Manhattan Associates (MANH) Q4 2025: RPO Jumps 25% as Cloud Momentum and AI Upsell Fuel Outlook
Manhattan Associates capped 2025 with a record RPO surge and robust cloud bookings, underscoring accelerating demand for its unified supply chain commerce platform. The company’s launch of agentic AI products, expansion into new verticals, and a revitalized services business signal growing cross-sell and upsell opportunities. Management’s conservative 2026 guidance leaves room for upside as AI monetization and cloud conversions gain traction.
Summary
- AI Monetization Pathway Opens: Commercial release of agentic AI and Agent Foundry sets up incremental revenue streams.
- Cloud Conversion and Expansion Accelerate: Strong pipeline in both net new logos and existing customer migrations fuels multi-year growth visibility.
- Guidance Leaves Room for Upside: Conservative outlook excludes AI uplift, positioning for potential outperformance if adoption accelerates.
Performance Analysis
Manhattan Associates delivered a record Q4, with total revenue up 6% and cloud revenue up 20% year-over-year, driven by broad-based demand across retail, logistics, healthcare, and industrial verticals. The company’s remaining performance obligations (RPO, contracted future revenue not yet recognized) climbed to $2.2 billion, a 25% YoY increase, highlighting strong forward visibility and sales execution. Cloud bookings set a new high, with over 75% of new bookings from net new logos in Q4, and more than half of 2025’s new cloud bookings from new customers, demonstrating ongoing market share gains.
Service revenue, which had faced headwinds, returned to growth ahead of plan, supported by the launch of new conversion programs and faster implementation cycles. Operating leverage improved as the cloud business scaled, driving adjusted operating margin expansion and a 40% YoY jump in Q4 operating cash flow. Management also introduced a new “ramped ARR” disclosure, showing a 23% increase to over $600 million, reflecting the full annualized value of recurring revenue as contracts reach mature pricing tiers.
- Cloud Revenue Scale: Cloud now anchors growth, with 21% full-year expansion and ramped ARR disclosures building investor confidence in multi-year durability.
- Services Turnaround: Early success in cloud migrations and fixed-fee implementations enabled a return to services revenue growth, reversing prior declines.
- Margin Expansion and Cash Flow: Operating margins improved by over 100bps YoY, while free cash flow margin exceeded 34% for the year, supporting $275 million in buybacks.
Management’s disciplined approach to contract renewals and pricing, coupled with a growing pipeline for both new logos and expansion, positions the company for sustained double-digit top-line growth excluding legacy attrition. The company’s cash-rich, debt-free balance sheet further enables continued investment and capital returns.
Executive Commentary
"In 2025, we extended our position as the leading innovator within the supply chain commerce universe, and enabled faster implementation of our industry leading solutions... several weeks ago on the heels of a successful early access program, we announced the commercial availability of our initial set of AI agents and our agent foundry, which is our offering that enables customers to build or customize new agents directly in the active platform using natural language."
Eric, President and Chief Executive Officer
"At the conclusion of 2025, our ramped ARR exceeded $600 million and was up 23% compared to the ramped ARR at the conclusion of 2024. Please recall, deals that include ramp pricing are only time-based, which supports our strong cloud revenue visibility."
Dennis, Chief Financial Officer
Strategic Positioning
1. Agentic AI Launch and Upsell Opportunity
Commercial availability of agentic AI and Agent Foundry tools positions Manhattan Associates as an early mover in embedded supply chain AI, offering both out-of-the-box agents and customer-built solutions. The initial go-to-market leverages low-risk pilots, with forward-deployed engineers ensuring value realization and future upsell to full subscriptions. Management confirmed that any AI-related revenue is incremental to current guidance, creating latent upside if adoption accelerates.
2. Cloud Conversion and Cross-Sell Engine
The company’s focused cloud migration programs and fixed-fee, fixed-timeline implementations are accelerating customer conversions from on-premise to cloud, while also shortening sales cycles and driving faster ramp in recurring revenue. Expansion within existing accounts, particularly through cross-selling unified warehouse, transportation, and order management modules, is expected to become a larger growth driver as the installed base expands.
3. Services Model Evolution
Services revenue, historically volatile, is stabilizing as cloud adoption creates a more predictable, incremental services cadence, with quarterly feature updates and ongoing customer enablement replacing episodic, large-scale upgrades. The domain-specific expertise of Manhattan’s services organization is now a key differentiator, particularly in supporting AI adoption and complex supply chain deployments.
4. Market Diversification and Share Gains
Q4 wins spanned retail, grocery, medical, logistics, and industrial verticals, with more than half of new cloud bookings in 2025 from new customers. Management expects the mix of new logos, expansions, and conversions to normalize to “rule of thirds” over time, but ongoing new logo strength signals continued share gains from legacy and niche competitors.
5. Capital Allocation and Financial Discipline
Robust free cash flow and a debt-free balance sheet underpin continued investment in R&D, sales, and marketing, while supporting $275 million in annual buybacks. The board’s replenishment of repurchase authority signals ongoing commitment to capital returns without compromising growth investments.
Key Considerations
Manhattan Associates’ multi-pronged growth strategy is underpinned by strong forward visibility and disciplined execution, but investors should weigh the following:
Key Considerations:
- AI Revenue Not in Guidance: Management’s 2026 outlook does not include any incremental contribution from new AI agent subscriptions, creating potential for outperformance as pilots convert.
- Cloud Migration Pipeline Robustness: Early success in cloud conversions and cross-sell programs is translating to faster revenue ramps and higher ARR visibility, but ongoing execution is needed to sustain pace.
- Services Predictability Improving: The shift to recurring, incremental services tied to cloud updates is reducing historical volatility, but services growth remains lower than the core cloud business.
- Contract Duration and Renewal Strategy: Management is proactively managing renewal cycles, sometimes favoring three-year renewals over five years to enable earlier price increases, balancing RPO growth and pricing power.
- Vertical Diversification Expanding: New logo wins and expansion across non-retail sectors are broadening the addressable market and reducing reliance on any single vertical.
Risks
Execution risk remains around the pace and scale of cloud migrations, AI adoption, and services delivery, particularly as the company ramps hiring and launches new products. Macro volatility could delay customer decision cycles, while competitive intensity in supply chain software and AI could pressure win rates or pricing. The company’s conservative renewal assumptions and exclusion of AI revenue from guidance mitigate some downside, but also signal uncertainty around adoption timing.
Forward Outlook
For Q1 2026, Manhattan Associates guided to:
- Total revenue of $272 million to $274 million
- Adjusted operating margin of about 31%
For full-year 2026, management provided:
- Total revenue of $1.133 billion to $1.153 billion (6% reported, 10% ex-legacy attrition)
- Cloud revenue growth of 21% to $492 million
- Adjusted operating margin of 34.5% to 35%
- Adjusted EPS of $5.04 to $5.20
Management highlighted several factors that shape the outlook:
- Strong RPO and ramped ARR provide visibility for double-digit growth
- AI agent revenue is not included in guidance, creating upside if adoption accelerates
- Cloud conversions and expansion are expected to offset legacy maintenance attrition
Takeaways
Investors should focus on Manhattan Associates’ accelerating cloud momentum, AI monetization optionality, and improving services visibility as key drivers for 2026 and beyond.
- Cloud and AI Leverage: Record RPO, ramped ARR, and new product launches build a multi-year runway for recurring revenue growth and margin expansion.
- Services and Cross-Sell Execution: Early wins in cloud migrations and ongoing cross-sell initiatives are stabilizing services and broadening wallet share within the customer base.
- Upside from AI and Renewals: Conservative guidance excludes AI uplift and assumes no price increases on renewals, providing potential for outperformance if adoption and pricing power materialize faster than expected.
Conclusion
Manhattan Associates enters 2026 with strong forward visibility, a revitalized product and services portfolio, and latent upside from AI monetization. The company’s disciplined guidance and conservative assumptions provide a margin of safety, while the accelerating adoption of cloud and agentic AI position it as a leader in next-generation supply chain commerce.
Industry Read-Through
Manhattan Associates’ results signal accelerating enterprise demand for unified, cloud-native supply chain platforms, with embedded AI and automation emerging as decisive differentiators. The company’s success in driving both new logo wins and cloud migrations highlights ongoing displacement of legacy on-premise and point solution vendors across retail, logistics, healthcare, and industrial sectors. The rapid productization and monetization of agentic AI within business-critical workflows sets a new bar for supply chain software peers, while the focus on faster implementations and recurring services revenue points to a broader industry shift toward outcome-based delivery and customer lifetime value. Investors in adjacent enterprise SaaS and automation names should watch for similar adoption curves and monetization models as AI capabilities mature.