MANHATTAN ASSOCIATES INC

Previous wording

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three months ended March 31, 2025 and 2024, including the notes to those statements, included elsewhere in this quarterly report. We also recommend the following discussion be read in conjunction with management’s discussion and analysis and consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2024. Statements in the following discussion that are not statements of historical fact are “forward-looking statements.” Actual results may differ materially from the results predicted in such forward-looking statements, for a variety of factors. See “Forward-Looking Statements” below.

Current wording

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024, including the notes to those statements, included elsewhere in this quarterly report. We also recommend the following discussion be read in conjunction with management’s discussion and analysis and consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2024. Statements in the following discussion that are not statements of historical fact are “forward-looking statements.” Actual results may differ materially from the results predicted in such forward-looking statements, for a variety of factors. See “Forward-Looking Statements” below.

Previous wording

In the three months ended March 31, 2025, we generated $262.8 million in total revenue. The revenue mix for the three months ended March 31, 2025 was: cloud subscriptions 36%; software license 4%; maintenance 12%; services 46%; and hardware 2%.

Current wording

In the three and six months ended June 30, 2025, we generated $272.4 million and $535.2 million in total revenue, respectively. The revenue mix for the three months ended June 30, 2025 was: cloud subscriptions 37%; software license 1%; maintenance 13%; services 47%; and hardware 2%. The revenue mix for the six months ended June 30, 2025 was: cloud subscriptions 36%; software license 2%; maintenance 13%; services 47%; and hardware 2%.

Previous wording

We have three geographic reportable segments: North, Latin and South America (the “Americas”), Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC). Geographic revenue is based on the location of the sale. Our international revenue was approximately $91.5 million for the three months ended March 31, 2025, which represents approximately 35% of our total revenue for the three months ended March 31, 2025. International revenue includes all revenue derived from sales to customers outside the United States. At March 31, 2025, we employed approximately 4,530 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Current wording

We have three geographic reportable segments: North, Latin and South America (the “Americas”), Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC). Geographic revenue is based on the location of the sale. Our international revenue was approximately $91.5 million and $183.0 million for the three and six months ended June 30, 2025, which represents approximately 34% of our total revenue for the three and six months ended June 30, 2025, respectively. International revenue includes all revenue derived from sales to customers outside the United States. At June 30, 2025, we employed approximately 4,480 employees worldwide. We have offices in Australia, Chile, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, the United Kingdom, and the United States, as well as representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia.

Previous wording

We remain cautious regarding the current turbulent global macro environment, which could impact our performance. Our results for the first three months of 2025 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory and omnichannel commerce solutions is in alignment with current market demand. We believe this contributes to our strong financial results, higher demand and strong win rates for our solutions for the period. While we are encouraged by our results, we remain cautious regarding the pace of global economic growth. We believe global geopolitical and economic volatility likely will continue to shape customers’ and prospects’ enterprise software buying decisions.

Current wording

We remain cautious regarding the current turbulent global macro environment, which could impact our performance. Our results for the first six months of 2025 exceeded our expectations due to solid demand for our cloud solutions. Our solutions are mission critical, supporting complex global supply chains. We believe that favorable secular tailwinds, such as the digital transformation of businesses in manufacturing, wholesale and retail, coupled with our commitment to investing in organic innovation to deliver leading cloud supply chain, inventory and omnichannel commerce solutions is in alignment with current market demand. We believe this contributed to our strong financial results, higher demand and strong win rates for our solutions for the period. While we are encouraged by our results, we remain cautious regarding the pace of global economic growth. We believe global geopolitical and economic volatility likely will continue to shape customers’ and prospects’ enterprise software buying decisions.

Previous wording

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Adoption of our Manhattan Active® cloud solutions continues to increase nicely, with cloud revenue up 21% over the same quarter in the prior year. Cloud revenue represents about 91% of our total software revenue. Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Current wording

Under our Manhattan Active® Solutions cloud subscription offering, customers pay a periodic fee for the right to use our software within a cloud environment that we provide and manage over a specified period of time. Adoption of our Manhattan Active® cloud solutions continues to increase nicely, with cloud revenue up 22% over the same quarter in the prior year. Cloud revenue represents about 95% of our total software revenue. Customers on our legacy perpetual license program can convert their maintenance contracts to cloud subscription contracts.

Previous wording

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In the three months ended March 31, 2025, approximately 65% of our total revenue was generated in the United States, 21% in EMEA, and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that approximately 80% of every supply chain software solutions dollar invested is spent in North America and Western Europe; consequently, the health of the U.S. and the Western European economies have a meaningful impact on our financial results.

Current wording

Global macro-economic trends, technology spending, and supply chain management market growth are important barometers for our business. In the three and six months ended June 30, 2025, approximately 66% of our total revenue was generated in the United States; 19% and 20% in EMEA, respectively; and the remaining balance in APAC, Canada, and Latin America. In addition, Gartner Inc. (“Gartner”), an information technology research and advisory company, estimates that approximately 80% of every supply chain software solutions dollar invested is spent in North America and Western Europe; consequently, the health of the U.S. and the Western European economies have a meaningful impact on our financial results.

Previous wording

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased to $94.3 million in the three months ended March 31, 2025 from $78.0 million for the same period in the prior year, representing a 21% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Current wording

Our cloud revenue growth provides insight into our ability to maintain and grow our cloud customer base. Total cloud revenue increased to $194.7 million in the six months ended June 30, 2025 from $160.4 million for the same period in the prior year, representing a 22% year-over-year increase. Cloud revenue growth is being driven by strong demand for our cloud offerings.

Previous wording

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and not included in RPO. RPO provides insight into our contracted backlog of future business. As of March 31, 2025, our RPO was approximately $1.9 billion, an increase of 25% over March 31, 2024 on strong demand.

Current wording

Transaction price allocated to RPO represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that we expect to invoice and recognize as revenue in future periods. Over 98% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and not included in RPO. RPO provides insight into our contracted backlog of future business. As of June 30, 2025, our RPO was approximately $2.0 billion, an increase of 26% over June 30, 2024 on strong demand.

Previous wording

Cloud Subscriptions and Software License Revenue. In the three months ended March 31, 2025, cloud subscriptions revenue was 91% of total cloud and software license revenue. In the three months ended March 31, 2025, cloud subscriptions revenue totaled $94.3 million or 36% of total revenues. The Americas, EMEA, and APAC segments recognized $74.1 million, $17.2 million, and $3.0 million in cloud subscriptions revenue, respectively, in the three months ended March 31, 2025. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles.

Current wording

Cloud Subscriptions and Software License Revenue. In the three months ended June 30, 2025, cloud subscriptions revenue totaled $100.4 million or 37% of total revenues. The Americas, EMEA, and APAC segments recognized $77.3 million, $19.7 million, and $3.4 million in cloud subscriptions revenue, respectively, in the three months ended June 30, 2025. In the six months ended June 30, 2025, cloud subscriptions revenue totaled $194.7 million or 36% of total revenues. The Americas, EMEA, and APAC segments recognized $151.4 million, $36.9 million, and $6.4 million in cloud subscriptions revenue, respectively, in the six months ended June 30, 2025. Cloud subscriptions revenue is recognized over the term of the agreement, typically five years or more. Cloud subscription revenue growth is influenced by the strength of general economic and business conditions and the competitive position of our software products. These revenues generally have long sales cycles.

Previous wording

In the three months ended March 31, 2025, license revenue totaled $9.3 million, or 4% of total revenue. The Americas, EMEA, and APAC segments totaled $1.5 million, $7.5 million, and $0.3 million in license revenue, respectively, in the three months ended March 31, 2025.

Current wording

In the three months ended June 30, 2025, license revenue totaled $1.5 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $0.9 million, $0.3 million, and $0.3 million in license revenue, respectively, in the three months ended June 30, 2025. In the six months ended June 30, 2025, license revenue totaled $10.8 million, or 2% of total revenue. The Americas, EMEA, and APAC segments totaled $2.3 million, $7.9 million, and $0.6 million in license revenue, respectively, in the six months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2025, approximately 49% of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed was with new customers, and 51% was with existing customers. We define new customers as entities from which we either have never earned revenue or have not recognized revenue in the last five years.

Current wording

During the three and six months ended June 30, 2025, approximately 75% and 60%, respectively, of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed was with new customers, and 25% and 40%, respectively, was with existing customers. We define new customers as entities from which we either have never earned revenue or have not recognized revenue in the last five years.

Previous wording

Maintenance Revenue. Our maintenance revenue for the three months ended March 31, 2025 totaled $32.1 million, or 12% of total revenue. The Americas, EMEA and APAC segments recognized $25.9 million, $4.2 million, and $2.0 million, respectively, in maintenance revenue in the three months ended March 31, 2025. For maintenance, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software upgrades, when and if available, which include additional or improved functionality and technological advances incorporating emerging supply chain and industry initiatives.

Current wording

Maintenance Revenue. Our maintenance revenue for the three months ended June 30, 2025 totaled $35.1 million, or 13% of total revenue. The Americas, EMEA and APAC segments recognized $27.8 million, $5.1 million, and $2.2 million, respectively, in maintenance revenue in the three months ended June 30, 2025. In the six months ended June 30, 2025, maintenance revenue totaled $67.2 million, or 13% of total revenue. The Americas, EMEA, and APAC segments totaled $53.7 million, $9.2 million, and $4.3 million in maintenance revenue, respectively, in the six months ended June 30, 2025. For maintenance, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software upgrades, when and if available, which include additional or improved functionality and technological advances incorporating emerging supply chain and industry initiatives.

Previous wording

Services Revenue. In the three months ended March 31, 2025, our services revenue totaled $121.1 million, or 46% of total revenue. The Americas, EMEA, and APAC segments recognized $87.5 million, $26.3 million, and $7.3 million, respectively, in services revenue in the three months ended March 31, 2025.

Current wording

Services Revenue. In the three months ended June 30, 2025, our services revenue totaled $128.9 million, or 47% of total revenue. The Americas, EMEA, and APAC segments recognized $94.2 million, $27.1 million, and $7.6 million, respectively, in services revenue in the three months ended June 30, 2025. In the six months ended June 30, 2025, services revenue totaled $250.0 million, or 47% of total revenue. The Americas, EMEA, and APAC segments totaled $181.7 million, $53.5 million, and $14.8 million in services revenue, respectively, in the six months ended June 30, 2025.

Previous wording

Hardware Revenue. Our hardware revenue, which we recognize net of related costs, totaled $5.9 million in the three months ended March 31, 2025 representing 2% of total revenue. As a convenience for our cloud and software customers, we resell a variety of hardware products developed and manufactured by third parties. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-authorized reseller agreements, pursuant to which we are entitled to purchase hardware products and services at discount prices. We generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we do not maintain hardware inventory.

Current wording

Hardware Revenue. Our hardware revenue, which we recognize net of related costs, totaled $6.5 million in the three months ended June 30, 2025 representing 2% of total revenue. For the six months ended June 30, 2025, hardware revenue totaled $12.4 million, or 2% of total revenue. As a convenience for our cloud and software customers, we resell a variety of hardware products developed and manufactured by third parties. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-authorized reseller agreements, pursuant to which we are entitled to purchase hardware products and services at discount prices. We generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we do not maintain hardware inventory.

Previous wording

We continue to invest significantly in research and development (R&D) to provide leading Unified Omnichannel Commerce and Digital Supply Chain solutions to enable global retailers, manufacturers, wholesalers, distributors, and logistics providers to successfully manage accelerating and fluctuating demands as well as the increasing complexity and volatility of their local and global supply chains, retail store operations and points of sale. Our R&D expenses were $35.3 million for the three months ended March 31, 2025.

Current wording

We continue to invest significantly in research and development (R&D) to provide leading Unified Omnichannel Commerce and Digital Supply Chain solutions to enable global retailers, manufacturers, wholesalers, distributors, and logistics providers to successfully manage accelerating and fluctuating demands as well as the increasing complexity and volatility of their local and global supply chains, retail store operations and points of sale. Our R&D expenses were $34.9 million and $70.2 million for the three and six months ended June 30, 2025, respectively.

Previous wording

For the three months ended March 31, 2025, we generated cash flow from operating activities of $75.3 million. Our cash and cash equivalents at March 31, 2025 totaled $205.9 million, with no debt on our balance sheet. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D in our Unified Omnichannel Commerce and Digital Supply Chain solutions to drive revenue and earnings growth. In addition, during the three months ended March 31, 2025, we repurchased approximately $100.0 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In April 2025, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $100.0 million of our common stock.

Current wording

For the three and six months ended June 30, 2025, we generated cash flow from operating activities of $74.0 million and $149.3 million, respectively. Our cash and cash equivalents at June 30, 2025 totaled $230.6 million, with no debt. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D in our Unified Omnichannel Commerce and Digital Supply Chain solutions to drive revenue and earnings growth. In addition, during the six months ended June 30, 2025, we repurchased approximately $149.6 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In July 2025, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $100.0 million of our common stock.

Previous wording

In the following table, we present a summary of our consolidated results for the three months ended March 31, 2025 and 2024.

Current wording

In the following table, we present a summary of our consolidated results for the three and six months ended June 30, 2025 and 2024.

Previous wording

We have three geographic reportable segments: the Americas, EMEA, and APAC. Geographic revenue information is based on the location of sale. The revenues represented below are from external customers only. The geography-based expenses include costs of personnel, direct sales, marketing expenses, and general and administrative costs to support the business. There are certain corporate expenses included in the Americas segment that we do not charge to the other segments, including R&D, stock compensation, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. Included in the Americas costs are all R&D costs, including the costs associated with our operations in India. During the three months ended March 31, 2025 and 2024, we derived the majority of our revenues from sales to customers within our Americas segment. In the following table, we present a summary of revenue and operating income by segment:

Current wording

We have three geographic reportable segments: the Americas, EMEA, and APAC. Geographic revenue information is based on the location of sale. The revenues represented below are from external customers only. The geography-based expenses include costs of personnel, direct sales, marketing expenses, and general and administrative costs to support the business. There are certain corporate expenses included in the Americas segment that we do not charge to the other segments, including R&D, stock compensation, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. Included in the Americas costs are all R&D costs, including the costs associated with our operations in India. During the three and six months ended June 30, 2025 and 2024, we derived the majority of our revenues from sales to customers within our Americas segment. In the following table, we present a summary of revenue and operating income by segment:

Previous wording

Diluted earnings per share: $0.85 for the first quarter of 2025 compared to $0.86 for the first quarter of 2024;

Current wording

Diluted earnings per share: $0.93 for the second quarter of 2025 compared to $0.85 for the second quarter of 2024;

Previous wording

Days sales outstanding: 72 days at March 31, 2025, compared to 74 days at December 31, 2024;

Current wording

Days sales outstanding: 70 days at June 30, 2025, compared to 72 days at March 31, 2025;

Previous wording

Cash: $205.9 million at March 31, 2025, compared to $266.2 million at December 31, 2024;

Current wording

Cash: $230.6 million at June 30, 2025, compared to $205.9 million at March 31, 2025;

Previous wording

Share repurchases: In the three months ended March 31, 2025, we reduced our shares of common stock outstanding through the repurchase of approximately 0.5 million shares of our common stock, under the share repurchase program authorized by our board of directors for a total investment of $100.0 million. In April 2025, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $100.0 million of our common stock.

Current wording

Share repurchases: In the three months ended June 30, 2025, we reduced our shares of common stock outstanding through the repurchase of approximately 0.3 million shares of our common stock, under the share repurchase program authorized by our Board of Directors for a total investment of $49.6 million. In July 2025, our Board of Directors approved replenishing the Company’s remaining share repurchase authority to an aggregate of $100.0 million of our common stock.

Previous wording

Below we discuss our consolidated results of operations for the first quarters of 2025 and 2024.

Current wording

Below we discuss our consolidated results of operations for the second quarters of 2025 and 2024.

Previous wording

Cloud Subscriptions Revenue. In the first quarter of 2025, cloud subscriptions revenue increased $16.3 million compared to the same quarter in the prior year. Our customers have demonstrated a clear preference for cloud-based solutions, including existing customers that are migrating from on-premise to cloud-based offerings. Cloud subscriptions revenue for the Americas, EMEA and APAC segments increased $13.0 million, $2.7 million and $0.6 million in the first quarter of 2025, respectively.

Current wording

Cloud Subscriptions Revenue. In the second quarter of 2025, cloud subscriptions revenue increased $18.1 million compared to the same quarter in the prior year. Our customers have demonstrated a clear preference for cloud-based solutions, including existing customers that are migrating from on-premise to cloud-based offerings. Cloud subscriptions revenue for the Americas, EMEA and APAC segments increased $12.6 million, $4.3 million and $1.2 million in the second quarter of 2025, respectively.

Previous wording

Maintenance Revenue. Maintenance revenue decreased $2.8 million in the first quarter of 2025 compared to the same quarter in the prior year. Across the Americas, EMEA, and APAC segments, maintenance revenue decreased by $2.0 million, $0.5 million, and $0.3 million, respectively. Maintenance relates to our perpetual software licenses.

Current wording

Maintenance Revenue. Maintenance revenue decreased $0.2 million in the second quarter of 2025 compared to the same quarter in the prior year. Maintenance revenue decreased by $0.8 million for the Americas segment and increased by $0.5 million and $0.1 million for the EMEA and APAC segments, respectively. Maintenance relates to our perpetual software licenses.

Previous wording

Services Revenue. Services revenue decreased $11.1 million in the first quarter of 2025 compared to the same quarter in the prior year. Services revenue for the Americas and EMEA segments decreased $11.6 million and $0.5 million, respectively, partially offset by the $1.0 million increase for the APAC segment, compared to the same quarter in the prior year. The decrease in services revenue is primarily driven by customer budgetary constraints that shifted services work to future periods which negatively impacted our professional services revenue related to cloud subscriptions. The percentage of professional services revenue that relates to cloud subscriptions in the first quarter of 2025 and 2024 was approximately 74%. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Current wording

Services Revenue. Services revenue decreased $7.9 million in the second quarter of 2025 compared to the same quarter in the prior year. Services revenue for the Americas and APAC segments decreased $8.3 million and $0.2 million, respectively, partially offset by the $0.6 million increase for the EMEA segment, compared to the same quarter in the prior year. The decrease in services revenue is primarily driven by customer budgetary constraints that shifted services work to future periods which negatively impacted our professional services revenue related to cloud subscriptions. The percentage of professional services revenue that relates to cloud subscriptions in the second quarter of 2025 and 2024 was approximately 76% and 75%, respectively. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Previous wording

Hardware Revenue. Hardware sales decreased $0.6 million in the first quarter of 2025 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware is largely dependent upon customer-specific desires, which fluctuate.

Current wording

Hardware Revenue. Hardware sales decreased $1.3 million in the second quarter of 2025 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware is largely dependent upon customer-specific desires, which fluctuate.

Previous wording

Cost of Cloud Subscriptions, Maintenance and Services. Costs of cloud subscriptions, maintenance and services consist primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $4.6 million decrease in the quarter ended March 31, 2025 compared to the same quarter in the prior year was principally due to a $4.7 million decrease in compensation and other personnel-related expenses, a $0.8 million decrease in performance-based compensation expense, and a $0.7 million decrease in travel expense, partially offset by a $1.9 million increase in computer infrastructure cost. The decrease in compensation cost is due to our reduction in headcount to align our services capacity with customer demand.

Current wording

Cost of Cloud Subscriptions, Maintenance and Services. Costs of cloud subscriptions, maintenance and services consist primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $3.8 million decrease in the quarter ended June 30, 2025 compared to the same quarter in the prior year was due to a $3.3 million decrease in performance-based compensation expense, a $2.1 million decrease in compensation and other personnel-related expenses, and a $0.9 million decrease in travel expense, partially offset by a $2.7 million increase in computer infrastructure cost. The decrease in compensation cost is due to our reduction in headcount to align our services capacity with customer demand.

Previous wording

Cost of Software License. Cost of software license consists of the costs associated with software reproduction; media, packaging and delivery; documentation, and other related costs; and royalties on third-party software sold with or as part of our products. Cost of software license remained relatively flat in the first quarter of 2025 compared with the same quarter in the prior year.

Current wording

Cost of Software License. Cost of software license consists of the costs associated with software reproduction; media, packaging and delivery; documentation, and other related costs; and royalties on third-party software sold with or as part of our products. Cost of software license remained relatively flat in the second quarter of 2025 compared with the same quarter in the prior year.

Previous wording

Research and Development. Our principal R&D activities have focused on the expansion and integration of new products and releases, including cloud-based solutions, while expanding the product footprint of our software solution suites in Supply Chain, Inventory Optimization, Omnichannel and point-of-sale.

Current wording

Research and Development. Our principal R&D activities have focused on the expansion and integration of new products and releases, including cloud-based solutions, while expanding the product footprint of our software solution suites in Supply Chain, Inventory Optimization, Omnichannel and point-of-sale. R&D expenses primarily consist of salaries and other personnel-related costs for personnel involved in our R&D activities. R&D expenses for the quarter ended June 30, 2025 decreased by $0.5 million compared to the same quarter of 2024 principally due to a $0.6 million increase in compensation and other personnel-related expenses.

Previous wording

Sales and Marketing. Sales and marketing expenses include salaries, commissions, travel and other personnel-related costs and the costs of our marketing and alliance programs and related activities. Sales and marketing expenses increased $1.1 million in the quarter ended March 31, 2025 compared to the same quarter in the prior year primarily due to a $0.5 million increase in compensation and other personnel-related expenses, a $0.3 million increase in performance-based compensation expense, and a $0.3 million increase in marketing and campaign program expenses.

Current wording

Sales and Marketing. Sales and marketing expenses include salaries, commissions, travel and other personnel-related costs and the costs of our marketing and alliance programs and related activities. Sales and marketing expenses increased $0.8 million in the quarter ended June 30, 2025 compared to the same quarter in the prior year primarily due to $1.0 million increase in marketing and campaign program expenses.

Previous wording

General and Administrative (G&A). G&A expenses consist primarily of salaries and other personnel-related costs of executive, financial, human resources, information technology, and administrative personnel, as well as facilities, legal, insurance, accounting, and other administrative expenses. G&A expenses increased $3.0 million in the current year quarter compared to the same quarter in the prior year primarily due to a signing bonus of $3.0 million, recruiting fees of $0.7 million, and additional stock compensation expense of $3.1 million for the hiring of our new chief executive officer. These expenses were partially offset by a $3.7 million insurance recovery on an unusual health insurance claim, net of ongoing expenses for the claim.

Current wording

General and Administrative (G&A). G&A expenses consist primarily of salaries and other personnel-related costs of executive, financial, human resources, information technology, and administrative personnel, as well as facilities, legal, insurance, accounting, and other administrative expenses. G&A expenses increased $4.9 million in the current year quarter compared to the same quarter in the prior year primarily due to a $3.0 million of ongoing expense related to an unusual health insurance claim and $1.8 million of compensation and other personnel-related expenses.

Previous wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for the first quarter of 2025 and 2024 was $1.5 million.

Current wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for the second quarter of 2025 and 2024 was $1.6 million and $1.5 million, respectively.

Previous wording

Operating income in the first quarter of 2025 was $63.2 million compared to $57.6 million in the same quarter in the prior year. Operating margin was 24.0% for the first quarter of 2025 versus 22.6% for the same quarter in the prior year. Operating income and margin increased primarily due to increased cloud subscriptions revenue.

Current wording

Operating income in the second quarter of 2025 was $73.8 million compared to $68.2 million in the same quarter in the prior year. Operating margin was 27.1% for the second quarter of 2025 versus 25.7% for the same quarter in the prior year. Operating income and margin increased primarily due to increased cloud subscriptions revenue.

Previous wording

Other income, net. Other income, net primarily includes interest income, foreign currency gains and losses, and other non-operating expenses. Other income, net increased $0.4 million in the first quarter of 2025 compared to the same quarter in the prior year due to a $0.7 million increase in foreign currency gains, partially offset by a $0.3 million decrease in interest income. The increase of foreign currency gains is mainly due to gains or losses on intercompany transactions denominated in foreign currencies with subsidiaries due to the fluctuation of the U.S. dollar relative to other foreign currencies, primarily the Indian Rupee. We recorded net foreign currency gains of $0.1 million in the first quarter of 2025, and $0.6 million of net foreign currency losses in the same quarter in the prior year.

Current wording

Other income, net. Other income, net primarily includes interest income, foreign currency gains and losses, and other non-operating expenses. Other income, net decreased $0.2 million in the second quarter of 2025 compared to the same quarter in the prior year due to a $0.7 million decrease in interest income, partially offset by a $0.5 million decrease in foreign currency losses. The decrease of foreign currency losses is mainly due to gains or losses on intercompany transactions denominated in foreign currencies with subsidiaries due to the fluctuation of the U.S. dollar relative to other foreign currencies, primarily the Indian Rupee. We recorded net foreign currency losses of $0.1 million in the second quarter of 2025, and $0.6 million of net foreign currency losses in the same quarter in the prior year.

Previous wording

Income tax provision. Our effective income tax rate was 18.5% and 8.2% for the quarters ended March 31, 2025 and 2024, respectively. The increase in the effective tax rate for the three months ended March 31, 2025 is due to a decrease in excess tax benefits on restricted stock awards that vested during the quarter.

Current wording

Income tax provision. Our effective income tax rate was 23.8% and 23.6% for the quarters ended June 30, 2025 and 2024, respectively. The increase in the effective tax rate for the three months ended June 30, 2025 is due to a decrease of excess tax benefits on restricted stock awards that vested during the quarter.

Previous wording

Condensed Consolidated Financial Summary - First Quarter 2025

Current wording

Condensed Consolidated Financial Summary – First Six Months of 2025

Previous wording

Software License Revenue. Software license revenue increased $6.5 million in the first quarter of 2025 compared to the same quarter in the prior year predominantly driven by one large contract with an existing customer. The perpetual license sales percentage mix across our product suite in the first quarter ended March 31, 2025 was over 70% warehouse management solutions.

Current wording

Software License Revenue. Software license revenue increased $4.9 million in the six months ended June 30, 2025 compared to the same period in the prior year predominantly driven by one large contract with an existing customer. The license sales percentage mix across our product suite in the six months ended June 30, 2025 was over 70% warehouse management solutions.

Previous wording

Restructuring Expense. In January 2025, the Company eliminated approximately 100 positions to align our services capacity with customer demand which has been impacted by short-term macro-economic uncertainty. The Company recorded a restructuring expense of approximately $2.9 million pretax ($2.2 million after-tax or $0.04 per fully diluted share) in the first quarter of 2025. The expense primarily consists of employee severance and outplacement services. The expense is classified in “Restructuring expense” in the Company’s Consolidated Statements of Income.

Current wording

Restructuring Expense. In January 2025, the Company eliminated approximately 100 positions to align our services capacity with customer demand which has been impacted by short-term macro-economic uncertainty. The Company recorded a restructuring expense of approximately $2.9 million pretax ($2.2 million after-tax or $0.04 per fully diluted share) in the six months ended June 30, 2025. The expense primarily consists of employee severance and outplacement services. The expense is classified in “Restructuring expense” in the Company’s Consolidated Statements of Income.

Previous wording

During the first three months of 2025, we funded our business exclusively through cash generated from operations. Our cash and cash equivalents as of March 31, 2025 included $109.2 million held in the U.S. and $96.7 million held by our foreign subsidiaries. We believe that our cash balances in the U.S. are sufficient to fund our U.S. operations. In the future, if we elect to repatriate the unremitted earnings of our foreign subsidiaries, we would not be subject to additional U.S. income taxes on such earnings, but we could be subject to additional local withholding taxes.

Current wording

During the first six months of 2025, we funded our business exclusively through cash generated from operations. Our cash and cash equivalents as of June 30, 2025 included $138.4 million held in the U.S. and $92.2 million held by our foreign subsidiaries. We believe that our cash balances in the U.S. are sufficient to fund our U.S. operations. In the future, if we elect to repatriate the unremitted earnings of our foreign subsidiaries, we would not be subject to additional U.S. income taxes on such earnings, but we could be subject to additional local withholding taxes.