Manhattan Associates heads into its third-quarter report with a problem most software companies would happily trade for: it has raised its full-year outlook so many times that merely hitting the numbers may no longer impress. Cloud growth has quickened for three straight quarters, bookings have set records three quarters running, and the stock has rallied hard since the last report. The question now is whether the company can show continued cloud strength through a quarter that management has already flagged as the low point for its services business.
Wall Street expects non-GAAP earnings of $1.46 a share on revenue of about $296.8 million, roughly 7.6% above the year-ago quarter. That is respectable rather than spectacular growth, and it reflects a mix shift that matters. Consensus revenue sits slightly below the prior quarter's $297.8 million, which is consistent with management's warning that services revenue would trough in the third quarter because of European implementation timing and adverse currency moves. The whisper number of $1.51 runs about 3% above consensus, a modest but real signal that the buy side expects another clean beat on margins even if the top line looks flat sequentially.
Guidance provides the key frame. Management lifted full-year adjusted EPS to $5.44 to $5.50, up from $5.29 to $5.37 a quarter earlier and $5.04 to $5.20 at the start of the year, while raising the revenue midpoint to about $1.163 billion and cloud revenue to roughly $505.5 million, implying 24% growth. The published full-year consensus of $5.33 sits below even the low end of that range, which suggests some estimates have not caught up. That gap makes the quarterly bar look softer than it really is; the number that matters is whether management can nudge the full-year range higher a fourth time.
The operational test centers on cloud. Cloud revenue grew 26% last quarter, and the raised outlook depends on that pace holding in the back half despite currency swinging from a tailwind to roughly a one-point headwind. Remaining performance obligations, which reached $2.47 billion last quarter, are the best read on future revenue, and management said it now expects to finish toward the high end of its $2.62 billion to $2.68 billion target. A figure tracking toward that level would validate the story. Equally important is bookings quality. Conversions of on-premise customers to the cloud jumped to more than 40% of new cloud bookings while new logos moderated, so evidence that the conversion wave is broadening, rather than front-loaded, would be reassuring. Early signs of traction for the new Editions packaging, aimed at smaller enterprises and second-tier sites, and further spread of AI agents beyond the 10% of the install base already touched would strengthen the longer-term thesis, even though management has said neither will be material this year.
Expectations have clearly warmed. Sentiment has flipped from mildly bearish before the last report to moderately bullish now, and shares have gained nearly 14% since then, outpacing the S&P 500 by almost 11 points. At about $222, the stock trades far above its 200-day average near $163 and sits roughly 4% below its post-earnings high of $231.63, with its entire trading range shifted well above last quarter's. That re-rating means the market is already pricing in continued execution.
The verdict will hinge on whether cloud growth and backlog hold up firmly enough to absorb the services dip and currency drag. A steady 20%-plus cloud pace, RPO on track for the high end and another upward tweak to full-year guidance would keep the improving narrative intact. Any sign that services softness is spreading or that cloud momentum is cooling would be far more costly for a stock priced for perfection.