associates has said it expects to have a sustainable revenue growth rate of 20% in its cloud subscription revenue. Answering a question from an analyst on the earnings call, Clark said the RPO figure is a reason the company is sticking to that forecast.
Clark said the stated goal of 20% would not be regularly updated each quarter on its progress. “But I can tell you we remain confident,” Clark said, citing the future revenues that are in the RPO. “That gives us good visibility in the second half and next year.”
He also said the renewal cycle “really starts to pick up pace next year,” citing in particular demand for the Manhattan Active Warehouse Management product.
Clark also spoke of changes the company had made in its sales effort, including promoting long-time executive Bob Howell to be its chief sales officer.
New middle-level sales managers also have been added, Clark said. But in terms of human resources, it isn’t just the executive level; Clark said Manhattan Associates has “added and will continue to add more feet on the street.”
In the three months since the company’s prior conference call with analysts, Clark said Manhattan Associates had added “more sales talent than in any quarter in the past ten years.”
Beyond just the last quarter, Clark said the latest three quarters at Manhattan Associates “have been our best three bookings quarters ever, and you can argue that all three of those quarters were during at least a changing if not a challenging macro.”
A boost from Google
The company also has put its product offerings up on Google Cloud Marketplace, the cloud platform that hosts third-party software applications. That was disclosed at Momentum.
Clark said the largest deal it signed in the quarter “was influenced by Google Cloud Marketplace, and we have a growing pipeline of Google Marketplace deals.”
Revenue in the Services group, which among other offerings provides advisory services to companies growing their use of Manhattan Associates products, fell to $129 million from $136.8 million a year ago. But despite that, CEO Eric Clark, in his prepared remarks on the company’s earnings call with analysts, said the group had “slightly outperformed expectations.”
“This execution is encouraging,” Clark said. “However, given the inherent flexibility of time and material contracts, coupled with the ongoing tariff and general market uncertainty, we remain cautious on our services revenue growth.”
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