April 21, 2026, 4:30 p.m.
ET CALL PARTICIPANTS President and Chief Executive Officer — Eric ClarkChief Financial Officer — Linda PinneHead of Investor Relations — Michael Bauer Need a quote from a Motley Fool analyst? Email [email protected] Total revenue -- $282 million, up 7%; excluding license and maintenance, revenue increased 13% due to accelerated cloud adoption.Cloud revenue -- $117 million, up 24%, with over 1% attributed to FX tailwinds; management cited one-time cloud overage fees and lower churn as contributors to outperformance.Services revenue -- $126 million, up 4%, driven by higher deal volume and cross-sell/upsell activities across both new and installed customers.Remaining performance obligations (RPO) -- $2.35 billion, up 24% year-over-year and 5% sequentially; 38% of RPO is expected to be recognized as revenue in the next 24 months.Net new bookings mix -- Over 55% of new cloud bookings came from net new logos, including the company's largest ever Order Management System (OMS) deal completed via Google Cloud Marketplace.Adjusted operating profit -- $91 million, with an operating margin of 32.4%; margin improvement offset increased go-to-market investments.Adjusted EPS -- $1.24, up 4%; GAAP EPS was $0.82, down 4% due to higher tax expense from reduced stock-based compensation benefits.Operating cash flow -- $84 million, up 12%, resulting in a 28.3% free cash flow margin and a 33.1% adjusted EBITDA margin.Deferred revenue -- $356 million, up 20% year-over-year.Share repurchases -- $150 million deployed in the quarter, with $350 million remaining under the current repurchase authorization.Contract duration -- Average length held steady at about 5.5 to 6 years, supporting multi-year visibility.Cloud migration progress -- 23% of on-prem customers have migrated or started migration to the cloud, indicating significant remaining conversion opportunity.2026 revenue guidance -- Targeting total revenue of $1.147 billion to $1.157 billion (midpoint $1.152 billion), implying 11% growth excluding license and maintenance attrition; cloud revenue midpoint raised to $495 million (21% growth).Full-year adjusted operating margin outlook -- Increased to a 35% midpoint, with quarterly targets of approximately 34.7% for Q2, 36.9% for Q3, and 36.1% for Q4.Full-year adjusted EPS guidance -- Increased to $5.29 to $5.37; GAAP EPS midpoint raised to $3.59.Active Agent (AI) adoption -- Early pilots showed a 5% improvement in order cycle times and labor reduction at one retail customer, "double-digit percentage" reductions in loading times at a healthcare customer, and up to 75% fewer exceptions for a food distributor, driving customer ROI and accelerating broader pilot interest.Forward deployed engineer (FDE) expansion -- Approximately 120 new hires added to the services team for AI and agent deployment, with an additional 70 roles open or pending.Cloud maintenance attrition -- Maintenance revenue expected to decline 17% to approximately $108 million as cloud migration continues; license revenue maintained at ~$1 million per quarter.Regional deal activity -- Largest Q1 deals closed in Europe and APAC, demonstrating geographic diversification; all regions contributed to bookings momentum.Win rate -- Consistently above 70% across competitive sales cycles.
Chief Financial Officer Linda Pinne stated, "the macro environment remains volatile.
While clarity from external variables remains limited," leading to continued conservative financial guidance for Q2 to Q4 despite strong Q1 results.GAAP EPS decreased by 4% due to "higher-than-expected tax expense due to a decrease of stock-based compensation benefits," directly reducing profits.Management indicated that Q1 cloud revenue benefited from "onetime cloud overage fees that would not be recurring," implying that growth rates may not sustain at current levels.
Manhattan Associates (MANH +0.79%) reported record first-quarter results, driven by 24% cloud revenue growth, strong net new bookings, and improved services performance, prompting management to raise full-year guidance for total revenue, operating margins, and EPS.
Early AI agent pilots delivered measurable productivity gains and customer ROI, accelerating adoption across multiple verticals.
Cloud migration continued, with a substantial on-premise base yet to convert, and geographic diversity in deal activity highlighted the company's expanding reach and pipeline resilience.
Management emphasized the strategic importance of the unified Active platform, with major Q1 deals citing operational advantages of single-application warehouse and transportation management.President and CEO Eric Clark stated that "over 55% of new cloud bookings were generated from net new logos," indicating expanding market penetration beyond the legacy customer base.Reported contract durations of 5.5 to 6 years provide significant revenue and cash flow visibility over multiple periods.Cloud overage fee upside and lower churn in renewals were acknowledged as one-time or non-recurring, prompting maintained conservatism for the balance of the year's financial outlook.RPO guidance for the year was reiterated at $2.62 billion to $2.68 billion, representing 18%-20% growth, with the mix influenced by deal size and timing variability.AI monetization will be primarily derived from a paid 90-day pilot transitioning to subscription pricing, with margin modeling and consumption-based pricing structures designed to ensure continuity with current SaaS margins.
INDUSTRY GLOSSARY RPO (Remaining performance obligations): The total contracted revenue not yet recognized, providing an indicator of future booked revenue streams for software and services companies.OMS (Order Management System): A technology platform that automates and tracks orders from inception to fulfillment across various commerce channels.FDE (Forward deployed engineer): Services and R&D staff deployed directly within client operations to co-develop, configure, and deploy advanced products, including AI agents, accelerating value delivery and product adoption.Active Agent Foundry: The company's feature set enabling clients to create, deploy, and customize autonomous and interactive AI agents integrated within its supply chain and omni-channel software suite.Cloud migration: The process of moving customers from legacy on-premises software to cloud-based, subscription-delivered solutions.
Full Conference Call Transcript Operator: Good afternoon.
My name is Joe, and I will be your conference facilitator today.
At this time, I would like to welcome everyone to the Manhattan Associates First Quarter 2026 Earnings Conference Call.
[Operator Instructions] And as a reminder, ladies and gentlemen, this call is being recorded today, April 21, 2026.
I would now like to introduce you to your host, Mr.
Michael Bauer, Head of Investor Relations of Manhattan Associates.
Bauer, please go ahead.
Michael Bauer: Great.
Thanks, Joe, and good afternoon, everyone.
Welcome to Manhattan Associates' 2026 First Quarter Earnings Call.
I will review our cautionary language and then turn the call over to our President and Chief Executive Officer, Eric Clark.
During this call, including the Q&A session, we may make forward-looking statements regarding future events or Manhattan Associates' future financial performance.
We caution you that these forward-looking statements involve risks and uncertainties are not guarantees of future performance, and actual results may differ materially from the projections contained in our forward-looking statements.
I refer you to Manhattan Associates' SEC reports for important factors that could cause actual results to differ materially from those in our projections, particularly our annual report on Form 10-K for fiscal year 2025 and the risk factor discussion in that report and any risk factor updates we provide in our subsequent Form 10-Qs.
Please note that the turbulent global macro environment could impact our performance and cause actual results to differ materially from our projections.
We are under no obligation to update these statements.
In addition, our comments include certain non-GAAP financial measures to provide additional information to investors.
We have reconciled all non-GAAP measures to the related GAAP measures in accordance with SEC rules.
You'll find reconciliation schedules in the Form 8-K we filed with the SEC earlier today and on our website at manh.com.
Now I'll turn the call over to Eric.
Eric Clark: Great.
Thank you, Mike.
Good afternoon, everyone, and thank you for joining us as we review our first quarter results and discuss our increased full year 2026 outlook.
Manhattan is off to a strong start to 2026, navigating a volatile global macro, reporting record better-than-expected results.
On solid demand, our Q1 revenue growth accelerated, highlighted by 24% growth in cloud revenue and our services revenue growth also continues to steadily improve.
Throughout 2025, we spoke about the strategic investments that we're making to improve our go-to-market effectiveness and accelerate our selling velocity.
And while results from these initiatives will certainly not be linear, these investments have started to pay off in the first quarter and contributed to RPO increasing 24% to $2.35 billion.
New customer bookings remained strong as over 55% of new cloud bookings were generated from net new logos with the largest Q1 deal influenced by Google Cloud Marketplace.
We also experienced notable deal volume improvements across all deal types as well as a larger contribution from products beyond Active Warehouse, including Active Omni, Active Transportation and Active Planning.
And we had strong bookings from all regions.
Our win rate metric continues to be consistently above 70%, and our renewal performance was solid and supportive of the plan that we highlighted last quarter.
All of this provides a glimpse into the large opportunity that we have across all of our industry-leading solutions.
In summary, bookings momentum continued in Q1, aligning with our goal of accelerating both ramped ARR and cloud revenue growth.
From a vertical sales perspective, our end markets are diverse, and we have healthy established footprints across numerous subsectors, which include retail, grocery, food distribution, life sciences, industrial, technology, airlines, third-party logistics and more.
For example, Q1 deals included a global retailer that became a new logo Active Warehouse and Active Transportation customer, one of the world's largest retailers became a new logo Active Omni customer, a large auto parts distributor became a new logo active warehouse and active omni customer.
An HVAC-focused distributor became a new logo active warehouse and active transportation customer, a global wellness retailer converted from on-prem to active warehouse and a multinational food distributor that was an existing active transportation customer expanded to become an active warehouse customer.
In addition to several other impressive Q1 deals, our active agent pilot program is off to a better-than-expected start.
As I mentioned last quarter, our active agent offering consists of 2 primary elements: a set of base agents ready to be activated immediately and our agent foundry offering, which enables our customers to quickly build and deploy their own agents within the Active platform.
And because we build all these agents directly into the Active platform, our customers don't need to implement costly and complex external data lakes to make them work.
Our unified cloud-native API-first architecture enables us to deploy agents with almost no configuration or additional upfront effort, embedding AI agents directly into the workflow, no data lakes, no latency, deployed in minutes, not months, creating value for our customers in real time.
And although our AI product set has only been in the market for 1 full quarter, we have an impressive list of pilot and paying customers that stretches across our diverse end markets and include some of the world's most distinguished and identifiable organizations.
For perspective, these customers include a global manufacturer and distributor of engineered components, a global 3PL, a global energy management and industrial automation company, a global manufacturer and distributor of beauty products, a global health care services company as well as several more Tier 1 retail brands, grocery chains and others.
We're very excited that these existing active customers are interested in beginning their agentic journey with Manhattan, and we're focused on helping them drive higher productivity, ROI and improved levels of customer satisfaction as we expand active agents across our customer bases.
For this quarter's product update, I'd like to go a bit deeper on our Active Agent foundry and some of the strong deployment results, which provide a bit more insight into why we believe AI is a significant opportunity for Manhattan and why we are uniquely positioned to win.
Core to our Agentic AI philosophy is the concept of embedding both interactive and autonomous agents directly within the workflows of our key users.
Rather than wave planners and shipping supervisors trying to incorporate stand-alone disconnected AI platforms, our active agents meet them where they live all day within our waving screens, within fulfillment progress monitors and within labor planning UIs.
By making AI ever present and highly available, our AI capabilities feel natural.
They're steeped in both domain expertise and real-time operational data, always making suggestions and ready to take action autonomously.
Our teams of forward deployed engineers assist our customers to activate our base agents and to build their own agents using our agent foundry.
As we look across the early success stories, we see an even balance in the value created by base and custom agents, and we believe that trend will persist.
One of the real advantages of building with Foundry is the ability to quickly target specific pockets of opportunity within a particular customer operation.
For example, one of our retail customers here in the U.S.
saw a 5% improvement in order cycle times and reduced labor requirements in their largest distribution center via the use of a Foundry-developed custom agent.
In this case, the agent dynamically reallocates resources to ensure replenishments are completed in time for orders to be fully picked and shipped.
The continual matching of work to be completed within the requisite resources available is one of the most challenging issues a DC operator deals with nonstop each day.
Unlike a manufacturing facility with a steady and predictable flow of work, DCs experience continuous peaks and valleys of different types of activity.
This variability is driven by the inherent unpredictability of customer ordering and the high variability of what actually makes up those orders.
In this case, the active agent looks both upstream and downstream, dynamically determining the work that needs to be done in each zone and continuously optimizes the assignments to ensure orders are complete and to maximize order shipment volume.
The next example of a Foundry-created agent comes from one of our health care customers.
From an operational standpoint, it's often just a few unfilled units which stand in the way of large orders being ready to ship.
This customer worked with our forward deployed engineers to create an agent which actively seeks out these aging units, ensuring that tasks are created and prioritized to get shipments completed faster.
The use of this agent resulted in a double-digit percentage reduction in loading times and improvement in on-time shipment departures.
On the base agent front, a number of our customers are using our WAVE Coordinator Agent to make sure orders are effectively turning into executable tasks.
This agent finds and repairs any data conditions within items, orders, tasks or users, which prevent the optimal flow of work to the floor, ensuring every unit on every line, on every order has a path to clean execution.
Specifically, this agent resulted in improved on-time shipments for one of our food distribution customers as exceptions requiring triage were reduced by up to 75%.
And for one of our industrial distribution customers, this very same agent increased line shipped by over 30% and improved order cycle times by over 25%.
Now these are meaningful improvements that drive revenue and ROI for our customers.
By leveraging case studies like this, in Q1, we saw strong demand for active agents.
We now have dozens of customers in various stages of AI maturity, exploring and realizing benefits as we leverage our FDE teams to continue to build additional agents for these customers and introduce the Active Agent Foundry to more of our active customers.
As you'd imagine, active agents will feature prominently at our Momentum user conference next month.
Each of our product tracks will feature the latest in our Agentic AI capabilities, and we'll have a number of customers giving testimonials to the power of our embedded active agents.
One of the important additions to this year's conference will be an active agent boot camp.
The day before the conference begins, we'll host an interactive session where customers can get hands-on experience with Foundry.
They'll choose a relevant issue from their own operations and work in a live sandbox guided by our FDE team to build and test their agents.
This hands-on experience is key to moving quickly from interest to production use cases.
We're happy to give as many customers as we can an opportunity to experience the ease and power of our active agent Foundry, we can't wait to see what they come up with in Las Vegas next month.
I'll close out my product updates by providing a bit more detail on 2 important wins that I highlighted earlier.
First, we closed a substantial new logo order management deal with one of the world's largest retailers.
This deal represents our largest ever OMS bookings deal and speaks to the ongoing power of having the most capable and scalable OMS product in the industry.
While historically, this customer chose to build their e-commerce tech stack in-house, their e-commerce business grew in scale and complexity to the point where they no longer believed it made sense to build the back-end intelligence layer on their own.
So we're proud to welcome them into the Manhattan family.
And finally, the power of solution unification continues to deliver for us.
Both during the sales process and in our implementation results, we're bringing solutions to life only possible when warehouse and transportation are truly unified.
We closed a large unified warehouse and transportation deal at a major retailer in Q1, in large part due to the power and simplicity of running a single application for distribution and logistics.
That unified approach lowers integration complexity and accelerates time to value.
This win adds to the growing list of customers recognizing the value of the unified active platform.
Next month at Momentum, our customers and prospects will hear directly from one of our large retail customers as they share the valuable benefits they're already achieving from having warehouse and transportation live together on the Active platform.
So with a strong pipeline across our product suite, numerous opportunities to drive growth and our unique ability to consistently deliver leading innovation to the supply chain commerce universe, we're very optimistic about our long-term growth opportunity.
So that concludes my business update.
And as you all know, we have a new CFO.
So before I introduce Linda, I'd like to thank Dennis Story for all of his contributions over the past 20 years.
And now I'd like to introduce you to our new CFO, Linda Pinne.
As many of you know, Linda previously served as our Global Corporate Controller and Chief Accounting Officer.
And with her 20-plus years of experience right here at Manhattan, she brings a wealth of company-specific industry and financial expertise that I'm sure all of you will appreciate.
So with that, I'll hand it over to Linda to report on our financial performance and outlook, and then I will close out our prepared remarks before we open it up to Q&A.
So Linda, over to you.
Linda Pinne: All right.
Thanks, Eric.
Before I jump into the numbers, I'd like to thank Eric and the Board for the opportunity to lead our talented finance team.
I look forward to helping Eric and the rest of the team execute on the enormous opportunity in front of us.
Regarding Q1, our global teams continued to perform well, delivering better-than-expected top and bottom line results in a volatile macro environment.
FX volatility continues to impact us.
In Q1, it was a 2-point tailwind to year-over-year total revenue growth, which was in line with the outlook we provided last quarter.
However, it was an approximate $5 million headwind to sequential RPO growth and about a $25 million tailwind to year-over-year RPO growth.
Now to our results.
Our growth rates are reported on a year-over-year basis unless otherwise stated.
For the quarter, total revenue was $282 million, up 7%.
Excluding license and maintenance revenue, which removes the compression driven by our cloud transition, our total revenue was up 13%.
Cloud revenue increased 24% to $117 million.
The better-than-expected performance was driven by a combination of strong execution, catch-up overage fees and lower-than-modeled churn rates of our renewal portfolio.
Services revenue was also better than expected and increased 4% to $126 million.
We ended Q1 with RPO of $2.35 billion, up 24% compared to the prior year and 5% sequentially.
As Eric previously highlighted, the strong Q1 performance was driven by a good mix of both sales from new and existing customers.
This includes renewals, which were in line with our 2026 annual plan that we discussed last quarter.
Contract duration remains at about 5.5 to 6 years, resulting in 38% of RPO to be recognized as revenue over the next 24 months.
Q1 adjusted operating profit was $91 million with an operating margin of 32.4%.
The better-than-expected performance was driven by strong cloud revenue growth, which offset some of the increased go-to-market investments we highlighted in Q4.
Turning to EPS.
We delivered better-than-expected adjusted earnings per share of $1.24, up 4%.
GAAP EPS was $0.82, down 4% and was adversely impacted by higher-than-expected tax expense due to a decrease of stock-based compensation benefits.
Moving to cash.
Q1 operating cash flow increased 12% to $84 million, resulting in a 28.3% free cash flow margin and 33.1% adjusted EBITDA margin.
Turning to the balance sheet.
Deferred revenue increased 20% year-over-year to $356 million.
We ended the quarter with $226 million in cash and $0 debt.
Accordingly, we leveraged our strong cash position and invested $150 million in share repurchases in the quarter and have $350 million remaining in the share repurchase authority we announced in March.
Moving to our 2026 guidance.
As noted on prior earnings calls, our goal is to update our RPO outlook on an annual basis.
Also, as previously discussed, our bookings performance is impacted by the number and relative value of large deals we close in any quarter, which can potentially cause nonlinear bookings throughout the year.
So with that, we continue to target RPO of $2.62 billion to $2.68 billion, which represents a range of 18% to 20% growth.
Moving to the P&L.
Our long-term and long-standing financial objective is to deliver sustainable double-digit top line growth and top quartile operating margins benchmarked against enterprise software comps.
These are drivers to our best-in-class return on invested capital as we maintain a balanced investment approach to growth and profitability.
As Eric highlighted, the macro environment remains volatile.
While clarity from external variables remains limited, given our strong Q1 performance, we are raising our full year total revenue, operating margin and EPS outlook.
This guidance is also provided in today's earnings release.
For total revenue, we expect $1.147 billion to $1.157 billion, with the $1.152 billion midpoint, comparing favorably to our prior outlook and representing 11% growth, excluding license and maintenance attrition and 7% all in.
This continues to include a 1-point tailwind from FX.
For Q2, we continue to target total revenue of $285 million to $289 million.
For the rest of the year, at the midpoint, our targets remain at about $296 million for Q3 and accounting for retail peak seasonality, $287 million for Q4.
For adjusted operating margin, we are increasing the midpoint to 35%, up from our prior midpoint of 34.75%, which includes a 100 basis point....
