Good afternoon. My name is Joe, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manhattan Associates First Quarter 2026 Earnings Conference Call. [Operator Instructions] And as a reminder, ladies and gentlemen, this call is being recorded today, April 21, 2026. I would now like to introduce you to your host, Mr. Michael Bauer, Head of Investor Relations of Manhattan Associates. Mr. Bauer, please go ahead.

Great. Thanks, Joe, and good afternoon, everyone. Welcome to Manhattan Associates' 2026 First Quarter Earnings Call. I will 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 risks 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 2025 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 macro environment 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 the related GAAP measures in accordance with SEC rules. You'll find reconciliation schedules in the Form 8-K 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 first quarter results and discuss our increased full year 2026 outlook. Manhattan is off to a strong start to 2026, navigating a volatile global macro, reporting record better-than-expected results. On solid demand, our Q1 revenue growth accelerated, highlighted by 24% growth in cloud revenue and our services revenue growth also continues to steadily improve. Throughout 2025, we spoke about the strategic investments that we're making to improve our go-to-market effectiveness and accelerate our selling velocity. And while results from these initiatives will certainly not be linear, these investments have started to pay off in the first quarter and contributed to RPO increasing 24% to $2.35 billion. New customer bookings remained strong as over 55% of new cloud bookings were generated from net new logos with the largest Q1 deal influenced by Google Cloud Marketplace. We also experienced notable deal volume improvements across all deal types as well as a larger contribution from products beyond Active Warehouse, including Active Omni, Active Transportation and Active Planning. And we had strong bookings from all regions. Our win rate metric continues to be consistently above 70%, and our renewal performance was solid and supportive of the plan that we highlighted last quarter. All of this provides a glimpse into the large opportunity that we have across all of our industry-leading solutions. In summary, bookings momentum continued in Q1, aligning with our goal of accelerating both ramped ARR and cloud revenue growth. From a vertical sales perspective, our end markets are diverse, and we have healthy established footprints across numerous subsectors, which include retail, grocery, food distribution, life sciences, industrial, technology, airlines, third-party logistics and more. For example, Q1 deals included a global retailer that became a new…

All right. Great. Thanks, Eric. Before I jump into the numbers, I'd like to thank Eric and the Board for the opportunity to lead our talented finance team. I look forward to helping Eric and the rest of the team execute on the enormous opportunity in front of us. Regarding Q1, our global teams continued to perform well, delivering better-than-expected top and bottom line results in a volatile macro environment. FX volatility continues to impact us. In Q1, it was a 2-point tailwind to year-over-year total revenue growth, which was in line with the outlook we provided last quarter. However, it was an approximate $5 million headwind to sequential RPO growth and about a $25 million tailwind to year-over-year RPO growth. Now to our results. Our growth rates are reported on a year-over-year basis unless otherwise stated. For the quarter, total revenue was $282 million, up 7%. Excluding license and maintenance revenue, which removes the compression driven by our cloud transition, our total revenue was up 13%. Cloud revenue increased 24% to $117 million. The better-than-expected performance was driven by a combination of strong execution, catch-up overage fees and lower-than-modeled churn rates of our renewal portfolio. Services revenue was also better than expected and increased 4% to $126 million. We ended Q1 with RPO of $2.35 billion, up 24% compared to the prior year and 5% sequentially. As Eric previously highlighted, the strong Q1 performance was driven by a good mix of both sales from new and existing customers. This includes renewals, which were in line with our 2026 annual plan that we discussed last quarter. Contract duration remains at about 5.5 to 6 years, resulting in 38% of RPO to be recognized as revenue over the next 24 months. Q1 adjusted operating profit was $91 million with an operating…

Great. Thank you, Linda. We're very pleased with our strong start to 2026 and our continued business momentum. Manhattan's business fundamentals are solid, and we have numerous opportunities to continue to accelerate profitable growth and reduce time to value for our customers. Thanks to everyone for joining the call, and thank you to our global team for the great execution. That concludes our prepared remarks, and we'd be happy to take any questions.

[Operator Instructions] And our first question comes from the line of Terry Tillman with Truist Securities.

Eric, Linda, Mike and Dennis. A nice job on the bookings. Good to see that. I'd be remiss if I didn't say something about Dennis though. I think that was almost 80 Manhattan calls that I think you've been on. Congrats to all your accomplishments and best of luck in retirement. And Linda, congratulations to you as well as the new CFO.

Thank you.

Yes. I had two questions. First, I definitely wanted to ask about agent and Eric, you gave a lot of good color there. I appreciate that. My two part on Agentic is, if you look through the rest of the year, how do you see the progression from these pilots and POCs into potentially scaled revenue. And then the second part is, I saw a demo at NRF going back what seems like months ago. And there is the opportunity to actually let this run autonomously then, like WAVE Coordinator Agent. How many of these early adopters are actually just letting it ride and just operate autonomously? And then I had a follow-up.

Okay. Yes. So in terms of scaling and monetization, as you know, we launched in Q1, and our primary go-to-market is through a 90-day pilot. So that is a paid pilot. And at the end of that pilot, we have the conversation about converting to subscription. So in Q2, while we continue to sign up additional pilot customers, we'll also be having conversations with the Q1 customers about conversion to subscriptions. And in fact, those conversations have already begun with many of them. So we expect this to continue to scale as we go throughout each quarter. And I think we'll have more clarity on what that means as we go throughout each quarter. So we continue to take a conservative approach to the monetization, and we expect to have a bigger impact, obviously, in '27 than we'll have in '26. And then in terms of the second part of autonomous agents, all of our agents are designed to be -- well, I shouldn't say that. Most of our agents are designed to be autonomous if they so choose. So they can be working alongside a user and providing suggestions to a user. And then when the user feels comfortable, they can allow the agent to work autonomously. Again, you go back to our architecture that's all micro services, all API-driven. So this concept that's been kicked around in the AI space here recently about headless we're set up for headless. Our user interface can be the screens that we build or our unit of interface can be an AI agent.

Yes. Got it. That's helpful. Just my follow-up question -- follow-up question just on this, so I'll just -- I'll throw it out there. On cloud subscription revenue, it was 24% growth, that's acceleration. How much of that, though, was FX? I think you all called out total revenue had about 2-point benefit. But I'm just curious how much of the revenue acceleration is kind of core versus FX? And then for the full year, maybe an update on FX impact to subscription revenue.

Yes. So for the quarter, it was a little bit over 1% tailwind on the cloud revenue. And for the full year, we're also expecting about a 1% overall tailwind on our revenue.

[Operator Instructions] And the next question comes from the line of Brian Peterson with Raymond James.

Congrats on the strong quarter. And Dennis, it's been really great working with you. So I wanted to ask on the RPO. Obviously, it was much stronger than we expected. The net new mix at 55%, it looks like that held steady. Is there any commonality in the deal timing or the deal sizes that drove some of that net new, Eric? I'd love for you to unpack that a little bit.

Yes. So I think one of the really good signs that we're seeing, and I mentioned it a bit in my prepared remarks, is the investments that we made and the strategy that we put in place last year to increase deal volume across all of those deal types is paying off. So our deal volume across all these types was up in Q1. So not nearly as dependent on large deals. In fact, the largest 2 deals we closed in the quarter came from Europe and APAC. So we saw a good variation of deal size. And that allows us to I think, to be more aggressive in that space as well. And when you look at the 55%, that kind of continues from the success that we had in new logo last year. But I've always said over a period of time, it's kind of going to go back to thirds. And we looked at that data. And if you go back 3 years, over the past 3 years, it is in thirds, but we've been really, really strong in the past 5 quarters of bringing in new logo. And we continue to see great pipeline, and we continue to have great win rates against our competitors. So we expect that to continue.

That's great to hear. And Eric, I'd love to get an update on some of the fixed services aspects that you were talking about. I know last quarter, you mentioned there was some interest in that. Any update on the uptake there? And how should we think about that impacting services in 2026?

Yes. So -- and that kind of goes back again to increase in deal volume, just the number of deals that we closed in Q1 and also increase in deal volume and dollar volume across cross-sells and upsells. So we've got the team actively engaging looking for those opportunities to expand within our customer base, and we're seeing good success there.

The next question comes from the line of Joe Vruwink with Baird.

Great. And I'll also extend my congrats to Dennis and Linda. More of a thematic question maybe, but when it comes to software categories that still have a fair amount of on-prem deployments, there seems to be a growing appreciation that's maybe not well suited to take advantage of AI. And so we're starting to hear more anecdotes and feedback that modernization campaigns need to pick up. Obviously, Manhattan kind of has its own irons in the fire to accelerate conversion activity. But are you starting to see the customer mindset change and maybe their planning windows are shifting forward on this idea that they need to pick up the pace?

Yes. And we talked about that last year as well. We started to see some of the tone and the pace changing when we were able to go out and offer fixed fee, fixed time frame deployments when they saw a way to get there quicker. And then the fact that we can offer them -- once they get to the Active platform, we can offer them base agents that they can turn on and use day 1. So all of these are absolutely creating more interest. But I also agree with your point that we've moved up now to about 23% of our on-prem customer base has converted or started the conversion to the cloud, but we still have a large installed base and a large opportunity to go do additional conversions. And I agree with your point that those probably aren't ripe for AI takeover. Those are conversions that are going to happen within our ecosystem.

Okay. Understood. And then just on the strong RPO addition in 1Q, and it seems like that was driven by the new logo performance, even though I appreciate a lot of good volume there, but I guess the dollars skewed more towards new logos. How much of that maybe relates to this dynamic around ERP upgrades still happening? And if you're on maybe an attach with your ERP vendor historically, you're starting to see that be a feeder and the conversion on that getting upgraded into a Manhattan solution being high?

Yes, that definitely continues to be a tailwind for us, and we see significant pipeline in that space. But I think same answer that I gave last year when we talked about this, an even bigger tailwind is some of our competitors in the industry that haven't made the investments in cloud and haven't made the investments in a unified platform. We continue to have just kind of off-the-chart win rates when we compete for their incumbents, and we're taking a lot of business from our competitors.

And the next question comes from the line of Dylan Becker with William Blair.

I'll echo congrats to Dennis and Linda here as well, too. But maybe, Eric, starting for you, if we kind of go back to the Agentic deployment conversation. I thought it was pretty impressive some of the statistics you disclosed and kind of value those early pilot customers are seeing. I guess, to one, maybe the first aspect, how that's maybe driving or fueling your expectation of scaling kind of that proof-of-concept cohort, if you will, right, just kind of tied to the value and referenceability that those customers are seeing as well as maybe layering in conviction on that conversion or their willingness to kind of pay for those agents over time. I understand kind of the conservatism in the framework, but how that's kind of layering confidence in the contribution here over, obviously, '26 and then '27?

Yes. So there's a lot of excitement about the opportunity here. And in terms of customers being willing to pay for it in some of the early conversations we've had around moving from pilot to subscription, there have been customers that have justified the entire ROI just by reduction in overtime. So when they look at all the different ways they can get value out of these AI agents, we aren't seeing customers have a problem justify the ROI of what they're getting. So that gives us pretty good confidence. But again, we're early. So we're still very conservative in what we're putting in, in terms of revenue for this year. But I think you look at what we did in terms of number and volume of deployments and agents that we put in, in Q1 in the very first quarter this was available, and I expect that to continue to grow and build as we go through the next 3 quarters. So I think when we start talking about outlook for 2027, there should be a meaningful impact from AI.

Very helpful. And then if we do kind of stick on the topic of kind of accelerated deal volume and velocity attributable to a lot of the structural kind of changes that have taken place over the last year or so, if you will. I think it's impressive to see that the services piece is stepping up in light of kind of the fixed contract dynamic, I guess. How should we think about or how are you guys thinking about the implications of that relative to kind of the broader software or subscription and services kind of mix shift as you're layering on more cloud contracts and maybe those customers are realizing value faster, kind of that pull-forward implication, if you will, to subscription revenues?

No, thank you. And it's a great question because as we've talked about in previous calls, we've got a lot of focus and investment on speed and simplicity and making it faster and easier for our customers to deploy and faster and easier for them to recognize, reduce that time to value. And in doing that, obviously, that makes services projects shorter. So when you look at our revenue growth, it's because we're doing more services projects. And some of that is the active selling that we're doing into our installed base. Some of it is this newfound opportunity around forward deployed engineers. You look at what's happening in the AI space and some of these large foundation companies, and model companies are creating partnerships with all of the consultancies out there because they don't have forward deployed engineers. And even some of the large cloud companies that have very, very small services teams, they've got to go create partnerships with those same consulting companies to try to create interest in deploying their AI agents. So I think what we're seeing is this services team that we have here at Manhattan has become a massive advantage for us because we are skilling and tooling teams of forward deployed engineers that are made up of people from R&D and services engineers that can very quickly get these agents active and productive and adding value to our customers, and we can do that at scale. So I think, again, one of the things that our customers love hearing from us when we're having these AI conversations because, by the way, as you know, they're having AI conversations with every one of their partners and everybody else trying to get in the door. We're the only people that can come and say, we can turn these on and have you actively using them and getting value on day 1.

And the next question comes from the line of George Kurosawa with Citi.

Okay. I wanted to touch on the cloud revenue upside, a lot stronger than what we've seen in recent quarters. You called out some components of that in terms of improving churn in the renewal book, I believe, and then something on the overages side. Maybe you could just double-click on some of those dynamics and how we should think about how sustainable those drivers are going forward?

Yes. So as you mentioned, we mentioned 3 drivers. One, of course, was just strong execution in the quarter. We also did have some onetime cloud overage fees that would not be recurring. And then as you noted, we had lower than modeled churn on our renewals. But again, as far as going forward, we're continuing to take a conservative position on our outlook for Q2 to Q4, keeping those metrics in line with what we previously disclosed last quarter, just given the volatility in the macro environment right now.

Okay. That's great color and makes sense. I wanted to touch on this forward deployed engineer concept you just touched on, Eric. Maybe if you could talk about that's a concept you guys have been leaning into in the most recent quarters, if there's -- what you had to change kind of structurally, if there's any specific hiring that you had to do, just how you sort of put that group into place? And maybe if you could just talk a little more about the impact that you're seeing there?

Yes. So as I mentioned a quarter ago, we were hiring early in Q1. And to date, we've added about 120 headcount into our services team, and we've got another roughly 70 either pending start or open. So we continue to add talent into our services team. And really, that's just based on demand. But when you look at what we're doing with forward deployed engineers, the bulk of those FDEs are coming from people that have experience here at Manhattan across the services engineering team and the R&D team because we want people that are deep in our product and deep in understanding supply chain and deep in understanding our customers' needs so that we can quickly create those custom agents within the foundry.

The next question comes from the line of Guy Hardwick with Barclays.

So a question on the pilots. So once the 90-day pilots are completed, what kind of uplift are you seeing in terms of percentage uplift to the SaaS subscription contracts?

Yes, it varies. We're not disclosing price list information on that, but it varies based on how they're using it, where they're using it. And all of AI has a cost, right? How many times are you hitting LLMs and how many APIs and et cetera, et cetera. So it's a unique conversation with each customer.

Okay. But I think I understand that you have guided to that the margins to be similar for SaaS. Is that correct?

Yes. Yes. We've modeled it so that the margin remains consistent.

Okay. And just sorry, my follow-up actually, in terms of the fixed fee deployments, what percentage of the services revenue is that now or what you expect it to be this year?

I don't have an answer for that. We haven't modeled that. But that's something that we'll continue to do more and more fixed fee because when -- as we put more and more automation and AI into the way we deliver services, that's part of how we sell the value of what we're delivering. So when you're using AI and automation, you don't want to sell services by the hour, you want to sell it by the outcome.

The next question comes from the line of Parker Lane with Stifel.

Eric, you talked about customers not really having any trouble justifying the ROI of agents. So maybe zooming in again on the pricing model here. What has been the reception to the more subscription-based arrangement for paying for agents versus a true consumption? And are you contracting in a similar fashion in terms of duration? Or are you giving smaller windows to sort of analyze that level of utilization and adoption over time and then go back and rework the subscription arrangement?

Yes. So the one thing that we have shared about pricing is that our intention here was to make it simple. Back to the speed and simplicity and easy to understand, easy to buy, easy to operate. So while all AI will be based on some kind of consumption because there is a cost to the consumption, we work with them to identify based on the POC and the pilot what kind of consumption are you using to do these tasks and automation that you want to do. And that's how we come to an uplift. And the reason that works is because a lot of these customers are somewhere along their journey in deployment. So they still have committed uplift. So rather than having to reprice the AI and talk about consumption all the time, we let it grow with them.

The next question comes from the line of Mark Schappel with Loop Capital Markets.

Really nice job on the quarter. Eric, I was wondering if you could just share some more details on the large deal completed through the Google Marketplace, including maybe how it originated, how it kind of grew during the quarter? And also, does it include your agents?

Yes. So if you go back to last year, I think the largest deal that we've ever closed in Europe went through Google Cloud Marketplace. And now this is the largest order management deal we've ever done and one of the largest deals we've done in APAC that's gone through Google Cloud Marketplace. So -- and I would say this one is similar to the other one. And there have been other smaller deals, too, but it's interesting that 2 of our largest deals in Europe and APAC have gone through the marketplace. And in both of those cases of the large deals, I wouldn't say that was the determining factor of why they did it, but it certainly reduced some of the friction because these customers have committed spend with Google, and this allows them to retire some of that committed spend as they work with us. So we view it more as an opportunity to help close deals and be a differentiator at this point, more so than creating net new pipeline. Is that the question you were looking for?

Yes, I think that's sufficient. And then as a follow-up, of the base agents that you released, I believe, in January, I know it's still early, but which ones are generating the strongest customer interest so far?

Well, the one that I mentioned and kind of give some examples of -- we've got multiple customers getting different types of value using the exact same agent is the WAVE planning agent. We've also had a lot of success with our labor agent. I would say we've got probably a couple of agents in each product that tend to be the hot couple of agents. And then what customers use beyond those top 2, it varies by customer. And then everybody is adding custom agents.

The next question comes from the line of Chris Quintero with Morgan Stanley.

Eric, Linda, great to speak with you again, and congrats on the CFO role. And Dennis, congrats on all your accomplishments over the years. I wanted to ask about the go-to-market changes. Really great to see that already impacting the results here with RPO. So maybe, Eric, just curious kind of which one of those are really the ones that are benefiting you today? And how do you think about the remaining ones impacting you later on in the year and into the future?

Yes. So I think we look at several things when it comes to how that team is building pipeline in terms of total pipeline dollars, but also volume of deals in the pipeline at different sizes, volume of deals of different sizes across cross-sell, upsell. The cross-sell and upsell that comes from renewal and all these different metrics. So what we're seeing is volume increases in all of these areas because we have specialists focused on all of those areas, and we have people focused on those areas that that's the only way they make money. So I think what we've done is we've created just more opportunities to find both subscription and services revenue across our new logo opportunities and our installed base.

Got it. That's helpful. And then I wanted to ask about services. Obviously, a bit more macro-sensitive part of the business. And we did hear about some services partners having some projects kind of getting delayed because of macro volatility and customer nervousness. But curious to get your sense on what you saw in the quarter and if you're even seeing any of that yourself on your services business.

Really haven't seen that, and I'm not aware of partners that have seen that. So typically, when partners see that, we hear about it. But no, I haven't seen that in the quarter.

And the next question comes from the line of Lachlan Brown with Rothschild & Company, Redburn.

Congrats on the quarter. With the customers that have been on the pilot program for your agent solutions, how has the overall consumption been of these products? I guess listening to your remarks, it sounds like it's been pretty strong, but just any commentary on whether it's been over, under or in line with expectations? And has this changed any initial thinking around available consumption usage when they move to the subscription package?

No. Maybe what I'll start with is, I mentioned in the prepared remarks, we had -- when you think of product sales in Q1, the breadth of product sales was probably the most diverse that it's been since 2022. So we're really selling across every one of our products. We're also offering these AI agents across all of these products. So we've got customers actively using agents across every product. And as I mentioned before, it depends on how they use them and where they're using and how much consumption and that consumption is how we determine how we create that price with that customer. So no big challenges, big issues there. I think it's all been coming in as we expected.

Appreciate it. And maybe one for Linda. Just on the upward revenue guidance revision, quite a notable increase at the bottom end, but a small increase at the top end of the range. So could you just run us through the puts and takes in the outlook with the confidence to raise the lower end while being somewhat conservative at the top?

Yes. I mean it's pretty much the same. I mean, basically, we took our beat from Q1, and we applied that to each one of our metrics. So we raised all 3 metrics. But as I mentioned before, we are keeping the Q2 to Q4 parameters, the same that we had mentioned on last quarter's call. Just again, we're executing well. We're very optimistic, but it is only the first quarter, and there's a lot of volatility in the macro environment. So we felt it was prudent to keep our out quarters the same as what we had previously communicated.

This concludes the question-and-answer session, and I will turn it back over to Eric Clark for closing remarks.

Yes. Well, again, thank you all for joining. Really proud of the team and the execution from the team to deliver a really strong Q1 and position us very well for 2026, and we're excited about where we are and look forward to continuing to deliver. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.