Financial Analysis

7. Contingencies From time to time, we are involved in litigation relating to claims arising out of the ordinary course of business, and occasionally legal proceedings not in the ordinary course. Many of our software products and services are critical to our customers business operations. Failures could result in claims against us for substantial damages, regardless of our level of responsibility for those failures. We attempt to limit contractually our liability for damages arising from product or service failures or our negligent acts or omissions, but there can be no absolute assurance that those limitations will be enforceable. Although litigation and other legal proceeding outcomes are difficult to predict, we do not believe we are a party to any legal proceeding the result of which is likely to have a material adverse impact on our business, financial position, results of operations, or cash flows. We expense legal costs associated with loss contingencies as we incur them. We record insurance recoveries when received. Among other proceedings, we are currently party to the lawsuits described below. Securities Litigation On February 25, 2025, an alleged Company shareholder filed a putative class action lawsuit, Prime v. Manhattan Associates, Inc., et al., No. 1:25-cv-00992-TRJ (N.D. Ga.), in the United States District Court for the Northern District of Georgia against the Company and certain of our current and former officers (the Prime Action). The complaint in the Prime …

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4. Equity-Based Compensation We granted 29,383 and 8,984 restricted stock units (RSUs) during the three months ended June 30, 2026 and 2025 , respectively, and granted 837,553 and 495,334 RSUs during the six months ended June 30, 2026 and 2025, respectively. Equity-based compensation expense related to RSUs was $ 29.4 million and $ 24.3 million during the three months ended June 30, 2026 and 2025, respectively, and $ 55.9 million and $ 53.1 million during the six months ended June 30, 2026 and 2025, respectively. We present below a summary of changes during the six months ended June 30, 2026 in our unvested restricted stock units: Number of shares/units Outstanding at December 31, 2025 1,396,941 Granted 837,553 Vested ( 570,387 ) Forfeited ( 82,761 ) Outstanding at June 30, 2026 1,581,346

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3. Fair Value Measurement We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1Quoted prices in active markets for identical instruments. Level 2Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Our investments typically have maturities of 90 days or less from the date of purchase and are classified as cash equivalents. At June 30, 2026, our cash and cash equivalents were $ 130.0 million and $ 56.1 million, respectively. Cash equivalents consist of highly liquid money market funds. For money market funds, we use quoted prices from active markets that are classified at Level 1, the highest level of observable input in the disclosure hierarchy framework. We had no investments classified at Level 2 or Level 3 at June 30, 2026 . …

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5. Income Taxes Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to the Foreign Derived Intangible Income deduction, state taxes, employee compensation limitation, the tax effects of stock-based compensation, and the U.S. research and development tax credit. Our effective tax rate was 25.1 % and 23.8 % for the three months ended June 30, 2026 and 2025, respectively, and 27.0 % and 21.3 % for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three and six months ended June 30, 2026 is due to a decrease of stock-based compensation benefits. We apply the provisions for income taxes related to, among other things, accounting for uncertain tax positions and disclosure requirements in accordance with Accounting Standards Classification (ASC) 740, Income Taxes. For the three months ended June 30, 2026, there were no material changes to our uncertain tax positions. We conduct business globally and, as a result, file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, Manhattan is subject to examination by taxing authorities throughout the world. We are no longer subject to U.S. federal, substantially all state and local income tax examinations and substantially all non-U.S. income tax examinations for years before 2015. On July 4, 2025, the One Big Beautif …

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"Recent Accounting Pronouncements In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (""ASU 2024-03""), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (""ASU 2025-01""). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. We expect to adopt the updated accounting guidance in our Annual Report on Form 10-K for the year ended December 31, 2027, and for interim period reporting beginning in 2028, as required in ASU 2024-03 and further clarified by ASU 2025-01. The Company is currently evaluating the impact that the adoption of these standards will have on its disclosures. In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 amends certain aspects of the accounting for and disclosure for internal-use software costs, which removes references to software development project stages and considers differe …

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9. Restructuring Expense On June 1, 2026, the Company reduced its global headcount by approximately 6 %, leveraging increased operational efficiencies and allowing the Company to focus investments on key strategic priorities. The Company recorded restructuring expense of approximately $ 8.3 million pretax ($ 6.2 million after-tax or $ 0.10 per fully diluted share) in t he six months ended June 30, 2026. The expense primarily consists of employee severance and outplacement services. The expense is classified in Restructuring expense in the Companys Consolidated Statements of Income for the six months ended June 30, 2026. The following table summarizes the activity in the restructuring accrual for the six months ended June 30, 2026 (in thousands): Americas EMEA APAC Consolidated (in thousands) Restructuring expense 5,637 2,346 280 $ 8,263 Cash payments ( 3,315 ) ( 689 ) ( 222 ) ( 4,226 ) Restructuring accrual balance at June 30, 2026 $ 2,322 $ 1,657 $ 58 $ 4,037 The balance at June 30, 2026 is included in Accrued compensation and benefits in the Companys Condensed Consolidated Balance Sheets. The remaining balance is expected to be paid during the remainder of 2026. …

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2. Revenue Recognition We recognize revenue when we transfer control of the promised products or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. We derive our revenue from cloud subscriptions, software licenses, customer support services and software enhancements (maintenance) for software licenses, professional services, and sales of hardware. We exclude sales and usage-based taxes from revenue. Nature of Products and Services Cloud subscriptions include software as a service (SaaS) and hosting arrangements which provide customers with the right to use our software within a cloud environment that we provide and manage where the customer does not have the right to take possession of the software without significant penalty. SaaS and hosting revenues are recognized over the contract period as the service is provided. Our services revenue consists of fees generated from implementation, training and application managed services, including reimbursements of out-of-pocket expenses in connection with our implementation services. Implementation services include system planning, design, configuration, testing, and other software implementation support, and are typically optional and distinct from our software. Following implementation, customers may purchase application managed services to support and maintain our software. Fees for our services are separately priced and are generally bill …

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8. Reportable Segments We manage our business by geographic segment and have three geographic reportable segments: the Americas (North, Latin and South America); Europe, the Middle East, and Africa (EMEA); and Asia Pacific (APAC). All segments derive revenue from the sale and implementation of our supply chain commerce solutions. We primarily operate in the Americas operating segment because most of the Company's service offerings operate on the Manhattan platform and are deployed and sold in a nearly identical manner. The individual products sold by the segments are similar in nature and are all designed to help companies manage the effectiveness and efficiency of their supply chain commerce. We use the same accounting policies for each reportable segment. The chief operating decision maker ( Chief Executive Officer ) reviews the variances in each reportable segments operating income compared to prior periods and to budget on a monthly basis to evaluate performance and allocate resources (including employees, financial or capital). The Americas segment charges royalty fees to the other segments based on cloud subscriptions and software licenses sold by those reportable segments. The royalties, which totaled approximately $ 7.4 million and $ 6.0 million for both the three months ended June 30, 2026 and 2025, respectively, and $ 14.4 million and $ 12.9 million for the six months ended June 30, 2026 and 2025, respectively, are included in costs of revenue for each segment with …

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