MANH Cloud Revenue Soars, Net Income Dips on Higher Taxes

TL;DR

**MANH's cloud growth is strong, but rising taxes and restructuring costs are eating into net income, making it a hold for now.**

AI Summary

MANHATTAN ASSOCIATES INC (MANH) reported a mixed financial performance for the three and nine months ended September 30, 2025. Total revenue increased by 3.4% to $275.8 million for the three months ended September 30, 2025, up from $266.7 million in the prior year, and grew by 3.1% to $811.0 million for the nine months, compared to $786.6 million in 2024. Cloud subscriptions were a significant growth driver, surging 21.2% to $104.9 million for the quarter and 21.3% to $299.6 million for the nine months. However, net income decreased by 8.1% to $58.6 million for the quarter, down from $63.8 million, and by 1.4% to $168.0 million for the nine months, compared to $170.3 million in 2024. This decline was primarily due to a substantial increase in income tax provision, which rose 56.9% to $19.8 million for the quarter and 46.4% to $49.4 million for the nine months. The company also incurred a restructuring expense of $2.9 million for the nine months ended September 30, 2025, which was not present in the prior year. Cash and cash equivalents slightly decreased to $263.6 million from $266.2 million at December 31, 2024, largely due to $238.2 million in common stock repurchases during the nine-month period.

Why It Matters

This filing reveals MANH's successful pivot to cloud subscriptions, a critical indicator for long-term growth and recurring revenue in the competitive supply chain software market. While cloud revenue is robust, the dip in net income due to increased tax provisions and restructuring costs could pressure margins and investor sentiment. For investors, the continued share repurchases, totaling $238.2 million, signal confidence in the company's value but also reduce cash reserves. Employees might see continued investment in R&D, which increased to $106.5 million, but also potential impacts from the $2.9 million restructuring expense. Customers benefit from enhanced cloud offerings, but the competitive landscape with larger players like SAP and Oracle means MANH must maintain innovation.

Risk Assessment

Risk Level: medium — The risk level is medium due to the decline in net income despite revenue growth, primarily driven by a significant increase in income tax provision from $12.6 million to $19.8 million for the three months ended September 30, 2025, and from $33.8 million to $49.4 million for the nine months. Additionally, the company incurred a $2.9 million restructuring expense for the nine-month period, indicating potential operational adjustments that could carry further costs or disruptions.

Analyst Insight

Investors should monitor MANH's upcoming earnings calls for management's explanation of the increased tax provision and the rationale behind the restructuring expense. While cloud growth is positive, the impact on net income warrants caution. Consider holding existing positions but deferring new investments until there's clearer guidance on profitability trends and tax implications.

Financial Highlights

debt To Equity

N/A

revenue

$275.8M

operating Margin

27.5%

total Assets

N/A

total Debt

N/A

net Income

$58.6M

eps

$0.96

gross Margin

N/A

cash Position

$263.6M

revenue Growth

+3.4%

Revenue Breakdown

Key Numbers

• $275.8M — Total Revenue (Q3 2025) (Increased 3.4% from $266.7M in Q3 2024)
• $104.9M — Cloud Subscriptions Revenue (Q3 2025) (Increased 21.2% from $86.5M in Q3 2024)
• $58.6M — Net Income (Q3 2025) (Decreased 8.1% from $63.8M in Q3 2024)
• $19.8M — Income Tax Provision (Q3 2025) (Increased 56.9% from $12.6M in Q3 2024)
• $811.0M — Total Revenue (9M 2025) (Increased 3.1% from $786.6M in 9M 2024)
• $299.6M — Cloud Subscriptions Revenue (9M 2025) (Increased 21.3% from $246.9M in 9M 2024)
• $168.0M — Net Income (9M 2025) (Decreased 1.4% from $170.3M in 9M 2024)
• $49.4M — Income Tax Provision (9M 2025) (Increased 46.4% from $33.8M in 9M 2024)
• $2.9M — Restructuring Expense (9M 2025) (New expense not present in 9M 2024)
• $238.2M — Common Stock Repurchases (9M 2025) (Significant use of cash in financing activities)

Key Players & Entities

• MANHATTAN ASSOCIATES INC (company) — Registrant
• Nasdaq Global Select Market (regulator) — Exchange where common stock is registered
• FASB (regulator) — Financial Accounting Standards Board
• SAP (company) — Competitor in supply chain software market
• Oracle (company) — Competitor in supply chain software market
• $275.8 million (dollar_amount) — Total revenue for three months ended September 30, 2025
• $104.9 million (dollar_amount) — Cloud subscriptions revenue for three months ended September 30, 2025
• $58.6 million (dollar_amount) — Net income for three months ended September 30, 2025
• $19.8 million (dollar_amount) — Income tax provision for three months ended September 30, 2025
• $238.2 million (dollar_amount) — Repurchase of common stock for nine months ended September 30, 2025

FAQ

Risk Factors

• Increased Income Tax Provision [medium — financial]: The company experienced a substantial increase in its income tax provision, rising 56.9% to $19.8 million for Q3 2025 and 46.4% to $49.4 million for the nine months. This significantly impacted net income.
• Restructuring Expenses [low — operational]: A new restructuring expense of $2.9 million was incurred for the nine months ended September 30, 2025, which was not present in the prior year. This expense negatively affected profitability.
• Stock Repurchases Impacting Cash [medium — financial]: Significant common stock repurchases totaling $238.2 million for the nine-month period led to a slight decrease in cash and cash equivalents, from $266.2 million to $263.6 million.
• Dependence on Cloud Subscriptions Growth [medium — market]: While cloud subscriptions are a strong growth driver (+21.2% in Q3), a slowdown or decline in this segment could materially impact overall revenue and profitability.
• Integration of Acquisitions [medium — operational]: While not explicitly detailed in this 10-Q, the company's ability to successfully integrate any past or future acquisitions is crucial for realizing synergies and maintaining operational efficiency.
• Data Privacy and Security [medium — regulatory]: As a provider of supply chain and logistics software, the company handles sensitive customer data. Evolving data privacy regulations (e.g., GDPR, CCPA) and the risk of cyberattacks pose ongoing compliance and operational challenges.

Industry Context

Manhattan Associates operates in the supply chain commerce solutions industry, competing with companies offering software for warehouse management, transportation management, and omnichannel fulfillment. The industry is characterized by a strong shift towards cloud-based solutions, increasing demand for automation and visibility, and a need for integrated platforms to manage complex global supply chains.

Regulatory Implications

The company must navigate evolving data privacy regulations globally, ensuring compliance with laws like GDPR and CCPA. Cybersecurity remains a critical regulatory and operational concern, as breaches can lead to significant financial penalties and reputational damage.

What Investors Should Do

1. Monitor the growth trajectory of cloud subscriptions.
2. Analyze the drivers behind the increased income tax provision.
3. Evaluate the strategic rationale for significant stock repurchases.
4. Scrutinize the impact of restructuring expenses.

Glossary

Cloud subscriptions

Revenue generated from software delivered and accessed over the internet, typically on a recurring subscription basis. (This is a key growth driver for Manhattan Associates, showing significant year-over-year increases.)

Income tax provision

The amount of income tax expense recognized by a company during a reporting period. (A significant increase in this provision negatively impacted the company's net income.)

Restructuring expense

Costs associated with significant reorganizations or shutdowns of business operations. (The emergence of this expense in 2025 impacted profitability compared to the prior year.)

Common stock repurchases

The company buying back its own shares from the open market. (A major use of cash for the company, impacting its cash reserves.)

Equity-based compensation

Compensation provided to employees in the form of stock options, restricted stock units, or other equity instruments. (A significant non-cash expense that is added back in the cash flow statement to reconcile net income to operating cash flow.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Manhattan Associates Inc. saw a modest 3.1% increase in total revenue, driven primarily by a strong 21.3% surge in cloud subscriptions. However, net income declined by 1.4% due to a significant 46.4% rise in income tax provision and the introduction of a $2.9 million restructuring expense. Operating cash flow improved substantially, but cash reserves saw a slight dip due to aggressive share repurchases totaling $238.2 million.

Key Financial Figures

• $0.01 — ows: 60,258,247 shares of common stock, $0.01 par value per share. MANHATTAN ASSOCI

Filing Documents

• manh-20250930.htm (10-Q) — 2572KB
• manh-ex31_1.htm (EX-31.1) — 15KB
• manh-ex31_2.htm (EX-31.2) — 15KB
• manh-ex32.htm (EX-32) — 9KB
• 0001193125-25-249633.txt ( ) — 7244KB
• manh-20250930.xsd (EX-101.SCH) — 558KB
• manh-20250930_htm.xml (XML) — 1357KB

Financial Statements

Financial Statements. Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 3 Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 (unaudited) 4 Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 (unaudited) 5 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 6 Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) 7 Notes to Condensed Consolidated Financial Statements (unaudited ) 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 28 Item 4.

Controls and Procedures

Controls and Procedures. 28 PART II OTHER INFORMATION Item 1. Legal Proceedings. 29 Item 1A. Risk Factors. 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 29 Item 3. Defaults Upon Senior Securities. 29 Item 4. Mine Safety Disclosures. 29 Item 5. Other Information. 29 Item 6. Exhibits. 30 Signatures. 31 2 PART I F INANCIAL INFORMATION I tem 1. Financial Statements MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES C ondensed Consolidated Balance Sheets (in thousands, except share and per share data) September 30, 2025 December 31, 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 263,555 $ 266,230 Accounts receivable, net 219,556 205,475 Prepaid expenses and other current assets 42,659 31,559 Total current assets 525,770 503,264 Property and equipment, net 20,050 13,971 Operating lease right-of-use assets 45,734 47,923 Goodwill, net 62,244 62,226 Deferred income taxes 76,374 94,505 Other assets 38,651 35,662 Total assets $ 768,823 $ 757,551 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,355 $ 26,615 Accrued compensation and benefits 59,475 72,180 Accrued and other liabilities 23,589 22,275 Deferred revenue 295,903 277,970 Income taxes payable 86 1,264 Total current liabilities 400,408 400,304 Operating lease liabilities, long-term 47,713 47,794 Other non-current liabilities 11,486 10,327 Shareholders' equity: Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2025 and 2024 - - Common stock, $ 0.01 par value; 200,000,000 shares authorized; 60,256,442 and 60,921,191 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 602 609 Retained earnings 338,690 329,439 Accumulated other comprehensive loss ( 30,076

Financial Statements (continued)

Item 1. Financial Statements (continued) MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES C ondensed Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Cloud subscriptions $ 104,852 $ 86,485 $ 299,580 $ 246,873 Software license 1,356 3,762 12,176 9,633 Maintenance 30,492 34,491 97,693 104,736 Services 133,007 137,009 383,033 406,035 Hardware 6,088 4,934 18,521 19,274 Total revenue 275,795 266,681 811,003 786,551 Costs and expenses: Cost of cloud subscriptions, maintenance and services 119,604 118,269 349,883 356,920 Cost of software license 208 391 711 1,068 Research and development 36,360 34,349 106,529 104,693 Sales and marketing 18,057 16,586 59,097 55,669 General and administrative 24,078 20,308 74,273 62,623 Depreciation and amortization 1,660 1,688 4,785 4,670 Restructuring expense - - 2,937 - Total costs and expenses 199,967 191,591 598,215 585,643 Operating income 75,828 75,090 212,788 200,908 Other income, net 2,604 1,312 4,656 3,222 Income before income taxes 78,432 76,402 217,444 204,130 Income tax provision 19,799 12,621 49,449 33,782 Net income $ 58,633 $ 63,781 $ 167,995 $ 170,348 Basic earnings per share $ 0.97 $ 1.04 $ 2.77 $ 2.77 Diluted earnings per share $ 0.96 $ 1.03 $ 2.75 $ 2.74 Weighted average number of shares: Basic 60,381 61,169 60,620 61,404 Diluted 60,954 61,948 61,183 62,186 See accompanying Notes to Condensed Consolidated Financial Statements. 4

Financial Statements (continued)

Item 1. Financial Statements (continued) MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES C onsolidated Statements of Comprehensive Income (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (unaudited) (unaudited) (unaudited) (unaudited) Net income $ 58,633 $ 63,781 $ 167,995 $ 170,348 Foreign currency translation adjustment, net of tax ( 3,751 ) 1,734 846 1,018 Comprehensive income $ 54,882 $ 65,515 $ 168,841 $ 171,366 See accompanying Notes to Condensed Consolidated Financial Statements. 5

Financial Statements (continued)

Item 1. Financial Statements (continued) MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES C ondensed Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2025 2024 (unaudited) (unaudited) Operating activities: Net income $ 167,995 $ 170,348 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,785 4,670 Equity-based compensation 80,678 70,614 Gain on disposal of equipment ( 22 ) ( 131 ) Deferred income taxes 17,946 ( 20,544 ) Unrealized foreign currency loss 246 906 Changes in operating assets and liabilities: Accounts receivable, net ( 8,865 ) ( 17,515 ) Other assets ( 4,311 ) ( 9,688 ) Accounts payable, accrued and other liabilities ( 18,463 ) ( 13,367 ) Income taxes ( 9,840 ) ( 7,956 ) Deferred revenue 12,271 12,962 Net cash provided by operating activities 242,420 190,299 Investing activities: Purchase of property and equipment ( 10,799 ) ( 5,547 ) Net cash used in investing activities ( 10,799 ) ( 5,547 ) Financing activities: Repurchase of common stock ( 238,187 ) ( 241,150 ) Net cash used in financing activities ( 238,187 ) ( 241,150 ) Foreign currency impact on cash 3,891 609 Net change in cash and cash equivalents ( 2,675 ) ( 55,789 ) Cash and cash equivalents at beginning of period 266,230 270,741 Cash and cash equivalents at end of period $ 263,555 $ 214,952 See accompanying Notes to Condensed Consolidated Financial Statements. 6

Financial Statements (continued)

Item 1. Financial Statements (continued) MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Shareholders' Equity (in thousands, except share data) Accumulated Additional Other Total Common Stock Paid-In Retained Comprehensive Shareholders' Shares Amount Capital Earnings Loss Equity For the Three Months Ended September 30, 2025 Balance, June 30, 2025 (unaudited) 60,468,401 $ 604 $ - $ 304,480 $ ( 26,325 ) $ 278,759 Repurchase of common stock ( 240,891 ) ( 2 ) ( 27,124 ) ( 24,423 ) - ( 51,549 ) Restricted stock units issuance 28,932 - - - - - Excise tax on net stock repurchases ( 453 ) ( 453 ) Equity-based compensation - - 27,577 - - 27,577 Foreign currency translation adjustment - - - - ( 3,751 ) ( 3,751 ) Net income - - - 58,633 - 58,633 Balance, September 30, 2025 (unaudited) 60,256,442 $ 602 $ - $ 338,690 $ ( 30,076 ) $ 309,216 For the Nine Months Ended September 30, 2025 Balance, December 31, 2024 (audited) 60,921,191 $ 609 $ - $ 329,439 $ ( 30,922 ) $ 299,126 Repurchase of common stock ( 1,224,719 ) ( 12 ) ( 79,431 ) ( 158,744 ) - ( 238,187 ) Restricted stock units issuance 559,970 5 ( 5 ) - - - Excise tax on net stock repurchases - - ( 1,242 ) - - ( 1,242 ) Equity-based compensation - - 80,678 - - 80,678 Foreign currency translation adjustment - - - - 846 846 Net income - - - 167,995 - 167,995 Balance, September 30, 2025 (unaudited) 60,256,442 $ 602 $ - $ 338,690 $ ( 30,076 ) $ 309,216 For the Three Months Ended September 30, 2024 Balance, June 30, 2024 (unaudited) 61,245,638 $ 612 $ - $ 267,771 $ ( 27,754 ) $ 240,629 Repurchase of common stock ( 202,209 ) ( 2 )

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