MANHATTAN ASSOCIATES INC

Previous wording

Our future revenue is dependent on continuing sales from cloud subscriptions, which in turn drive sales of professional services. We are dependent on our new customers as well as our large installed customer base to purchase additional cloud subscriptions and professional services from us. In future periods customers may discontinue the cloud subscriptions and in turn may not purchase additional professional services from us. If our customers decide to discontinue the cloud subscription, or if they reduce the scope of their professional services agreements, our revenue could decrease significantly, and that could have a material adverse effect on our business, results of operations, cash flow and financial condition.

Current wording

Our future revenue is dependent on continuing sales from cloud subscriptions, which in turn drive sales of professional services. We are dependent on our new customers as well as our large installed customer base to purchase additional cloud subscriptions and professional services from us. Our ability to continue to grow revenues from our cloud solutions depends upon a number of factors, including the quality and functionality of our platform, our ability to design our cloud solutions to meet customer demand, our ability to attract new customers, and our ability to increase sales from existing customers. In future periods customers may discontinue the cloud subscriptions and in turn may not purchase additional professional services from us. If our customers decide to discontinue the cloud subscription, or if they reduce the scope of their professional services agreements, our revenue could decrease significantly, and that could have a material adverse effect on our business, results of operations, cash flow and financial condition.

Previous wording

Our liability to clients may be substantial if our systems fail, which could adversely impact our business, results of operations, cash flow, and financial condition. Our products are often critical to the operations of our customers’ businesses and provide benefits that may be difficult to quantify. If our products fail to function as required—which, as described in more detail in other risk factors, could be due to software bugs, cloud hosting service failures, security breaches, faulty implementations or other reasons—we may be subject to claims for substantial damages. Courts may not enforce provisions in our contracts that would limit our liability or otherwise protect us from liability for damages. Defending a lawsuit, regardless of its merit, could be costly and divert management’s time and attention. Although we maintain general liability insurance and error and omissions coverage, these coverages may not continue to be available on reasonable terms or in sufficient amounts to cover claims against us. In addition, our insurer may disclaim coverage as to any future claim. If claims exceeding the available insurance coverage are successfully asserted against us, or our insurer imposes premium increases or large deductibles or co-insurance requirements on us, then our business, results of operations, cash flow, and financial condition could be adversely affected.

Current wording

Our liability to clients may be substantial if our systems fail, which could adversely impact our business, results of operations, cash flow, and financial condition. Our products are often critical to the operations of our customers’ businesses and provide benefits that may be difficult to quantify. If our products fail to function as required—which, as described in more detail in other risk factors, could be due to software bugs, cloud hosting service failures, security breaches, faulty implementations, risks associated with our use of generative and agentic artificial intelligence, or other reasons—we may be subject to claims for substantial damages. Courts may not enforce provisions in our contracts that would limit our liability or otherwise protect us from liability for damages. Defending a lawsuit, regardless of its merit, could be costly and divert management’s time and attention. Although we maintain general liability insurance and error and omissions coverage, these coverages may not continue to be available on reasonable terms or in sufficient amounts to cover claims against us. In addition, our insurer may disclaim coverage as to any future claim. If claims exceeding the available insurance coverage are successfully asserted against us, or our insurer imposes premium increases or large deductibles or co-insurance requirements on us, then our business, results of operations, cash flow, and financial condition could be adversely affected.

Previous wording

Our use of generative artificial intelligence (“AI”) tools may expose us to operational, compliance or other risks, which could adversely impact our business, results of operations, cash flow and financial condition, and subject us to legal liability. We use generative AI tools in our business for external purposes (e.g., as additional features to our software products) and for internal purposes (e.g., to support our operations and improve the day-to-day performance of our employees), and these tools are mostly developed and marketed by third-party vendors.

Current wording

Our use of generative and agentic artificial intelligence (“AI”) tools may expose us to operational, compliance or other risks, which could adversely impact our business, results of operations, cash flow and financial condition, and subject us to legal liability. We use generative and agentic AI tools in our business for external purposes (e.g., as additional features to our software products) and for internal purposes (e.g., to support our operations and improve the day-to-day performance of our employees), and these tools are mostly developed and marketed by third-party vendors. The use of generative and agentic AI within our business inherently carries a broad range of risks typical to emerging technologies, and requires an investment of resources in the development and integration of the technology. These investments may be costly and could impact our operating results as we continue to incorporate generative and agentic AI into our products and services.

Previous wording

However, because the use of generative AI tools in business environments is a relatively novel development, the extent of benefits, risks, and liabilities attached to it are still unknown. We have identified the following main risks related to our use of AI tools:

Current wording

However, because the use of generative and agentic AI tools in business environments is a relatively novel development, the extent of benefits, risks, and liabilities attached to it are still unknown. We have identified the following main risks related to our use of AI tools:

Previous wording

Protection of our proprietary rights. Our developers may use, in limited instances, generative AI tools to support their computer code writing activities for our proprietary software products. According to recent decisions of governmental entities and courts (such as the U.S. Copyright Office and U.S. Court of Appeals for the Federal Circuit), U.S. copyright is limited to protecting works created by human authors. Many other jurisdictions around the world follow the same approach.

Current wording

Protection of our proprietary rights. Our developers may use, in limited instances, generative and agentic AI tools to support their computer code writing activities for our proprietary software products. According to recent decisions of governmental entities and courts (such as the U.S. Copyright Office and U.S. Court of Appeals for the Federal Circuit), U.S. copyright is limited to protecting works created by human authors. Many other jurisdictions around the world follow the same approach. We may therefore face challenges in obtaining U.S. copyright or other intellectual property rights worldwide on certain parts of our products that were developed using generative and agentic AI tools (for further information regarding this risk, see the risk factor entitled “Our failure to adequately protect our proprietary rights could adversely impact our business, results of operations, cash flow, and financial condition”).

Previous wording

AI adoption-related risk. As we include generative AI features in our software products, some of our customers, especially those in highly regulated industries, may be reluctant or unwilling to use generative AI products. Accordingly, their reluctance to do so could reduce or delay customer adoption, and this may adversely affect our business, results of operations, and financial condition.

Current wording

AI adoption-related risk. As we include generative and agentic AI features in our software products, some of our customers, especially those in highly regulated industries, may be reluctant or unwilling to use generative and agentic AI products. Accordingly, their reluctance to do so could reduce or delay customer adoption, and this may adversely affect our business, results of operations, and financial condition.

Previous wording

Operational risks. Our use of third-party generative AI tools exposes us to greater risks related to the quality of our products (for further information regarding this risk, see the risk factor entitled “Our ability to sell our cloud solutions is highly dependent on the quality of our services offerings, and our failure to offer high quality services could adversely impact our business, results of operations, cash flow, and financial condition”). For example:

Current wording

Operational risks. Our use of third-party generative and agentic AI tools exposes us to greater risks related to the quality of our products (for further information regarding this risk, see the risk factor entitled “Our ability to sell our cloud solutions is highly dependent on the quality of our services offerings, and our failure to offer high quality services could adversely impact our business, results of operations, cash flow, and financial condition”). For example:

Previous wording

Generative AI features embedded in our software products may create incomplete or inaccurate outputs and this could result in customer dissatisfaction or potential claims related to product performance (for further information regarding this risk, see the risk factor entitled “Our software may contain undetected errors or “bugs” causing harm to our reputation, which could adversely impact our business, results of operations, cash flow, and financial condition”);

Current wording

Generative and agentic AI features embedded in our software products may create incomplete, inaccurate, unwanted or offensive outputs and may cause our software products not to operate as expected, and this could result in customer dissatisfaction or potential claims related to product performance (for further information regarding this risk, see the risk factor entitled “Our software may contain undetected errors or “bugs” causing harm to our reputation, which could adversely impact our business, results of operations, cash flow, and financial condition”);

Previous wording

Our use of third-party generative AI tools to power features of our software products may impair our ability to correct defects or cure unavailability in a timely manner because we have no control over our third-party vendors’ operations and infrastructure (for further information regarding this risk, see the risk factor entitled “We incorporate third-party software in our solutions, the failure or unavailability of which could adversely affect our ability to sell, support, and service our products”).

Current wording

Our use of third-party generative and agentic AI tools to power features of our software products may impair our ability to correct defects or cure unavailability in a timely manner because we have no control over our third-party vendors’ operations and infrastructure (for further information regarding this risk, see the risk factor entitled “We incorporate third-party software in our solutions, the failure or unavailability of which could adversely affect our ability to sell, support, and service our products”).

Previous wording

Cybersecurity and Third-Party Rights. Generally, because we mainly use generative AI tools that are developed by third-party vendors, we have lesser control over the further use or distribution of any content we may share or create via these third-party tools. In addition, the vendors of these tools may fail to comply with their contractual obligations to us, or not provide warranties, indemnities or other remedies, regarding the confidentiality or security of this content. Further, our use of generative AI tools to generate computer code may present additional security risks because the generated source code may contain security vulnerabilities. As a result, our sensitive information or that of our employees or customers could be leaked or disclosed, or other IT security incidents may arise (for further information regarding this risk, see the risk factor entitled “If our data protection or other security measures are compromised and, as a result, our data, our customers’ data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable…”). In addition, we have little insight into, and no control over, the content used or provided by third-party vendors to train their generative AI tools. For example, there is ongoing litigation over whether the use of copyrighted materials to train AI models is lawful, however the impact of its outcome on our ability to use certain generative AI tools is unknown.

Current wording

Cybersecurity and Third-Party Rights. Generally, because we mainly use generative and agentic AI tools that are developed by third-party vendors, we have lesser control over the further use or distribution of any content we may share or create via these third-party tools. In addition, the vendors of these tools may fail to comply with their contractual obligations to us, or not provide warranties, indemnities or other remedies, regarding the confidentiality or security of this content. Further, our use of generative and agentic AI tools to generate computer code may present additional security risks because the generated source code may contain security vulnerabilities. As a result, our sensitive information or that of our employees or customers could be leaked or disclosed, or other IT security incidents may arise (for further information regarding this risk, see the risk factor entitled “If our data protection or other security measures are compromised and, as a result, our data, our customers’ data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable…”). In addition, we have little insight into, and no control over, the content used or provided by third-party vendors to train their generative and agentic AI tools. For example, there is ongoing litigation over whether the use of copyrighted materials to train AI models is lawful, however the impact of its outcome on our ability to use certain generative and agentic AI tools is unknown. Further, the AI generative and agentic tools used by third party vendors could also generate content that infringes upon or misappropriates other third-party intellectual property rights. This risk is intensified by the current trend of entities seeking patents and other intellectual property protections in AI to gain a competitive edge.

Previous wording

Regulatory risks. Several jurisdictions around the globe, including in Europe and the U.S. (at state and federal level), have proposed or already enacted legislative frameworks governing the development, use and marketing of AI tools, including the European Union’s AI Act and the Colorado AI Act. We expect other jurisdictions will adopt similar regulations. Additionally, certain privacy laws may apply to our use of generative AI tools (such as a data subject’s right to have a precise view of how their personal data are processed). These legal requirements may make it harder for us to conduct our business using AI (especially third-party AI tools), lead to regulatory fines or penalties, require us to change our business practices, or prevent or limit our use of AI tools, which in turn, may lead our business to be less efficient, or us to be at a competitive disadvantage (for further information regarding this risk, see the risk factor entitled “Our technology must be advanced if we are to remain competitive”).

Current wording

Regulatory risks. Several jurisdictions around the globe, including in Europe and the U.S. (at state and federal level), have proposed or already enacted legislative frameworks governing the development, use and marketing of AI tools, including the European Union’s AI Act and the Colorado AI Act. We expect other jurisdictions will adopt similar regulations. Additionally, certain privacy laws may apply to our use of generative and agentic AI tools (such as a data subject’s right to have a precise view of how their personal data are processed). These legal requirements may make it harder for us to conduct our business using AI (especially third-party AI tools), lead to regulatory fines or penalties, require us to change our business practices, or prevent or limit our use of AI tools, which in turn, may lead our business to be less efficient, or us to be at a competitive disadvantage (for further information regarding this risk, see the risk factor entitled “Our technology must be advanced if we are to remain competitive”).

Previous wording

Supply chain execution and planning vendors, including Blue Yonder/Panasonic (formerly JDA), Korber (formerly HighJump), SAS Institute, the Sterling Commerce division of IBM, Relex, and others;

Current wording

Supply chain execution and planning vendors, including Blue Yonder/Panasonic (formerly JDA), E2Open, Korber (formerly HighJump), SAS Institute, the Sterling Commerce division of IBM, Relex, and others;

Previous wording

POS vendors, including Aptos, Oracle, and others; and

Current wording

POS vendors, including Aptos, Oracle, Jumpmind, Salesforce and others; and

Previous wording

Adverse litigation results could affect our business. From time to time, we may be involved in litigation relating to claims arising in the ordinary course of business, and occasionally legal proceeding not in the ordinary course. Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from running our core business. The results of any litigation also cannot be predicted with certainty. An adverse decision could result in monetary damages or injunctive relief that could affect our business, operating results or financial condition. Additional information regarding legal matters in which we are involved, if any, can be found in Note 5 to our Consolidated Financial Statements.

Current wording

Adverse litigation results could affect our business. From time to time, we may be involved in litigation relating to claims arising in the ordinary course of business, and occasionally legal proceeding not in the ordinary course. Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from running our core business. The results of any litigation also cannot be predicted with certainty. In February and April 2025, two putative securities class action lawsuits were filed against us. Then, on September 22, 2025, a shareholder derivative lawsuit was filed against us. Additional information regarding these legal matters can be found in Note 5 to our Consolidated Financial Statements. We are unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, these proceedings.

Previous wording

The effects of a pandemic, such as the COVID-19 pandemic, or other major public health crisis could materially adversely affect our business, results of operations and financial condition. In March 2020, the World Health Organization declared the outbreak of the COVID-19 pandemic. The disease spread throughout the world, prompting governmental and private authorities to implement measures to contain the pandemic, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. A future pandemic or other public health crisis, and related remedial measures, could adversely impact our results from operations, financial condition, liquidity and cash flows in numerous ways, including but not limited to:

Current wording

The effects of a disease outbreak, pandemic, or other major public health crisis could materially adversely affect our business, results of operations and financial condition. For example, in March 2020, the World Health Organization declared the outbreak of the COVID-19 pandemic. The disease spread throughout the world, prompting governmental and private authorities to implement measures to contain the pandemic, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. A future disease outbreak, pandemic, or other public health crisis, and related remedial measures, could adversely impact our results from operations, financial condition, liquidity and cash flows in numerous ways, including but not limited to:

Previous wording

A decrease in revenues could also negatively affect our liquidity, as we primarily rely on cash generated from operating activities for our liquidity needs. Compounding this issue, a pandemic or other public health crisis may make outside capital less available or more expensive.

Current wording

A decrease in revenues could also negatively affect our liquidity, as we primarily rely on cash generated from operating activities for our liquidity needs. Compounding this issue, a disease outbreak, pandemic, or other public health crisis may make outside capital less available or more expensive.

Previous wording

Fires or other catastrophic events at our principal facilities could disrupt our business. Fires, natural disasters, weather events, political unrest, disruptions in critical infrastructure or other catastrophic events, particularly those affecting our Atlanta headquarters or India research and development center, may cause damage or disruption to our operations, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, weather events, political unrest, fire, power shortages and other disruptions of critical infrastructure, health crises or pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers.

Current wording

Fires or other catastrophic events at our principal facilities could disrupt our business. Fires, natural disasters, weather events, political or civil unrest, terrorist acts, disruptions in critical infrastructure or other catastrophic events, particularly those affecting our Atlanta headquarters or India research and development center, may cause damage or disruption to our operations, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, weather events, political unrest, fire, power shortages and other disruptions of critical infrastructure, health crises or pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers.