MANHATTAN ASSOCIATES INC

Previous wording

The following discussion should be read in conjunction with the condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025, 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, 2025. 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 nine months ended September 30, 2026 and 2025, 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, 2025. 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 and six months ended June 30, 2026, we generated $297.8 million and $580.0 million in total revenue. The revenue mix for the three and six months ended June 30, 2026 was: cloud subscriptions 42%; software license 1%; maintenance 10%; services 45%; and hardware 2%.

Current wording

In the three and nine months ended September 30, 2026, we generated $306.2 million and $886.2 million in total revenue. The revenue mix for the three months ended September 30, 2026 was: cloud subscriptions 44%; software license 1%; maintenance 10%; services 44%; and hardware 1%. The revenue mix for the nine months ended September 30, 2026 was: cloud subscriptions 43%; software license 1%; maintenance 10%; services 44%; 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 $102.1 million and $198.9 million for the three and six months ended June 30, 2026, which represents approximately 34% of our total revenue for both the three and six months ended June 30, 2026. International revenue includes all revenue derived from sales to customers outside the United States. At June 30, 2026, we employed approximately 4,100 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 $106.4 million and $305.3 million for the three and nine months ended September 30, 2026, which represents approximately 35% and 34% of our total revenue for both the three and nine months ended September 30, 2026, respectively. International revenue includes all revenue derived from sales to customers outside the United States. At September 30, 2026, we employed approximately 3,980 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

While we remain cautious about the global economy, including with respect to macroeconomic uncertainty and global instability resulting from the military conflict involving the United States, Israel, and Iran and the ongoing war between Russia and Ukraine, our results for the first six months of 2026 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 synergistic alignment with current market demand. We believe this alignment is contributing to our strong financial results, higher demand, and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

Current wording

While we remain cautious about the global economy, including with respect to macroeconomic uncertainty and global instability resulting from the military conflict involving the United States, Israel, and Iran and the ongoing war between Russia and Ukraine, our results for the first nine months of 2026 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 synergistic alignment with current market demand. We believe this alignment is contributing to our strong financial results, higher demand, and strong win rates for our solutions for the period. We remain committed to investing in our business to drive customer success and expand our total addressable market, which we believe will position us well to achieve long-term sustainable growth and earnings.

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. Demand for our Manhattan Active® cloud solutions continues to grow nicely, with cloud revenue up 26% over the same quarter in the prior year. Cloud revenue represents about 98% of our total software revenue.

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. Demand for our Manhattan Active® cloud solutions continues to grow nicely, with cloud revenue up 28% over the same quarter in the prior year. In the three months ended September 30, 2026, cloud revenue represents about 97% of our total software revenue.

Previous 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, 2026, approximately 66% of our total revenue was generated in the United States, 19% 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 Europe; consequently, the health of the U.S. and the 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 nine months ended September 30, 2026, approximately 65% and 66% of our total revenue was generated in the United States, respectively; 19% 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 Europe; consequently, the health of the U.S. and the 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 $243.8 million in the six months ended June 30, 2026 from $194.7 million for the same period in the prior year, representing a 25% 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 $378.3 million in the nine months ended September 30, 2026 from $299.6 million for the same period in the prior year, representing a 26% 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 99% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and are not included in RPO. RPO provides insight into our contracted backlog of future business. As of June 30, 2026, our RPO was approximately $2.5 billion, an increase of 23% over June 30, 2025 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 99% of our RPO represent cloud native subscriptions with a non-cancelable term greater than one year. Maintenance contracts typically are for one year and are not included in RPO. RPO provides insight into our contracted backlog of future business. As of September 30, 2026, our RPO was approximately $2.6 billion, an increase of 25% over September 30, 2025 on strong demand.

Previous wording

Cloud Subscriptions and Software License Revenue. In the three months ended June 30, 2026, cloud subscriptions revenue totaled $126.7 million or 42% of total revenues. The Americas, EMEA, and APAC segments recognized $97.6 million, $24.3 million, and $4.8 million in cloud subscriptions revenue, respectively, in the three months ended June 30, 2026. In the six months ended June 30, 2026, cloud subscriptions revenue totaled $243.8 million or 42% of total revenues. The Americas, EMEA, and APAC segments recognized $187.1 million, $47.3 million, and $9.4 million in cloud subscriptions revenue, respectively, in the six months ended June 30, 2026. 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. During the three and six months ended June 30, 2026, approximately 25% and 40%, respectively, of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed was with new customers, and 75% and 60%, 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.

Current wording

Cloud Subscriptions and Software License Revenue. In the three months ended September 30, 2026, cloud subscriptions revenue totaled $134.5 million or 44% of total revenues. The Americas, EMEA, and APAC segments recognized $102.8 million, $26.5 million, and $5.2 million in cloud subscriptions revenue, respectively, in the three months ended September 30, 2026. In the nine months ended September 30, 2026, cloud subscriptions revenue totaled $378.3 million or 43% of total revenues. The Americas, EMEA, and APAC segments recognized $289.9 million, $73.8 million, and $14.6 million in cloud subscriptions revenue, respectively, in the nine months ended September 30, 2026. 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. During the three and nine months ended September 30, 2026, approximately 35% and 40%, respectively, of the total value of new non-cancelable cloud subscriptions (excluding renewals) signed was with new customers, and 65% and 60%, 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

In the three months ended June 30, 2026, license revenue totaled $2.0 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $1.2 million, $0.6 million, and $0.2 million in license revenue, respectively, in the three months ended June 30, 2026. In the six months ended June 30, 2026, license revenue totaled $4.2 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $3.0 million, $0.8 million, and $0.4 million in license revenue, respectively, in the six months ended June 30, 2026.

Current wording

In the three months ended September 30, 2026, license revenue totaled $3.6 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $3.0 million, $0.5 million, and $0.1 million in license revenue, respectively, in the three months ended September 30, 2026. In the nine months ended September 30, 2026, license revenue totaled $7.8 million, or 1% of total revenue. The Americas, EMEA, and APAC segments totaled $6.0 million, $1.3 million, and $0.5 million in license revenue, respectively, in the nine months ended September 30, 2026.

Previous wording

Maintenance Revenue. Our maintenance revenue for the three months ended June 30, 2026 totaled $30.5 million, or 10% of total revenue. The Americas, EMEA and APAC segments recognized $23.8 million, $4.7 million, and $2.0 million, respectively, in maintenance revenue in the three months ended June 30, 2026. In the six months ended June 30, 2026, maintenance revenue totaled $61.1 million, or 10% of total revenue. The Americas, EMEA, and APAC segments totaled $47.6 million, $9.3 million, and $4.2 million in maintenance revenue, respectively, in the six months ended June 30, 2026. 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 September 30, 2026 totaled $29.2 million, or 10% of total revenue. The Americas, EMEA and APAC segments recognized $22.7 million, $4.4 million, and $2.1 million, respectively, in maintenance revenue in the three months ended September 30, 2026. In the nine months ended September 30, 2026, maintenance revenue totaled $90.3 million, or 10% of total revenue. The Americas, EMEA, and APAC segments totaled $70.3 million, $13.7 million, and $6.3 million in maintenance revenue, respectively, in the nine months ended September 30, 2026. 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 June 30, 2026, our services revenue totaled $133.1 million, or 45% of total revenue. The Americas, EMEA, and APAC segments recognized $99.1 million, $25.7 million, and $8.3 million, respectively, in services revenue in the three months ended June 30, 2026. In the six months ended June 30, 2026, services revenue totaled $258.8 million, or 45% of total revenue. The Americas, EMEA, and APAC segments totaled $192.4 million, $51.1 million, and $15.3 million in services revenue, respectively, in the six months ended June 30, 2026.

Current wording

Services Revenue. In the three months ended September 30, 2026, our services revenue totaled $134.4 million, or 44% of total revenue. The Americas, EMEA, and APAC segments recognized $100.4 million, $25.5 million, and $8.5 million, respectively, in services revenue in the three months ended September 30, 2026. In the nine months ended September 30, 2026, services revenue totaled $393.2 million, or 44% of total revenue. The Americas, EMEA, and APAC segments totaled $292.8 million, $76.6 million, and $23.8 million in services revenue, respectively, in the nine months ended September 30, 2026.

Previous wording

Hardware Revenue. Our hardware revenue, which we recognize net of related costs, totaled $5.6 million in the three months ended June 30, 2026 representing 2% of total revenue. For the six months ended June 30, 2026, hardware revenue totaled $12.1 million, or 2% of total revenue. As a convenience for our cloud and perpetual license 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 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 $4.5 million in the three months ended September 30, 2026 representing 1% of total revenue. For the nine months ended September 30, 2026, hardware revenue totaled $16.6 million, or 2% of total revenue. As a convenience for our cloud and perpetual license 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 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 POS. Our R&D expenses were $34.8 million and $72.1 million for the three and six months ended June 30, 2026, respectively.

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 POS. Our R&D expenses were $35.5 million and $107.7 million for the three and nine months ended September 30, 2026, respectively.

Previous wording

For the three and six months ended June 30, 2026, we generated cash flow from operating activities of $90.7 million and $174.7 million. Our cash and cash equivalents at June 30, 2026 totaled $186.1 million, with no debt. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D as well as sales and marketing 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, 2026, we repurchased approximately $275.0 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In March 2026, our Board of Directors approved an increase to the Company’s share repurchase authority from $100 million to $500 million. As of the end of the quarter, approximately $225.0 million remained under the existing March 2026 repurchase authority.

Current wording

For the three and nine months ended September 30, 2026, we generated cash flow from operating activities of $68.6 million and $243.3 million. Our cash and cash equivalents at September 30, 2026 totaled $199.4 million, with no debt. We currently have no credit facilities. Our primary uses of cash have been for funding investments in R&D as well as sales and marketing in our Unified Omnichannel Commerce and Digital Supply Chain solutions to drive revenue and earnings growth. In addition, during the nine months ended September 30, 2026, we repurchased approximately $325.0 million of Manhattan Associates’ outstanding common stock under the share repurchase program approved by our Board of Directors. In March 2026, our Board of Directors approved an increase to the Company’s share repurchase authority from $100 million to $500 million. As of the end of the quarter, approximately $175.0 million remained under the existing March 2026 repurchase authority.

Previous wording

In the following table, we present a summary of our consolidated results for the three and six months ended June 30, 2026 and 2025.

Current wording

In the following table, we present a summary of our consolidated results for the three and nine months ended September 30, 2026 and 2025.

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 and six months ended June 30, 2026 and 2025, 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, including those related to India operations, stock compensation, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. During the three and nine months ended September 30, 2026 and 2025, 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 second quarter of 2026 compared to $0.93 for the second quarter of 2025;

Current wording

Diluted earnings per share: $1.04 for the third quarter of 2026 compared to $0.96 for the third quarter of 2025;

Previous wording

Days sales outstanding: 67 days at June 30, 2026, compared to 72 days at March 31, 2026;

Current wording

Days sales outstanding: 81 days at September 30, 2026, compared to 67 days at June 30, 2026;

Previous wording

Cash: $186.1 million at June 30, 2026, compared to $226.1 million at March 31, 2026; and

Current wording

Cash: $199.4 million at September 30, 2026, compared to $186.1 million at June 30, 2026; and

Previous wording

Share repurchases: In the three months ended June 30, 2026, we reduced our shares of common stock outstanding through the repurchase of approximately 0.9 million shares of our common stock, under the share repurchase program authorized by our Board of Directors for a total investment of $125.0 million. In March 2026, our Board of Directors approved an increase to the Company’s share repurchase authority from $100 million to $500 million. As of the end of the quarter, approximately $225.0 million remained under the existing March 2026 repurchase authority.

Current wording

Share repurchases: In the three months ended September 30, 2026, we reduced our shares of common stock outstanding through the repurchase of approximately 0.2 million shares of our common stock, under the share repurchase program authorized by our Board of Directors for a total investment of $50.0 million. In March 2026, our Board of Directors approved an increase to the Company’s share repurchase authority from $100 million to $500 million. As of the end of the quarter, approximately $175.0 million remained under the existing March 2026 repurchase authority.

Previous wording

Below we discuss our consolidated results of operations for the second quarters of 2026 and 2025.

Current wording

Below we discuss our consolidated results of operations for the third quarters of 2026 and 2025.

Previous wording

Cloud Subscriptions Revenue. In the second quarter of 2026, cloud subscriptions revenue increased $26.3 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 $20.2 million, $4.7 million and $1.4 million in the second quarter of 2026, respectively.

Current wording

Cloud Subscriptions Revenue. In the third quarter of 2026, cloud subscriptions revenue increased $29.6 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 $23.4 million, $5.2 million and $1.0 million in the third quarter of 2026, respectively.

Previous wording

Software License Revenue. Software license revenue increased $0.4 million in the second quarter of 2026 compared to the same quarter in the prior year. The perpetual license sales percentage mix across our product suite in the second quarter ended June 30, 2026 was over 70% warehouse management solutions.

Current wording

Software License Revenue. Software license revenue increased $2.3 million in the third quarter of 2026 compared to the same quarter in the prior year. The perpetual license sales percentage mix across our product suite in the third quarter ended September 30, 2026 was approximately 95% warehouse management solutions.

Previous wording

Maintenance Revenue. Maintenance revenue decreased $4.5 million in the second quarter of 2026 compared to the same quarter in the prior year. Maintenance relates to our perpetual software licenses. The decrease in maintenance revenue for the Americas segment is primarily driven by customer demand for cloud-based solutions over perpetual software licenses. Maintenance revenue for the Americas, EMEA, and APAC segments decreased by $4.0 million, $0.4 million, and $0.1 million, respectively.

Current wording

Maintenance Revenue. Maintenance revenue decreased $1.3 million in the third quarter of 2026 compared to the same quarter in the prior year. Maintenance relates to our perpetual software licenses. The decrease in maintenance revenue is primarily driven by customer demand for cloud-based solutions over perpetual software licenses. Maintenance revenue for the Americas, EMEA, and APAC segment decreased by $0.9 million, $0.2 million, and $0.2 million, respectively.

Previous wording

Services Revenue. Services revenue increased $4.1 million in the second quarter of 2026 compared to the same quarter in the prior year. Services revenue increased $4.9 million and $0.8 million for the Americas and APAC segments, respectively, partially offset by a decrease of $1.5 million for the EMEA segment compared to the same quarter in the prior year. The increase in services revenue for the Americas segment is primarily driven by demand for cloud-based solutions. The percentage of professional services revenue that relates to cloud subscriptions in the second quarter of 2026 and 2025 was approximately 81% and 76%, respectively. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Current wording

Services Revenue. Services revenue increased $1.4 million in the third quarter of 2026 compared to the same quarter in the prior year. Services revenue increased $3.6 million for the Americas segment, partially offset by a decrease of $2.2 million for the EMEA segment compared to the same quarter in the prior year. Services revenue remained relatively flat for the APAC segment. The increase in services revenue for the Americas segment is primarily driven by demand for cloud-based solutions. The percentage of professional services revenue that relates to cloud subscriptions in the third quarter of 2026 and 2025 was approximately 83% and 77%, respectively. The remainder of our professional services revenue relates to implementations, ongoing support, and upgrades of licensed software.

Previous wording

Hardware Revenue. Hardware revenue, net decreased $0.9 million in the second quarter of 2026 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware are largely dependent upon customer-specific desires, which fluctuate.

Current wording

Hardware Revenue. Hardware revenue, net decreased $1.6 million in the third quarter of 2026 compared to the same quarter in the prior year. The majority of our hardware revenue is derived from our Americas segment. Sales of hardware are 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 $13.0 million increase in the quarter ended June 30, 2026 compared to the same quarter in the prior year was due to a $4.7 million increase in performance-based compensation expense, a $4.6 million increase in compensation and other personnel-related expenses, a $2.6 million increase in computer infrastructure cost, and a $1.1 million increase in travel costs.

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 $11.7 million increase in the quarter ended September 30, 2026 compared to the same quarter in the prior year was due to a $7.4 million increase in performance-based compensation expense, a $2.5 million increase in computer infrastructure cost, a $2.2 million increase in compensation and other personnel-related expenses, partially offset by a $0.4 million decrease in travel costs.

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 increased $0.3 million in the second quarter of 2026 compared to 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 increased $0.4 million in the third quarter of 2026 compared to 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, Demand Forecasting and Replenishment, Omnichannel, and POS. 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, 2026 remained relatively flat compared to the same quarter of 2025.

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, Demand Forecasting and Replenishment, Omnichannel, and POS. 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 September 30, 2026 decreased $0.8 million compared to the same quarter of 2025 primarily from a $2.3 million decrease in compensation and other personnel-related expenses and a $0.6 million decrease in computer infrastructure cost, partially offset by a $2.2 million increase in performance-based compensation expense.

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 $10.7 million in the quarter ended June 30, 2026 compared to the same quarter in the prior year as we have expanded our sales force and increased our marketing efforts to accelerate our revenue growth. The increase is primarily due to a $4.4 million increase in marketing and campaign program expenses, a $3.3 million increase in compensation and other personnel-related expenses, a $2.6 million increase in performance-based compensation expense, and a $0.3 million increase in travel expense.

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 $8.7 million in the quarter ended September 30, 2026 compared to the same quarter in the prior year as we have expanded our sales force and increased our marketing efforts to accelerate our revenue growth. The increase is primarily due to a $3.2 million increase in compensation and other personnel-related expenses, a $2.6 million increase in performance-based compensation expense, and a $2.6 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 $0.8 million in the current year quarter compared to the same quarter in the prior year primarily due to a $2.1 million increase in compensation and other personnel-related expenses, a $0.8 million increase in in professional fees, a $0.7 million increase in performance-based compensation expense, partially offset by a $3.0 million decrease in benefits expense for an unusual health insurance claim in the prior year period.

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 $5.2 million in the current year quarter compared to the same quarter in the prior year primarily due to a $2.7 million increase in compensation and other personnel-related expenses, a $1.0 million increase in professional fees, a $0.7 million increase in performance-based compensation expense, and a $0.7 million increase in internal-use software costs.

Previous wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for both the second quarter of 2026 and 2025 was $1.6 million.

Current wording

Depreciation and Amortization. Depreciation and amortization of intangibles and software expense for both the third quarter of 2026 and 2025 was $1.7 million.

Previous wording

Operating income in the second quarter of 2026 was $66.2 million compared to $73.8 million in the same quarter in the prior year. Operating margin was 22.2% for the second quarter of 2026 versus 27.1% for the same quarter in the prior year. Operating income and margin decreased primarily due to the restructuring expense as well as an increase in sales and marketing expenses.

Current wording

Operating income in the third quarter of 2026 was $81.0 million compared to $75.8 million in the same quarter in the prior year. Operating margin was 26.5% for the third quarter of 2026 versus 27.5% for the same quarter in the prior year. Operating income increased primarily due to increased cloud subscriptions revenue. Operating margin decreased primarily due the increase in sales and marketing expenses.

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 $0.3 million in the second quarter of 2026 compared to the same quarter in the prior year due to a $0.3 million increase in foreign currency gains. 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 $0.2 million in the second quarter of 2026, and losses of $0.1 million 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 $0.7 million in the third quarter of 2026 compared to the same quarter in the prior year primarily due to a $0.5 million decrease in foreign currency gains. The decrease 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 $1.1 million in the third quarter of 2026, and gains of $1.6 million in the same quarter in the prior year.

Previous wording

Income tax provision. Our effective income tax rate was 25.1% and 23.8% for the quarters ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended June 30, 2026 is due to a decrease of stock-based compensation benefits.

Current wording

Income tax provision. Our effective income tax rate was 26.0% and 25.2% for the quarters ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended September 30, 2026 is due to a decrease of stock-based compensation benefits.

Previous wording

Condensed Consolidated Financial Summary – First Six Months of 2026

Current wording

Condensed Consolidated Financial Summary – First Nine Months of 2026

Previous wording

Diluted earnings per share: $1.67 for the six months ended June 30, 2026 compared to $1.78 for the six months ended June 30, 2025.

Current wording

Diluted earnings per share: $2.72 for the nine months ended September 30, 2026 compared to $2.75 for the nine months ended September 30, 2025.

Previous wording

Cash: $186.1 million at June 30, 2026, compared to $328.7 million at December 31, 2025.

Current wording

Cash: $199.4 million at September 30, 2026, compared to $328.7 million at December 31, 2025.

Previous wording

Share repurchases: During the six months ended June 30, 2026, we reduced our shares of common stock outstanding by approximately 3.2% primarily through the repurchase of approximately 1.9 million shares of our common stock, under the share repurchase program authorized by our Board of Directors, for a total investment of $275.0 million.

Current wording

Share repurchases: During the nine months ended September 30, 2026, we reduced our shares of common stock outstanding by approximately 3.6% primarily through the repurchase of approximately 2.2 million shares of our common stock, under the share repurchase program authorized by our Board of Directors, for a total investment of $325.0 million.