MANHATTAN ASSOCIATES INC Q1 FY2026 earnings

Manhattan Associates reported first-quarter fiscal 2026 revenue of $282.2 million, up 7.4% from the prior-year quarter. GAAP operating income rose 2.8% to $64.9 million, but GAAP net income fell 6.3% to $49.3 million. Diluted GAAP earnings per share slipped 3.5% to $0.82. Operating margin was 23.0%, down 1.0 percentage point from the prior-year quarter. The top line benefited from cloud demand. Cloud subscription revenue growth was 24%, and services revenue rose 4%. Software license revenue fell 76% and maintenance revenue fell 5%, which reflects the ongoing shift away from perpetual licenses. The company said cloud revenue represents about 98% of total software revenue. The revenue mix was cloud subscriptions 41%, services 45%, maintenance 11%, hardware 2%, and software license 1%. Higher sales and marketing spending was the main reason operating margin compressed even as revenue grew. The perpetual license sales mix was over 95% warehouse management solutions.

Cash generation was a bright spot. Operating cash flow rose 11.7% to $84.0 million. Capital expenditures rose 360.5% to $4.1 million, a much smaller cash outflow. Deferred revenue, current portion only, rose 20.0% to $355.9 million. Remaining performance obligations rose 21.1% to $2.30 billion. Days sales outstanding was 72 days at March 31, 2026, compared with 73 days at December 31, 2025. The company repurchased 1,043,312 shares for $150.0 million during the quarter. In March 2026, the board increased the repurchase authority from $100 million to $500 million, leaving approximately $350.0 million available at quarter end.

Non-GAAP results showed steadier profitability. Adjusted operating income was $91.5 million, compared with $91.3 million in the prior-year quarter. Adjusted diluted earnings per share was $1.24, compared with $1.19. Management issued full-year 2026 guidance that includes adjusted operating margin of 34.9% to 35.1% and adjusted EPS of $5.29 to $5.37. The guidance is for the full fiscal year, not the next quarter. The full-year 2026 revenue guidance range calls for 6% to 7% growth. The company also said the guidance covers total revenue and GAAP operating margin and EPS ranges, but it highlighted the adjusted figures because they exclude equity-based compensation, an unusual health insurance claim, restructuring expense, and related tax effects.

Management described solid and broad-based demand. The company said its results reflect strong win rates and a healthy pipeline across its product suite. It still struck a cautious tone on the macro backdrop. Risks include macroeconomic uncertainty, global instability from the military conflict involving the United States, Israel, and Iran, and the ongoing war between Russia and Ukraine. Other named risks include longer sales cycles for large cloud subscriptions, competitive and pricing pressures, software errors and information technology failures, security breaches, risks tied to generative and agentic artificial intelligence, tariffs and trade tensions, litigation, and foreign currency exchange risk. Manhattan Associates carries no debt and had no credit facilities at the end of the quarter.

International revenue represented about 34% of total revenue, and the company employed approximately 4,390 people worldwide. The quarter showed a business still growing its cloud base and generating cash, but GAAP net income and EPS moved lower even though other income rose on foreign currency gains, because of higher sales and marketing spending and a higher effective tax rate tied to lower stock compensation benefits. The RPO and deferred revenue balances point to a solid contracted backlog. The company said it expects maintenance revenue to decline as customers move to cloud subscriptions, with that decline offset by additional cloud revenue. The main question for the rest of 2026 is whether cloud subscription growth can keep offsetting declines in license and maintenance revenue while spending stays under control.