Manhattan Associates is converting a warehouse-and-omnichannel installed base onto Manhattan Active, and the second quarter is the third straight period in which bookings set a company record. Cloud subscription revenue is now the growth engine, while services barely advance and maintenance continues to roll off as customers leave perpetual licenses. The equity debate is no longer whether the cloud mix can rise. The debate is whether mid-twenties cloud growth, long-duration remaining performance obligations, and a raised full-year outlook are enough to justify a premium software multiple while GAAP operating income still recedes.
Cloud subscriptions reached $127 million in the June quarter, a 26 percent lift that now accounts for more than two fifths of the mix. Remaining performance obligations climbed to roughly two and a half billion, a 23 percent year-over-year step that management attributes to a third consecutive record bookings print. On-premise conversions into Manhattan Active represented more than 40 percent of new cloud bookings, while new logos contributed more than a quarter. That mix is the mechanism: the company is harvesting its own installed base and still adding names, which is how a mid-single-digit total-revenue grower can keep a software-subscription multiple. The tension is that GAAP operating income still fell, because a June headcount cut and heavier go-to-market spending absorbed the cloud gain.
Full-year revenue guidance now sits just above $1 billion. Adjusted earnings guidance sits near $5 a share at the midpoint. Cash ended the quarter at $186 million with no bank debt, even after a $125 million repurchase in the period. The next several prints decide whether cloud growth holds in the mid-twenties as the base scales, or whether services stay soft enough to keep consolidated growth in the high single digits. Does a multiple in the mid-thirties on adjusted earnings still make sense if GAAP earnings barely move?