Manhattan Associates, Inc.

Good afternoon. My name is Vaughn, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates Quarter 3 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question, press star and then the number two. As a reminder, ladies and gentlemen, this call is being recorded today, October 21st, 2025. I would now like to introduce your host, Mr. Michael Bauer, Head of Investor Relations of Manhattan Associates. Mr. Bauer, you may begin your conference.

We'll 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 risk 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 2024 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 macroenvironment 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 related GAAP measures in accordance with SEC rules. You'll find reconciliation schedules in the form 8K we filed with the SEC earlier today and on our website at manh.com. Now, I'll turn the call over to Eric.

Great. Thank you, Mike. Good afternoon, everyone, and thank you for joining us as we review our third quarter results, discuss our Q4 outlook, and provide some color on our 2026 cloud revenue growth. Our Q3 results were better than expected as 21% cloud revenue growth drove our top-line outperformance and earnings leverage. Also encouraging was our continued services revenue outperformance versus expectations. While the global macro environment remains volatile, our consistent execution throughout 2025, as well as our services backlog and pipeline, all set the stage to get back to growth in services in 2026. RPO increased 23% year-over-year to $2.1 billion. Win rates remained very strong at 70%, and we experienced strength selling to existing customers, highlighted by a meaningful sequential uptick in conversions and a growing pipeline of future conversion opportunities. However, like the year-ago period, Q3 seasonality, coupled with general lumpiness of large deals, pressured net new logos, which were about 17% of our new cloud bookings in Q3, but still represent 50% of new cloud bookings year-to-date. Importantly, our 2025 year-to-date bookings performance is in line with our original projections and supports continued 20% subscription growth. And like the year-ago period, Q4 is off to a solid start. In light of these factors, we expect to achieve toward the high end of our full-year 2025 RPO outlook. As I've stated in the past, Manhattan's business fundamentals are strong and we're optimistic about our long-term opportunity. Our platform is superior and our product portfolio offers best-in-class functionality across the supply chain commerce ecosystem. This is driving solid pipeline, which provides our sales team with numerous opportunities to drive growth. Those opportunities include adding new customers, cross-selling our unified product portfolio, and converting our on-premise customers to the cloud. At the end of the third quarter, new logos continue to represent approximately 35% of our pipeline. From a vertical perspective, our end markets are diverse, and we have a healthy, established footprint across numerous subsectors, which include retail, grocery, food distribution, life sciences, industrial, technology, airlines, third-party logistics, and more. For example, Q3 bookings included the following notable deals. A global developer, manufacturer, and distributor of medical devices became a new logo active warehouse customer. A global top 10 retailer was a conversion from on-prem to active warehouse. A North American food distributor that was an existing active transportation and inventory customer expanded to include active warehouse and active omni. A global developer, manufacturer, and distributor of pharmaceuticals converted from on-prem to active warehouse. A food and beverage distributor converted from on-prem to active warehouse, and at the same time added our entire active portfolio, including active transportation, active omni, and active supply chain planning. A leading telecommunications company became a new logo with active scale, as well as a number of others. And while the timing of large deals and the mix of bookings will vary on a quarterly basis, we believe our bookings breadth from both new and existing customers over a broad set of industries and across our full product portfolio exemplifies our multiple opportunities for sustainable long-term growth. To successfully execute on these robust opportunities, we continue to strategically invest in our sales and marketing team and mature our go-to-market partnerships. I want to share several updates since our last call. First, we continue to add key sales talent to the team, including sales specialists in our newer products. Additionally, in Q3, we launched a dedicated renewal team led by a Manhattan veteran. This team brings consistency across all of our renewals to make sure we are maximizing the opportunity for cross-sell and expansion at the time of renewal. We also launched a conversion program. This enables us to take a more proactive and consultative approach to converting our on-prem customers to Manhattan Active. We've been very encouraged by the early results, including some early wins and significant pipeline growth for conversions. And this afternoon, we announced the addition of Greg Betts to the newly created position of Chief Operating Officer. Greg brings more than two decades of experience leading complex global organizations. He has a proven track record of operational excellence and strategic execution, Most recently, Greg led Microsoft's global cloud onboarding organization called FastTrack, a flagship program designed to accelerate customer conversions to Microsoft cloud solutions. In his new position here at Manhattan, Greg will play a key role in helping scale the operational frameworks around conversions and renewals, as well as drive the next generation of our partner model across global SIs, Manhattan specialists, and technology partners like Google and Shopify. I'm delighted to welcome Greg to the team. So now I'll turn to some updates on our products. We are investing in agentic AI across all of our Manhattan active solutions, and we're focused on delivering high impact use cases for key personas across our user community. Earlier this month, we made good on the promise that we made at Momentum about being ready to roll out agentic AI this fall. We're currently working with a number of strategic customers as part of an early access program focused on agent deployments. The applications covered as part of this early access program include warehouse, transportation, store, and contact center. Our aim is to gather feedback, create additional capabilities, and roll out to multiple groups of early access customers throughout this quarter. We will move to general availability for this initial set of agents in early 2026. So I'd like to share a couple examples of the value that our initial set of agents are already providing. In Active Warehouse, we have embedded agents into the workflow that monitor operational performance in real time and make high-impact recommendations to make key users more productive. This includes areas like wave planning, which drives all of the outbound activity within a DC. Our wave agent empowers DC super users to ensure that orders are being allocated effectively and turned into tasks that and that those tasks are being released reliably and completed on the DC floor. In active transportation, we have created freight audit and pay agents. By automating the induction and payment of freight bills, our agents increase efficiency, speed, and accuracy while reducing or even removing the need for human involvement. And remember, all of this is executed within our unified cloud-native API-first platform. embedding AI agents into the workflow to make people more productive. No data lakes, no latency, deployed in minutes, not months, and creating value for our customers in real time. Another announcement that we made at Momentum was the launch of a new product, Enterprise Promise and Fulfill. EPF is designed to work seamlessly with leading ERPs like SAP to help our customers add agility and responsiveness to their supply chains. With EPF, we help our customers monetize their inventory more effectively by helping them sell to anyone and fulfill from anywhere. And we improve the end customer experience by providing transparency and flexibility throughout the fulfillment process. We already have a number of customers live with EPF, and we've signed some substantial new deals recently, including one at a large global 3PL. As our wholesale customers continue to find growth through acquisition and industry consolidation, they're faced with increasingly complex and fragmented fulfillment networks. Their ability to maximize their value of acquisition hinges in part on their ability to hide this network complexity and instead to present a simple interface to their sales force. And EPF helps them do just that. EPF also serves another important purpose for us. It provides a natural bridge between our supply chain planning and supply chain execution solutions, particularly outside of retail. The combination of planning and EPF serves as a nexus of network inventory and facilitates the forecasting, procurement, promising, and selling of that inventory across the widest possible market. And speaking of supply chain planning, we continue to make progress in this exciting new focus area for us. Our message around unifying planning and execution is absolutely resonating, and it's helping us find our way into deals that we weren't seeing just a year ago. The cloud-native architecture which underpins the Manhattan Active Platform allows us to unlock use cases that vendors focused only on planning simply can't match. We now have our first customer live on supply chain planning, a US-based retailer with over 700 stores. This customer also runs active warehouse and active transportation. A number of the other customers that we have going live in the next few months also run other Manhattan active products, reflecting the strength of the cross-sell potential. We also continue to hire planning talent aggressively into our engineering teams, allowing us to make rapid progress on building out both core planning capabilities as well as differentiating unification features across planning and execution. So that concludes my product update. And before I hand it off to Dennis, I'd like to share that, as we indicated last quarter, our chairman, Eddie Capel, will be completing his transition away from any remaining executive management responsibilities as of January 1st and will continue in his role as chairman of the board. And with that, Dennis will provide you with an update on our financial performance and outlook, and then I'll close our prepared remarks before we open it up to Q&A.