Supply chain optimization software maker Manhattan Associates (NASDAQ: MANH) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 3.2% year on year to $262.8 million. The company’s full-year revenue guidance of $1.07 billion at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP profit of $1.19 per share was 15.4% above analysts’ consensus estimates.
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Manhattan Associates (MANH) Q1 CY2025 Highlights:
- Revenue: $262.8 million vs analyst estimates of $256.8 million (3.2% year-on-year growth, 2.3% beat)
- Adjusted EPS: $1.19 vs analyst estimates of $1.03 (15.4% beat)
- Adjusted Operating Income: $91.27 million vs analyst estimates of $79.27 million (34.7% margin, 15.1% beat)
- The company reconfirmed its revenue guidance for the full year of $1.07 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $4.59 at the midpoint, a 2% increase
- Operating Margin: 24%, up from 22.6% in the same quarter last year
- Free Cash Flow Margin: 28.3%, down from 39.7% in the previous quarter
- Billings: $279.9 million at quarter end, in line with the same quarter last year
- Market Capitalization: $10.44 billion
StockStory’s Take
Manhattan Associates’ Q1 results were shaped by continued momentum in its cloud-based supply chain solutions and a smooth leadership transition, with Eric Clark stepping in as CEO. Management highlighted robust demand for cloud products, particularly through new customer wins and expanded cross-selling, while also noting that services revenue held up despite cautious customer spending in a challenging macro environment.
Looking ahead, the company maintained its full-year revenue guidance and increased its adjusted EPS outlook. Management cited ongoing investments in sales and marketing, as well as product simplification initiatives, as key drivers for future growth. CEO Eric Clark emphasized, “We are investing in sales specialists around many of our new products” to capture additional market share and drive adoption, even as the industry navigates external uncertainties like tariffs.
Key Insights from Management’s Remarks
Manhattan Associates attributed its Q1 performance to strong growth in cloud subscription revenue and steady demand across diverse industry verticals. Management focused on expanding its customer base and introducing new products to address evolving market needs.
- Cloud Revenue Expansion: The company experienced 21% growth in cloud revenue, driven by demand from both new and existing customers, with about half of new cloud bookings attributed to net-new clients.
- Diverse Industry Penetration: Manhattan’s customer wins in the quarter spanned retail, grocery, life sciences, and logistics, supporting a balanced performance and reducing reliance on any single sector.
- New Product Launch: The introduction of Enterprise Promise and Fulfill (EPF) targeted B2B order optimization, addressing customer demand for more direct-to-consumer-like fulfillment capabilities in complex supply chains.
- AI and Automation Initiatives: The company expanded its Agentic AI offerings, notably Manhattan Active Maven and Manhattan Assist, to automate customer service tasks and simplify supply chain management, with new features enabling broader deployment across client operations.
- Leadership Transition: The CEO transition from Eddie Capel to Eric Clark was described as smooth, with both leaders focusing on continuity and ongoing product innovation, positioning the company for long-term growth.
Drivers of Future Performance
Management’s outlook for the remainder of the year is anchored in further scaling cloud solutions, increasing sales and marketing investments, and ongoing product innovation, while remaining vigilant about macroeconomic uncertainty and potential impacts from tariffs.
- Sales and Marketing Investment: The company is prioritizing hiring and deploying sales specialists to drive adoption of new cloud products and expand its customer base.
- Product Simplification Efforts: Continued investment in simplifying deployment processes is expected to accelerate customer onboarding and shorten time-to-value for clients.
- Macro Environment Risks: Management remains cautious about near-term services revenue due to customer budget shifts, the flexibility of time-and-materials contracts, and the evolving tariff landscape, which could influence sales cycles and project implementations.
Top Analyst Questions
- Terry Tillman (Truist Securities): Asked how tariffs and macro uncertainty might affect sales cycles; management said Q2 and Q3 could see some impact but maintained confidence in the current pipeline.
- Brian Peterson (Raymond James): Inquired about the stability of the sales pipeline and new business linearity; management reported balanced deal flow across industries and regions, with strong early-quarter activity.
- Joe Vruwink (Baird): Questioned the resilience of new logo wins versus migrations and cross-sells; management noted all channels are performing well, with no single area significantly more resilient.
- Dylan Becker (William Blair): Asked how customers are prioritizing supply chain investments; management believes precise execution and inventory management remain critical regardless of macro challenges.
- George Kurosawa (Citi): Requested detail on customer feedback informing guidance; management cited ongoing direct engagement and service project reviews as supporting their outlook.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of new cloud customer acquisitions and whether new logo momentum sustains, (2) the effectiveness of sales and marketing investments in driving product adoption, and (3) customer uptake of Agentic AI and automation features across Manhattan’s unified platform. We will also track how macroeconomic pressures, particularly tariffs and shifting customer budgets, affect deal closure rates and services revenue.
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