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01/10 20:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company's earnings call reflects a positive outlook with raised revenue and EPS guidance, strong cloud and services revenue growth, and a robust pipeline. Management's optimism about achieving 2026 goals, along with positive feedback on AI initiatives and strategic investments in sales and marketing, further supports this sentiment. While there are some uncertainties in AI revenue projections, the overall sentiment is positive, suggesting a likely stock price increase in the short term.
Total Revenue $276 million, up 3% year-over-year excluding license and maintenance revenue. When excluding the compression driven by the cloud transition, total revenue was up 7%. The increase was driven by strong cloud revenue growth.
Cloud Revenue $105 million, increased 21% year-over-year. This growth was slightly better than expected and contributed to top-line outperformance.
Services Revenue $133 million, declined 3% year-over-year. The decline reflects customary budgetary constraints that shifted services work to future periods. However, there was a $2 million shift in service revenue from Q4 to Q3, which improved Q3 performance.
Remaining Performance Obligations (RPO) $2.1 billion, up 23% year-over-year and 3% sequentially. Growth was driven by strong demand and win rates, although impacted by the lumpiness of large deals and Q3 seasonality.
Adjusted Operating Profit $103 million with an adjusted operating margin of 37.5%, up about 40 basis points year-over-year. The increase was driven by strong cloud revenue growth and operating leverage as the cloud business scales.
Adjusted Earnings Per Share (EPS) $1.36, up 1% year-over-year. The increase was supported by strong financial performance, although higher tax rates due to changes in U.S. tax law impacted the results.
Operating Cash Flow $93 million, increased 9% year-over-year. Excluding the benefit from the U.S. tax law change, operating cash flow increased about 18%. The tax law change benefited Q3 operating cash flow by approximately $20 million.
Deferred Revenue $297 million, increased 17% year-over-year. Growth reflects strong bookings and customer demand.
Agentic AI: Investing in Agentic AI across all Manhattan Active solutions, focusing on high-impact use cases for key personas. Early access program launched for warehouse, transportation, store, and contact center applications. General availability expected in early 2026.
Enterprise Promise & Fulfill (EPF): New product designed to integrate with leading ERPs like SAP, enhancing inventory monetization and customer experience. Already live with several customers, including a large global 3PL.
Supply Chain Planning: First customer live on supply chain planning, with cross-sell potential evident. Aggressively hiring planning talent to enhance capabilities and unify planning and execution.
New Customer Acquisitions: New logos represent 35% of the pipeline. Notable deals include a global medical device developer and a leading telecommunications company.
Cross-Selling and Conversions: Strong cross-sell opportunities with existing customers. Conversion program launched to migrate on-premise customers to Manhattan Active, showing early success.
Sales and Marketing Investments: Added key sales talent and launched a dedicated renewal team to maximize cross-sell and expansion opportunities.
Operational Leadership: Appointed Greg Betz as Chief Operating Officer to scale operational frameworks and enhance partner models.
Cloud Transition: Cloud revenue grew 21% in Q3, with a strong pipeline for future conversions. Targeting 20% cloud revenue growth in 2026.
Unified Product Portfolio: Focus on unifying planning and execution to differentiate from competitors and unlock new use cases.
Global macroeconomic volatility: The turbulent global macro environment could impact performance and cause actual results to differ materially from projections.
Seasonality and deal lumpiness: Q3 seasonality and the lumpiness of large deals pressured net new logos, impacting new cloud bookings.
Customer contract ramp timelines: Some customers are electing longer ramp timelines for contract implementation, reflecting a more conservative approach in the current macro environment.
Maintenance attrition: Maintenance attrition is expected to accelerate in 2026 as customers migrate to cloud solutions, potentially impacting revenue.
Regulatory and tax changes: The U.S. tax law change has increased tax reserves, impacting GAAP earnings per share.
Competitive pressures: The company faces competitive pressures in the supply chain commerce ecosystem, requiring continuous investment in sales, marketing, and product innovation.
Customer budgetary constraints: Customary budgetary constraints have shifted services work to future periods, impacting services revenue.
Operational scaling challenges: The company is investing in operational frameworks and talent to scale conversions and renewals, which could pose execution risks.
Cloud Revenue Growth: The company expects 20% cloud revenue growth in 2026, supported by strong year-to-date bookings performance and a robust pipeline of opportunities.
Services Revenue Growth: Services revenue is expected to return to growth in 2026, driven by a strong services backlog and pipeline.
RPO (Remaining Performance Obligations): The company expects to achieve towards the high end of its 2025 RPO outlook, targeting $2.11 billion to $2.15 billion, excluding FX movements.
Adjusted Operating Margin: For 2026, adjusted operating margin is expected to expand by 50 to 75 basis points, reflecting historical trends and increased investment in sales and marketing.
Maintenance Attrition: Maintenance attrition is anticipated to accelerate in 2026 as the company drives migration of maintenance-paying customers to the cloud.
Product Launches and AI Integration: The company plans to roll out Agentic AI across its Manhattan Active solutions, with general availability for the initial set of AI agents expected in early 2026. This includes applications in warehouse, transportation, store, and contact center operations.
Market Trends and Opportunities: The company is optimistic about its long-term opportunities, driven by a diverse end-market footprint and strong pipeline across various industries, including retail, grocery, life sciences, and technology.
Share Repurchase Program: In the quarter, we leveraged our strong cash position and invested $50 million in share repurchases, resulting in $200 million in buybacks year-to-date. Additionally, our Board has approved the replenishment of our $100 million share repurchase authority.
The company's earnings call reflects a positive outlook with raised revenue and EPS guidance, strong cloud and services revenue growth, and a robust pipeline. Management's optimism about achieving 2026 goals, along with positive feedback on AI initiatives and strategic investments in sales and marketing, further supports this sentiment. While there are some uncertainties in AI revenue projections, the overall sentiment is positive, suggesting a likely stock price increase in the short term.
The earnings call summary shows strong financial performance, with growth in operating cash flow, free cash flow margin, and deferred revenue. The Q&A section further supports positive sentiment, highlighting confidence in sustaining cloud subscription revenue growth, successful go-to-market investments, and strong RPO bookings. However, the conservative services revenue guide and lack of direct responses on certain growth impacts temper the overall positive outlook slightly. Overall, the sentiment leans positive, with the potential for a 2% to 8% stock price increase.
The earnings call presents a mixed picture. Positive aspects include strong cloud revenue growth, a robust pipeline, and a significant share repurchase program, which could support the stock price. However, challenges such as macroeconomic risks, customer budget constraints, and potential tariff impacts create uncertainties. The cautious tone in the Q&A, particularly management's avoidance of specific details on tariffs and challenges, adds to the uncertainty. The neutral sentiment reflects the balance between positive growth in cloud services and the risks presented by the macro environment and competitive pressures.
The earnings report shows strong cloud revenue growth and a solid cash position, but concerns about implementation delays, competitive pressures, and customer spending trends affect the overall sentiment. The Q&A reveals cautious optimism but highlights uncertainties in service revenue and cloud transition. The share repurchase program is a positive indicator, yet the lack of specific guidance on certain issues raises caution. Overall, the mixed signals from the financial performance and strategic challenges balance each other out, leading to a neutral outlook.
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