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Manhattan Associates reported Q2 FY2026 revenue of $297.8 million, up from $272.4 million a year earlier. Diluted earnings per share fell to $0.85 from $0.93.
The company reported gross margin of 56.5%, compared with 57.3% a year earlier, and operating margin of 22.2%, compared with 27.1%. Free cash flow rose to $89.7 million from $70.1 million. The company’s filing says a headcount reduction resulted in restructuring expenses during Q2.
For the subsequent quarter ended September 30, Manhattan reported revenue of $306.2 million, above the consensus of $296.8 million. Adjusted earnings per share of $1.55 also exceeded the consensus of $1.46.
The filing says Q3 cloud subscription revenue increased to $134.4 million from $104.9 million a year earlier, while services revenue rose to $134.4 million from $133.0 million. It attributes the decline in Q3 operating margin primarily to higher sales and marketing expenses.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $297.8 million | $272.4 million | 9.31% |
| Diluted EPS | $0.85 | $0.93 | −8.60% |
| Gross margin | 56.5% | 57.3% | −0.8 percentage points |
| Operating margin | 22.2% | 27.1% | −4.8 percentage points |
| Free cash flow | $89.7 million | $70.1 million | 28.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.55 | $1.46 | Beat by 6.16% |
| Revenue | $306.2 million | $296.8 million | Beat by 3.16% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
In its filing, Manhattan said customers had shown a preference for cloud-based solutions, including existing customers migrating from on-premise offerings. The company attributed the increase in cloud revenue to demand for those offerings.
Manhattan said it had expanded its sales force and increased marketing efforts to accelerate revenue growth. It also said its cash priorities included product development and investment in the business, while it would weigh share repurchases against acquisitions and other investments.
Guidance
Manhattan said in its filing that it expects maintenance revenue to decline as it develops cloud offerings, with additional cloud revenue offsetting the decline. The company also said it expects existing cash to meet its working capital and capital expenditure needs for at least the next twelve months.