Manhattan Associates delivered a strong finish to 2025, achieving record results across RPO, cloud bookings, revenue, operating income, and free cash flow. Q4 revenue increased 6% year-over-year to $270 million, driven by 20% growth in cloud revenue to $109 million, while adjusted EPS rose 3% to $1.21. For the full year, revenue reached $1.08 billion (up 4%) with adjusted EPS of $5.06 (up 7%). The company generated record cloud bookings in Q4, propelling RPO to $2.2 billion, a 25% increase, with new logos accounting for over 55% of new cloud bookings. Strategic highlights included the commercial launch of 'Agentik' AI agents and the Agent Foundry, alongside a reorganized sales team and new C-suite hires. Looking to 2026, management expects total revenue growth of 6% (or 10% excluding license/maintenance attrition) to approximately $1.143 billion, with RPO growing 18-20% to $2.65 billion at the midpoint.
| Metric | Value | Change |
|---|---|---|
| Q4 Total Revenue | $270 million | +6% |
| Q4 Cloud Revenue | $109 million | +20% |
| Q4 Adjusted EPS | $1.21 | +3% |
| FY 2025 Total Revenue | $1.08 billion | +4% |
| FY 2025 RPO | $2.2 billion | +25% |
| FY 2025 Adjusted Operating Margin | 35.8% | +100 bps |
| FY 2025 Free Cash Flow | $389 million | +32% |
| Ramped ARR (FY 2025) | $600 million+ | +23% |
Manhattan Associates is aggressively pivoting towards AI monetization with the commercial launch of 'Agentik.ai' and the 'Agent Foundry.' This strategy allows customers to use pre-built base agents or create custom ones using natural language directly within the platform. Management emphasized a low-risk, 90-day proof of concept model to drive adoption, stating, 'We're offering this at a very low-cost low-risk scenario.' This initiative is critical as it represents the first time the company can upsell to every cloud customer simultaneously, leveraging its 'army of services people' and domain expertise to drive value immediately.
The company is executing a strategic shift in its sales organization and go-to-market motion to accelerate growth. In 2025, Manhattan reorganized the global sales team under a new Chief Sales Officer, hired a new COO (Greg Betts) and CMO (Katie Foote), and refreshed its partner program. These changes are designed to improve 'selling velocity' and capture share in both new logos and existing accounts. The early success is evident in Q4, where competitive win rates remained over 70% and new logos represented a significant portion of bookings.
Management introduced a new non-GAAP metric, 'Ramped ARR' (four-year annualized value of recurring revenue), which exceeded $600 million (up 23%). This metric is intended to provide investors better visibility into cloud revenue growth by accounting for pricing ramps, complementing the traditional RPO metric. This signal highlights management's focus on transparency and the underlying durability of their subscription revenue, which they argue remains strong even if RPO fluctuates due to renewal timing (e.g., renewing deals at 3 years vs 5 years).
Capital allocation remains a key pillar of shareholder value creation. The company ended 2025 with $329 million in cash and zero debt. In 2025, they repurchased $275 million worth of shares, including $75 million in Q4 alone. The board has also replenished the $100 million share repurchase authority. This aggressive buyback program, combined with a 34.6% free cash flow margin, signals management's confidence in cash generation and commitment to returning capital to shareholders while investing in growth.
Services revenue remains a point of weakness and visibility challenges. While Q4 services returned to growth earlier than expected, full-year 2025 services revenue declined 4% to $503 million. Guidance for 2026 is modest, expecting only 3% growth to $517 million. Management noted that services is 'the tough one to predict a year from now,' and while they are hiring aggressively (100 new hires in January), the low growth rate relative to the high-flying cloud business acts as a drag on total revenue expansion.
Legacy revenue streams are contracting faster than anticipated, creating a headwind to reported growth. License and maintenance attrition is expected to be a 4.4% headwind to total revenue growth in 2026. Specifically, maintenance revenue is guided to decline 19% to $105.5 million. Additionally, the company faced a $1.3 million (annualized $2.5 million) customer liquidation headwind in Q4 that was not embedded in prior guidance, highlighting execution risks or customer instability in certain pockets of the base.
The shift in renewal duration strategy introduces complexity for investors modeling RPO. Management stated they may renew some deals at 3 years instead of 5 years to accelerate pricing conversations. While this is strategically sound for long-term value, it creates 'lumpiness' in RPO reporting. Management explicitly warned, 'our bookings performance is impacted by the number and relative value of large deals we closed in any quarter which can potentially cause lumpiness or non-linear bookings throughout the year,' requiring investors to look past the headline RPO number to the new Ramped ARR metric.
Tax and margin headwinds persist. The company is facing a higher effective tax rate due to the acceleration of domestic R&D cost deductions following a July 4 U.S. Tax law change. While this lowered cash taxes, it impacts GAAP reporting. Furthermore, while operating margins are expanding (35.8% in 2025), the 2026 guide implies only modest expansion (approx 75 bps excluding license/maintenance attrition) as the company reinvests in sales and marketing and absorbs the cost of 100 new services hires.
Overall: Management exhibited a high level of confidence and enthusiasm throughout the call, particularly regarding the company's product differentiation and the new AI product launch. Eric Clark (CEO) emphasized the 'world-class' nature of the platform and people, while Dennis Story (CFO) provided precise, data-driven financial updates. The tone shifted from celebratory about 2025 records to assertive about 2026 opportunities, specifically around AI monetization and cloud conversions.
Confidence: HIGH - Management's confidence was bolstered by record financial metrics, a robust pipeline, and successful early adoption of AI products. They provided specific guidance ranges and new metrics (Ramped ARR) to demonstrate visibility, reducing reliance on qualitative assurances.
$1.133 billion - $1.153 billion (Midpoint $1.143B, +6% YoY)
$2.62 billion - $2.68 billion (+18% to 20% YoY)
$5.04 - $5.20
$492 million (+21% YoY)
$517 million (+3% YoY)
$272 million - $274 million
Hedging & Uncertainty: Management used relatively little hedging regarding core operations, speaking with high certainty about product superiority ('only Manhattan Associates... will meet their needs'). However, they employed standard forward-looking qualifiers regarding the macro environment ('turbulent global macro environment could impact our outperformance'). There was specific hedging around the 'lumpiness' of bookings and the difficulty of predicting services revenue a full year out. Notably, Eric Clark used a 'conservative approach' framing regarding AI contributions to guidance, stating, 'Anything we do in AI is incremental to what we've talked about today,' effectively lowering the bar for upside while protecting the base guidance.
"The vast majority of prospects reached the conclusion that only Manhattan Associates, Inc.'s active warehouse application will meet their needs." - Eric Clark, CEO
"We've taken a very conservative approach. Anything we do in AI is incremental to what we've talked about today." - Eric Clark, CEO
"We're offering this at a very low-cost low-risk scenario. It's a ninety-day proof of concept." - Eric Clark, CEO
"Of all of the revenue services is the tough one to predict a year from now." - Eric Clark, CEO
"We want to give ourselves the ability to renew some deals at three years as well." - Eric Clark, CEO
Analyst Sentiment: Analysts were overwhelmingly positive, congratulating management on the 'impressive' bookings and cash flow. Questions focused heavily on understanding the sustainability of the high RPO growth, the mechanics of the new AI product launch, and the drivers behind the services recovery.
Management Responses: Management was forthcoming with details, using the Q&A to explain the nuance behind RPO vs. Ramped ARR. They confidently defended the services growth thesis by linking it to the new AI upsell motion and fixed-fee conversion deals. Eric Clark was particularly assertive regarding the competitive landscape, noting that customers often have 'no choice' but to select Manhattan.
Discussion on the mix of RPO, specifically the 18-20% contribution from renewals versus new business.
Deep dive into the monetization strategy for 'Agentik' AI agents and the 'low-risk' pilot program.
Analysis of the services business outlook, specifically the confidence in the 3% growth guide despite historical volatility.
Inquiries into the 'rule of thirds' for bookings (new logo, expansion, conversion) and the deviation seen in 2025.
Manhattan Associates is executing at a high level, demonstrating resilience in a volatile macro environment by taking market share and successfully transitioning to a cloud-centric model. The introduction of Agentik AI represents a tangible growth catalyst for 2026, offering a unique upsell opportunity that leverages their deep domain expertise and services army. Financial discipline is evident, with expanding operating margins, robust free cash flow generation (34.6% margin), and aggressive share repurchases reducing the share count. While legacy revenue attrition and modest services growth present minor headwinds, the 20%+ cloud growth trajectory and record RPO provide strong visibility. The introduction of Ramped ARR further de-risks the investment thesis by clarifying the underlying revenue momentum. The stock remains a core holding for exposure to the supply chain digital transformation theme.
Management indicated that despite a 'turbulent global macro environment,' CIOs continue to greenlight large WMS and TMS conversion projects. The focus has shifted to 'speed and simplicity' and ROI, with customers seeking efficiency gains to offset broader economic pressures.
There is strong customer interest in AI agents, as evidenced by the reception at NRF and the early access program. Customers are looking for practical, immediate value (ROI) from AI rather than experimental projects, favoring Manhattan's embedded, domain-specific approach over generic data lake solutions.