MANH - Platform Talk; Self-Generating Code, Not Token Maxxing; AI Update

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MANH - Platform Talk; Self-Generating Code, Not Token Maxxing; AI Update

Truist Securities

Additional Perspective on Recently Released Manhattan Solution Design Studio. As a reminder the company highlighted this new

innovation, Solution Design Studio, at the recent Momentum customer conference. It is meant to help business or less technical-focused

users configure otherwise complex systems such as WMS via natural language instructions (e.g. blueprints) on how they want their

configurations to be uniquely set up. Instead of months of coding and setup work, the company suggested these configurations now can

be completed in minutes and rapidly accelerate overall time to value and implementation cycle times.

Incrementally we learned Manhattan Associates is already using it within its own services organization for implementations. Also, we

believe it will be made available to customers who subscribe to the various AI subscription packs they are selling to customers. Given

the potential strong value prop of this capability, we believe this could be an accelerant or strong incentive for customers to subscribe

to Manhattan’s AI capabilities. Recall Active Agent pilots are expected to convert to subscription revenue by 2H26. We have no material

impact modeled; however, it could start to become an interesting growth/upside driver moving into 2027, in our opinion.

Valuation. We are reiterating our $240 PT. Our PT is based on a long-term DCF, which assumes a 10-year revenue CAGR of 11%,

terminal growth of 3%, terminal uFCF margin of 42%, 19x terminal FCF multiple and WACC of ~10%. We believe Manhattan remains

a top quartile performer on SaaS revenue growth, operating margin, and FCF performance, and we expect top quartile performance to

continue despite ongoing macro volatility.