Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today
reported its fourth quarter and fiscal year 2023 results for the
year ended September 30, 2023.
Results Summary
(1)
(in millions, except per share data)
| |
|
Three Months Ended |
|
|
Twelve Months Ended |
| |
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
| GAAP
revenue |
|
$80.8 |
|
|
$58.1 |
|
|
$294.5 |
|
|
$327.9 |
| GAAP
gross margin |
|
71.5% |
|
|
58.1% |
|
|
67.7% |
|
|
70.4% |
| Non-GAAP
gross margin |
|
72.9% |
|
|
58.9% |
|
|
69.1% |
|
|
72.4% |
| GAAP
operating margin |
|
4.8% |
|
|
-394.4% |
|
|
-9.2% |
|
|
-56.2% |
| Non-GAAP
operating margin |
|
17.8% |
|
|
-9.8% |
|
|
10.8% |
|
|
23.5% |
| GAAP net
loss (2) (3) |
|
$(11.6) |
|
|
$(230.1) |
|
|
$(56.3) |
|
|
$(310.8) |
| GAAP net
loss margin |
|
-14.3% |
|
|
-395.8% |
|
|
-19.1% |
|
|
-94.8% |
| Non-GAAP
net income (loss) |
|
$3.8 |
|
|
$(5.5) |
|
|
$14.6 |
|
|
$50.4 |
| Adjusted
EBITDA |
|
$16.6 |
|
|
$(3.1) |
|
|
$41.5 |
|
|
$86.4 |
| Adjusted
EBITDA margin |
|
20.5% |
|
|
-5.3% |
|
|
14.1% |
|
|
26.3% |
| GAAP net
(loss) income per share - diluted |
|
$(0.29) |
|
|
$(5.84) |
|
|
$(1.40) |
|
|
$(7.93) |
| Non-GAAP
net income (loss) per share - diluted |
|
$0.09 |
|
|
$(0.14) |
|
|
$0.36 |
|
|
$1.24 |
|
(1) |
Please refer to the “Discussion of Non-GAAP Financial Measures” and
“Reconciliations of GAAP Financial Measures to Non-GAAP Financial
Measures” included elsewhere in this release for more information
regarding our use of non-GAAP financial measures. |
| (2) |
During the third quarter of
fiscal 2022, the company established a valuation allowance of
$107.6 million against our deferred tax assets in a foreign
jurisdiction, which consist of tax amortizable intellectual
property and net operating loss carryforwards. This provision is a
non-cash event. |
| (3) |
During the fourth quarter of
fiscal 2022, the company reported a goodwill impairment of $213.7
million. This provision is a non-cash event. |
| |
|
Stefan Ortmanns, Chief Executive Officer at Cerence, commented,
“We finished the fiscal year strong with revenue for the quarter
and fiscal year above the high end of the guidance range.
Accordingly, we delivered better than expected full fiscal year
results on all profitability metrics.”
Ortmanns continued, “During the year, we won more than a dozen
strategic deals in our core auto business including five winbacks.
In addition, we made strong progress in transportation adjacencies
like two-wheelers and trucks. We are becoming a primary supplier of
conversational AI technology in the two-wheeler space, having won
every two-wheeler deal we’ve pitched.”
Ortmanns concluded, “Our industry is experiencing rapid change
as automakers look to quickly deploy generative AI and large
language models (LLMs), providing important opportunities for
Cerence to serve as an innovation partner. We have demonstrated our
initial product enhancements using these technologies to over a
dozen customers with very favorable feedback, and we are already
executing on a long-term product strategy that is expected to
position Cerence as an industry leader for the foreseeable
future.”
Cerence Key Performance Indicators
To help investors gain further insight into the Cerence business
and its performance, management provides a set of key performance
indicators that includes:
|
Key Performance Indicator1 |
Q4FY23 |
|
|
|
| Percent of worldwide auto
production with Cerence Technology (TTM) |
54% |
| Change in Adjusted Deferred
Revenue2 (TTM): |
15% |
| Repeatable software
contribution (TTM): |
75% |
| Change in number of Cerence
connected cars shipped3 (TTM over prior year TTM) |
34% |
| Adjusted Total Billings (TTM
over prior year TTM)4 |
6% |
|
(1) |
Please refer to the “Key Performance Indicators” included elsewhere
in this release for more information regarding the definition and
our use of key performance indicators. |
| (2) |
Change in Adjusted Deferred
Revenue is a non-GAAP measure: Adjusted deferred revenue is
calculated by adding deferred revenue and long-term deferred
revenue on the balance sheet less the component associated with the
Toyota Legacy contract. |
| (3) |
Based on IHS Markit data, global
auto production increased 8% over the same time period ended on
September 30, 2023. |
| (4) |
Adjusted Total Billings YoY
(TTM): The year over year change in total billings adjusted to
exclude Professional Services, Connected Professional Services,
prepay and prepay assumptions. |
| |
|
First Quarter and Full Year
Fiscal 2024 Outlook
For the fiscal quarter ending December 31, 2023, revenue is
expected to be in the range of $128 million to $132 million, which
includes $67.8 million of deferred revenue that is accelerated due
to an early termination agreement, entered into in the first
quarter of 2024, relating to the Toyota “Legacy” contract.
GAAP Net Income is expected to be in the range of $19 million to
$23 million. Adjusted EBITDA is expected to be in the range of
approximately $58 million to $62 million.
For the full fiscal year ending September 30, 2024, the company
expects revenue to be in the range of $355 million to $375 million
which includes $20 million of fixed contracts. GAAP Net Income is
expected to be in the range of $20 million to $35 million. Adjusted
EBITDA is expected to be in the range of approximately $94 million
to $109 million.
The adjusted EBITDA guidance excludes acquisition-related costs,
amortization of acquired intangible assets, stock-based
compensation, restructuring and other costs.
Additional details regarding guidance will be provided during
the earnings call.
Cerence Conference Call Webcast
The company will host a live conference call and webcast with
slides to discuss the results today at 8:30 a.m. Eastern Time/5:30
a.m. Pacific Time. Interested investors and analysts are invited to
dial into the conference call by using the following link:
Register Here
Webcast access will also be available on the Investor
Information section of the company’s website at
https://www.cerence.com/investors/events-and-resources.
A replay of the webcast can be accessed by visiting the
company’s website 90 minutes following the conference call at
https://www.cerence.com/investors/events-and-resources.
Forward Looking Statements
Statements in this press release regarding: Cerence’s future
performance, results and financial condition; expected growth;
multi-year targets; strategy; opportunities; business, industry and
market trends; strategy regarding fixed contracts and its impact on
financial results; backlog; revenue visibility; demand for Cerence
products; innovation and new product offerings; cost efficiency
initiatives; and management’s future expectations, estimates,
assumptions, beliefs, goals, plans or prospects constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are
not statements of historical fact (including statements containing
the words “believes,” “plans,” “anticipates,” “expects,” “intends”
or “estimates” or similar expressions) should also be considered to
be forward-looking statements. Although we believe forward-looking
statements are based upon reasonable assumptions, such statements
involve known and unknown risk, uncertainties and other factors,
which may cause actual results or performance of the company to be
materially different from any future results or performance
expressed or implied by such forward-looking statements including
but not limited to: the highly competitive and rapidly changing
market in which we operate; adverse conditions in the automotive
industry, the related supply chain and semiconductor shortage, or
the global economy more generally; the impacts of the COVID-19
pandemic on our and our customers’ businesses; the impact of the
war in Ukraine and conflict between Israel and Hamas on our and our
customers’ businesses; our ability to control and successfully
manage our expenses and cash position; escalating pricing pressures
from our customers; the impact on our business of the transition to
a lower level of fixed contracts, including the failure to achieve
such a transition; our failure to win, renew or implement service
contracts; the cancellation or postponement of existing contracts;
the loss of business from any of our largest customers; effects of
customer defaults; our inability to successfully introduce new
products, applications and services; our strategies to increase
cloud offerings and deploy generative AI and large language models
(LLMs), the inability to recruit and retain qualified personnel;
disruptions arising from transitions in management personnel;
cybersecurity and data privacy incidents; fluctuating currency
rates and interest rates; inflation; and the other factors
discussed in our most recent Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. Further, the
inclusion of Cerence’s multi-year targets in the accompanying
presentation should not be regarded as predictive of actual future
events, and such targets, which were based on numerous variables
and assumptions that necessarily involve judgments, should not be
relied upon as such or construed as financial guidance. Such
targets cover multiple years, and thus, by their nature become
subject to greater uncertainty with each successive year.
Accordingly, there can be no assurance that any of the multi-year
targets will be realized, and actual results may vary materially
from those targets. We disclaim any obligation to update any
forward-looking statements as a result of developments occurring
after the date of this document.
Discussion of Non-GAAP Financial Measures
We believe that providing the non-GAAP information in addition
to the GAAP presentation, allows investors to view the financial
results in the way management views the operating results. We
further believe that providing this information allows investors to
not only better understand our financial performance, but more
importantly, to evaluate the efficacy of the methodology and
information used by management to evaluate and measure such
performance. The non-GAAP information should not be considered
superior to, or a substitute for, financial statements prepared in
accordance with GAAP.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
the business, for making operating decisions and for forecasting
and planning for future periods. While our management uses these
non-GAAP financial measures as a tool to enhance their
understanding of certain aspects of our financial performance, our
management does not consider these measures to be a substitute for,
or superior to, the information provided by GAAP financial
statements.
Consistent with this approach, we believe that disclosing
non-GAAP financial measures to the readers of our financial
statements provides such readers with useful supplemental data
that, while not a substitute for GAAP financial statements, allows
for greater transparency in the review of our financial and
operational performance. In assessing the overall health of the
business during the three and twelve months ended September 30,
2023 and 2022, our management has either included or excluded the
following items in general categories, each of which is described
below.
Adjusted EBITDA.
Adjusted EBITDA is defined as net income attributable to Cerence
Inc. before net income (loss) attributable to income tax (benefit)
expense, other income (expense) items, net, depreciation and
amortization expense, and excluding acquisition-related costs,
amortization of acquired intangible assets, stock-based
compensation, and restructuring and other costs, net or impairment
charges related to fixed and intangible assets and gains or losses
on the sale of long-lived assets, if any. From time to time we may
exclude from Adjusted EBITDA the impact of events, gains, losses or
other charges (such as significant legal settlements) that affect
the period-to-period comparability of our operating performance.
Other income (expense) items, net include interest expense,
interest income, and other income (expense), net (as stated in our
Condensed Consolidated Statement of Operations). Our management and
Board of Directors use this financial measure to evaluate our
operating performance. It is also a significant performance measure
in our annual incentive compensation programs.
Restructuring and other costs, net.
Restructuring and other charges, net include restructuring
expenses as well as other charges that are unusual in nature, are
the result of unplanned events, and arise outside the ordinary
course of our business such as employee severance costs, costs for
consolidating duplicate facilities, third-party fees relating to
the modification of our convertible debt, release of a
pre-acquisition contingency, and separation costs directly
attributable to the Cerence business becoming a standalone public
company.
Amortization of acquired intangible assets.
We exclude the amortization of acquired intangible assets from
non-GAAP expense and income measures. These amounts are
inconsistent in amount and frequency and are significantly impacted
by the timing and size of acquisitions. Providing a supplemental
measure which excludes these charges allows management and
investors to evaluate results “as-if” the acquired intangible
assets had been developed internally rather than acquired and,
therefore, provides a supplemental measure of performance in which
our acquired intellectual property is treated in a comparable
manner to our internally developed intellectual property. Although
we exclude amortization of acquired intangible assets from our
non-GAAP expenses, we believe that it is important for investors to
understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past
acquisitions will recur in future periods until such intangible
assets have been fully amortized. Future acquisitions may result in
the amortization of additional intangible assets.
Non-cash expenses.
We provide non-GAAP information relative to the following
non-cash expenses: (i) stock-based compensation; and (ii) non-cash
interest. These items are further discussed as follows:
i) Stock-based compensation.
Because of varying valuation methodologies, subjective assumptions
and the variety of award types, we exclude stock-based compensation
from our operating results. We evaluate performance both with and
without these measures because compensation expense related to
stock-based compensation is typically non-cash and awards granted
are influenced by the Company’s stock price and other factors such
as volatility that are beyond our control. The expense related to
stock-based awards is generally not controllable in the short-term
and can vary significantly based on the timing, size and nature of
awards granted. As such, we do not include such charges in
operating plans. Stock-based compensation will continue in future
periods.
ii) Non-cash interest. We
exclude non-cash interest because we believe that excluding this
expense provides management, as well as other users of the
financial statements, with a valuable perspective on the cash-based
performance and health of the business, including the current
near-term projected liquidity. Non-cash interest expense will
continue in future periods.
Other expenses.
We exclude certain other expenses that result from unplanned
events outside the ordinary course of continuing operations, in
order to measure operating performance and current and future
liquidity both with and without these expenses. By providing this
information, we believe management and the users of the financial
statements are better able to understand the financial results of
what we consider to be our organic, continuing operations. Included
in these expenses are items such as other charges (credits), net,
losses from extinguishment of debt, and changes in indemnification
assets corresponding with the release of pre-spin liabilities for
uncertain tax positions.
Adjustments to income tax provision.
Adjustments to our GAAP income tax provision to arrive at
non-GAAP net income is determined based on our non-GAAP pre-tax
income. Additionally, as our non-GAAP profitability is higher based
on the non-GAAP adjustments, we adjust the GAAP tax provision to
remove valuation allowances and related effects based on the higher
level of reported non-GAAP profitability. We also exclude from our
non-GAAP tax provision certain discrete tax items as they
occur.
Key Performance Indicators
We believe that providing key performance indicators (“KPIs”)
allows investors to gain insight into the way management views the
performance of the business. We further believe that providing KPIs
allows investors to better understand information used by
management to evaluate and measure such performance. KPIs should
not be considered superior to, or a substitute for, operating
results prepared in accordance with GAAP. In assessing the
performance of the business during the three months ended September
30, 2023, our management has reviewed the following KPIs, each of
which is described below:
- Percent of worldwide auto production with Cerence Technology:
The number of Cerence enabled cars shipped as compared to IHS
Markit car production data.
- Change in Adjusted Deferred Revenue: The year over year change
in deferred revenue excluding Toyota “Legacy” revenue. Amounts
calculated on a TTM basis. Adjusted deferred revenue is calculated
by adding deferred revenue and long-term deferred revenue on the
balance sheet less the component associated with the Toyota Legacy
contract.
- Repeatable software contribution: The percentage of repeatable
revenues as compared to total GAAP revenue in the quarter on a TTM
basis. Repeatable revenues are defined as the sum of License and
Connected Services revenues.
- Change in number of Cerence connected cars shipped: The
year-over-year change in the number of cars shipped with Cerence
connected solutions. Amounts calculated on a TTM basis.
- Adjusted total billings YoY (TTM): The year over year change in
total billings adjusted to exclude Professional Services, prepay
billings and prepay consumption.
____________
See the tables at the end of this press release for non-GAAP
reconciliations to the most directly comparable GAAP measures.
To learn more about Cerence, visit www.cerence.com, and follow
the company on LinkedIn and Twitter.
About Cerence Inc.Cerence (NASDAQ: CRNC) is the
global industry leader in creating unique, moving experiences for
the mobility world. As an innovation partner to the world’s leading
automakers and mobility OEMs, it is helping advance the future of
connected mobility through intuitive, AI-powered interaction
between humans and their vehicles, connecting consumers’ digital
lives to their daily journeys no matter where they are. Cerence’s
track record is built on more than 20 years of knowledge and 475
million cars shipped with Cerence technology. Whether it’s
connected cars, autonomous driving, e-vehicles, or two-wheelers,
Cerence is mapping the road ahead. For more information, visit
www.cerence.com.
Contact Information
Rich YerganianSenior Vice President of Investor RelationsCerence
Inc.Tel: 617-987-4799Email: richard.yerganian@cerence.com
CERENCE INC.Consolidated Statements of
Operations(in thousands, except per share data)
| |
|
Three Months Ended |
|
|
Twelve Months Ended |
|
| |
|
September 30, |
|
|
September 30, |
|
| |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
License |
|
$ |
43,105 |
|
|
$ |
19,000 |
|
|
$ |
145,159 |
|
|
$ |
158,610 |
|
|
Connected service |
|
|
19,168 |
|
|
|
18,096 |
|
|
|
75,071 |
|
|
|
85,571 |
|
|
Professional service |
|
|
18,491 |
|
|
|
21,048 |
|
|
|
74,245 |
|
|
|
83,710 |
|
|
Total revenues |
|
|
80,764 |
|
|
|
58,144 |
|
|
|
294,475 |
|
|
|
327,891 |
|
| Cost of
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
License |
|
|
2,356 |
|
|
|
1,006 |
|
|
|
8,522 |
|
|
|
2,698 |
|
|
Connected service |
|
|
4,777 |
|
|
|
5,956 |
|
|
|
22,995 |
|
|
|
22,722 |
|
|
Professional service |
|
|
15,791 |
|
|
|
17,316 |
|
|
|
63,232 |
|
|
|
68,764 |
|
|
Amortization of intangible assets |
|
|
104 |
|
|
|
105 |
|
|
|
414 |
|
|
|
2,984 |
|
|
Total cost of revenues |
|
|
23,028 |
|
|
|
24,383 |
|
|
|
95,163 |
|
|
|
97,168 |
|
| Gross
profit |
|
|
57,736 |
|
|
|
33,761 |
|
|
|
199,312 |
|
|
|
230,723 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
35,143 |
|
|
|
25,308 |
|
|
|
123,333 |
|
|
|
107,116 |
|
|
Sales and marketing |
|
|
5,848 |
|
|
|
8,611 |
|
|
|
27,504 |
|
|
|
31,098 |
|
|
General and administrative |
|
|
11,450 |
|
|
|
10,712 |
|
|
|
57,903 |
|
|
|
42,653 |
|
|
Amortization of intangible assets |
|
|
557 |
|
|
|
2,365 |
|
|
|
5,854 |
|
|
|
11,516 |
|
|
Restructuring and other costs, net |
|
|
842 |
|
|
|
2,379 |
|
|
|
11,917 |
|
|
|
8,965 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
213,720 |
|
|
|
— |
|
|
|
213,720 |
|
|
Total operating expenses |
|
|
53,840 |
|
|
|
263,095 |
|
|
|
226,511 |
|
|
|
415,068 |
|
| Income
(loss) from operations |
|
|
3,896 |
|
|
|
(229,334 |
) |
|
|
(27,199 |
) |
|
|
(184,345 |
) |
| Interest
income |
|
|
1,231 |
|
|
|
591 |
|
|
|
4,471 |
|
|
|
1,007 |
|
| Interest
expense |
|
|
(3,132 |
) |
|
|
(3,792 |
) |
|
|
(14,769 |
) |
|
|
(14,394 |
) |
| Other
income (expense), net |
|
|
(1,649 |
) |
|
|
(255 |
) |
|
|
1,108 |
|
|
|
(1,019 |
) |
| Income
(loss) before income taxes |
|
|
346 |
|
|
|
(232,790 |
) |
|
|
(36,389 |
) |
|
|
(198,751 |
) |
|
Provision for (benefit from) income taxes |
|
|
11,898 |
|
|
|
(2,663 |
) |
|
|
19,865 |
|
|
|
112,075 |
|
| Net
loss |
|
$ |
(11,552 |
) |
|
$ |
(230,127 |
) |
|
$ |
(56,254 |
) |
|
$ |
(310,826 |
) |
| Net loss
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
(0.29 |
) |
|
|
(5.84 |
) |
|
|
(1.40 |
) |
|
|
(7.93 |
) |
|
Diluted |
|
|
(0.29 |
) |
|
|
(5.84 |
) |
|
|
(1.40 |
) |
|
|
(7.93 |
) |
|
Weighted-average common share outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
40,357 |
|
|
|
39,407 |
|
|
|
40,215 |
|
|
|
39,187 |
|
|
Diluted |
|
|
40,357 |
|
|
|
39,407 |
|
|
|
40,215 |
|
|
|
39,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CERENCE INC.Consolidated Balance
Sheets(in thousands, except per share amounts)
|
|
September 30, |
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
ASSETS |
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
101,154 |
|
|
$ |
94,847 |
|
|
Marketable securities |
|
|
9,211 |
|
|
|
20,317 |
|
|
Accounts receivable, net of allowances of $4,044 and $157 at
September 30, 2023 and September 30, 2022, respectively |
|
|
61,270 |
|
|
|
45,073 |
|
|
Deferred costs |
|
|
6,935 |
|
|
|
7,098 |
|
|
Prepaid expenses and other current assets |
|
|
47,157 |
|
|
|
60,184 |
|
|
Total current assets |
|
|
225,727 |
|
|
|
227,519 |
|
|
Long-term marketable securities |
|
|
10,607 |
|
|
|
11,584 |
|
|
Property and equipment, net |
|
|
34,013 |
|
|
|
37,707 |
|
|
Deferred costs |
|
|
20,299 |
|
|
|
22,451 |
|
|
Operating lease right of use assets |
|
|
11,961 |
|
|
|
14,702 |
|
|
Goodwill |
|
|
900,342 |
|
|
|
890,802 |
|
|
Intangible assets, net |
|
|
3,875 |
|
|
|
9,700 |
|
|
Deferred tax assets |
|
|
46,601 |
|
|
|
51,989 |
|
|
Other assets |
|
|
44,165 |
|
|
|
52,039 |
|
|
Total assets |
|
$ |
1,297,590 |
|
|
$ |
1,318,493 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
16,873 |
|
|
$ |
10,372 |
|
|
Deferred revenue |
|
|
77,068 |
|
|
|
72,662 |
|
|
Short-term operating lease liabilities |
|
|
5,434 |
|
|
|
5,071 |
|
|
Short-term debt |
|
|
- |
|
|
|
10,938 |
|
|
Accrued expenses and other current liabilities |
|
|
48,718 |
|
|
|
47,990 |
|
|
Total current liabilities |
|
|
148,093 |
|
|
|
147,033 |
|
|
Long-term debt, net of discounts and issuance costs |
|
|
275,951 |
|
|
|
259,436 |
|
|
Deferred revenue, net of current portion |
|
|
145,531 |
|
|
|
165,972 |
|
|
Long-term operating lease liabilities |
|
|
7,947 |
|
|
|
11,375 |
|
|
Other liabilities |
|
|
25,193 |
|
|
|
21,727 |
|
|
Total liabilities |
|
|
602,715 |
|
|
|
605,543 |
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
Common stock, $0.01 par value, 560,000 shares authorized as of
September 30, 2023; 40,423 and 39,430 shares issued and outstanding
as of September 30, 2023 and September 30, 2022, respectively |
|
|
404 |
|
|
|
394 |
|
|
Accumulated other comprehensive loss |
|
|
(27,966 |
) |
|
|
(33,737 |
) |
|
Additional paid-in capital |
|
|
1,056,099 |
|
|
|
1,029,542 |
|
|
Accumulated deficit |
|
|
(333,662 |
) |
|
|
(283,249 |
) |
|
Total stockholders’ equity |
|
|
694,875 |
|
|
|
712,950 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,297,590 |
|
|
$ |
1,318,493 |
|
|
|
|
|
|
|
|
|
|
|
CERENCE INC.Consolidated Statements of
Cash Flows(in
thousands)
| |
|
Twelve Months Ended |
|
| |
|
September 30, |
|
| |
|
2023 |
|
|
2022 |
|
| Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net loss |
|
$ |
(56,254 |
) |
|
$ |
(310,826 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in)
operations: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
16,038 |
|
|
|
23,939 |
|
|
Provision for (benefit from) credit loss reserve |
|
|
3,626 |
|
|
|
(413 |
) |
|
Stock-based compensation |
|
|
40,766 |
|
|
|
28,076 |
|
|
Non-cash interest expense |
|
|
2,914 |
|
|
|
5,281 |
|
|
Loss on debt extinguishment |
|
|
1,333 |
|
|
|
- |
|
|
Deferred tax benefit |
|
|
7,597 |
|
|
|
97,287 |
|
|
Goodwill impairment |
|
|
- |
|
|
|
213,720 |
|
|
Unrealized foreign currency transaction (gain) losses |
|
|
(3,393 |
) |
|
|
5,730 |
|
|
Other |
|
|
(3,388 |
) |
|
|
385 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
|
(16,964 |
) |
|
|
(6,590 |
) |
|
Prepaid expenses and other assets |
|
|
28,192 |
|
|
|
(33,756 |
) |
|
Deferred costs |
|
|
3,194 |
|
|
|
4,654 |
|
|
Accounts payable |
|
|
5,774 |
|
|
|
157 |
|
|
Accrued expenses and other liabilities |
|
|
(408 |
) |
|
|
(1,479 |
) |
|
Deferred revenue |
|
|
(21,529 |
) |
|
|
(28,303 |
) |
| Net cash provided by (used in)
operating activities |
|
|
7,498 |
|
|
|
(2,138 |
) |
| Cash flows from
investing activities: |
|
|
|
|
|
|
|
Capital expenditures |
|
|
(5,124 |
) |
|
|
(17,446 |
) |
|
Purchases of marketable securities |
|
|
(18,025 |
) |
|
|
(31,757 |
) |
|
Sale and maturities of marketable securities |
|
|
30,324 |
|
|
|
37,203 |
|
|
Purchase of debt securities |
|
|
- |
|
|
|
- |
|
|
Payments for equity investments |
|
|
- |
|
|
|
(584 |
) |
|
Other investing activities |
|
|
(1,355 |
) |
|
|
2,019 |
|
| Net cash provided by (used in)
investing activities |
|
|
5,820 |
|
|
|
(10,565 |
) |
| Cash flows from
financing activities: |
|
|
|
|
|
|
|
Proceeds from revolving credit facility |
|
|
24,700 |
|
|
|
- |
|
|
Payments of revolver credit facility |
|
|
(24,700 |
) |
|
|
- |
|
|
Proceeds from long-term debt, net of discount |
|
|
210,000 |
|
|
|
- |
|
|
Payments for long-term debt issuance costs |
|
|
(17,176 |
) |
|
|
- |
|
|
Principal payments of long-term debt |
|
|
(198,438 |
) |
|
|
(6,250 |
) |
|
Common stock repurchases for tax withholdings for net settlement of
equity awards |
|
|
(4,894 |
) |
|
|
(49,003 |
) |
|
Principal payment of lease liabilities arising from a finance
lease |
|
|
(451 |
) |
|
|
(415 |
) |
|
Proceeds from the issuance of common stock |
|
|
5,625 |
|
|
|
36,062 |
|
| Net cash used in financing
activities |
|
|
(5,334 |
) |
|
|
(19,606 |
) |
| Effects of exchange rate
changes on cash and cash equivalents |
|
|
(1,677 |
) |
|
|
(1,272 |
) |
| Net change in cash and cash
equivalents |
|
|
6,307 |
|
|
|
(33,581 |
) |
| Cash and cash equivalents at
beginning of period |
|
|
94,847 |
|
|
|
128,428 |
|
| Cash and cash equivalents at
end of period |
|
$ |
101,154 |
|
|
$ |
94,847 |
|
| |
|
|
|
|
|
|
|
|
CERENCE INC.Reconciliations of GAAP
Financial Measures to Non-GAAP Financial
Measures(unaudited - in thousands)
| |
|
Three Months Ended |
|
|
Twelve Months Ended |
|
| |
|
September 30, |
|
|
September 30, |
|
| |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
GAAP revenue |
|
$ |
80,764 |
|
|
$ |
58,144 |
|
|
$ |
294,475 |
|
|
$ |
327,891 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP gross
profit |
|
$ |
57,736 |
|
|
$ |
33,761 |
|
|
$ |
199,312 |
|
|
$ |
230,723 |
|
|
Stock-based compensation |
|
|
1,004 |
|
|
|
382 |
|
|
|
3,703 |
|
|
|
3,766 |
|
|
Amortization of intangible assets |
|
|
104 |
|
|
|
105 |
|
|
|
414 |
|
|
|
2,984 |
|
| Non-GAAP gross
profit |
|
$ |
58,844 |
|
|
$ |
34,248 |
|
|
$ |
203,429 |
|
|
$ |
237,473 |
|
| GAAP gross
margin |
|
|
71.5 |
% |
|
|
58.1 |
% |
|
|
67.7 |
% |
|
|
70.4 |
% |
| Non-GAAP gross
margin |
|
|
72.9 |
% |
|
|
58.9 |
% |
|
|
69.1 |
% |
|
|
72.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP operating income
(loss) |
|
$ |
3,896 |
|
|
$ |
(229,334 |
) |
|
$ |
(27,199 |
) |
|
$ |
(184,345 |
) |
|
Stock-based compensation* |
|
|
8,965 |
|
|
|
5,056 |
|
|
|
40,766 |
|
|
|
24,076 |
|
|
Amortization of intangible assets |
|
|
661 |
|
|
|
2,470 |
|
|
|
6,268 |
|
|
|
14,500 |
|
|
Restructuring and other costs, net* |
|
|
842 |
|
|
|
2,379 |
|
|
|
11,917 |
|
|
|
8,965 |
|
|
Goodwill impairment |
|
|
- |
|
|
|
213,720 |
|
|
|
- |
|
|
|
213,720 |
|
| Non-GAAP operating
income (loss) |
|
$ |
14,364 |
|
|
$ |
(5,709 |
) |
|
$ |
31,752 |
|
|
$ |
76,916 |
|
| GAAP operating
margin |
|
|
4.8 |
% |
|
|
-394.4 |
% |
|
|
-9.2 |
% |
|
|
-56.2 |
% |
| Non-GAAP operating
margin |
|
|
17.8 |
% |
|
|
-9.8 |
% |
|
|
10.8 |
% |
|
|
23.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net
loss |
|
$ |
(11,552 |
) |
|
$ |
(230,127 |
) |
|
$ |
(56,254 |
) |
|
$ |
(310,826 |
) |
|
Stock-based compensation* |
|
|
8,965 |
|
|
|
5,056 |
|
|
|
40,766 |
|
|
|
24,076 |
|
|
Amortization of intangible assets |
|
|
661 |
|
|
|
2,470 |
|
|
|
6,268 |
|
|
|
14,500 |
|
|
Restructuring and other costs, net* |
|
|
842 |
|
|
|
2,379 |
|
|
|
11,917 |
|
|
|
8,965 |
|
|
Goodwill impairment |
|
|
- |
|
|
|
213,720 |
|
|
|
- |
|
|
|
213,720 |
|
|
Depreciation |
|
|
2,226 |
|
|
|
2,616 |
|
|
|
9,770 |
|
|
|
9,439 |
|
|
Total other (expense) income, net |
|
|
(3,550 |
) |
|
|
(3,456 |
) |
|
|
(9,190 |
) |
|
|
(14,406 |
) |
|
Provision for (benefit from) income taxes |
|
|
11,898 |
|
|
|
(2,663 |
) |
|
|
19,865 |
|
|
|
112,075 |
|
| Adjusted
EBITDA |
|
$ |
16,590 |
|
|
$ |
(3,093 |
) |
|
$ |
41,522 |
|
|
$ |
86,355 |
|
| GAAP net loss
margin |
|
|
-14.3 |
% |
|
|
-395.8 |
% |
|
|
-19.1 |
% |
|
|
-94.8 |
% |
| Adjusted EBITDA
margin |
|
|
20.5 |
% |
|
|
-5.3 |
% |
|
|
14.1 |
% |
|
|
26.3 |
% |
| * - $4.0 million
in stock-based compensation is included in Restructuring and other
costs, net during Q1’22. |
|
|
|
|
CERENCE INC.Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
(cont.)(unaudited - in thousands, except per share
data)
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
GAAP net loss |
|
$ |
(11,552 |
) |
|
$ |
(230,127 |
) |
|
$ |
(56,254 |
) |
|
$ |
(310,826 |
) |
|
Stock-based compensation* |
|
|
8,965 |
|
|
|
5,056 |
|
|
|
40,766 |
|
|
|
24,076 |
|
|
Amortization of intangible assets |
|
|
661 |
|
|
|
2,470 |
|
|
|
6,268 |
|
|
|
14,500 |
|
|
Restructuring and other costs, net* |
|
|
842 |
|
|
|
2,379 |
|
|
|
11,917 |
|
|
|
8,965 |
|
|
Loss on debt extinguishment |
|
|
- |
|
|
|
- |
|
|
|
1,333 |
|
|
|
- |
|
|
Goodwill impairment |
|
|
- |
|
|
|
213,720 |
|
|
|
- |
|
|
|
213,720 |
|
|
Non-cash interest expense |
|
|
1,464 |
|
|
|
1,359 |
|
|
|
2,914 |
|
|
|
5,281 |
|
|
Indemnification asset release |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,302 |
|
|
Other |
|
|
500 |
|
|
|
- |
|
|
|
(344 |
) |
|
|
- |
|
|
Adjustments to income tax expense |
|
|
2,870 |
|
|
|
(362 |
) |
|
|
7,976 |
|
|
|
93,405 |
|
|
Non-GAAP net income (loss) |
|
$ |
3,750 |
|
|
$ |
(5,505 |
) |
|
$ |
14,576 |
|
|
$ |
50,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributed to common shareholders - basic and diluted |
|
$ |
(11,552 |
) |
|
$ |
(230,127 |
) |
|
$ |
(56,254 |
) |
|
$ |
(310,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributed to common shareholders |
|
$ |
3,750 |
|
|
$ |
(5,505 |
) |
|
$ |
14,576 |
|
|
$ |
50,423 |
|
|
Interest on the Notes, net of tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,068 |
|
|
Net income (loss) attributed to common shareholders - diluted |
|
$ |
3,750 |
|
|
$ |
(5,505 |
) |
|
$ |
14,576 |
|
|
$ |
54,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic and diluted |
|
|
40,357 |
|
|
|
39,407 |
|
|
|
40,215 |
|
|
|
39,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding- basic |
|
|
40,357 |
|
|
|
39,407 |
|
|
|
40,215 |
|
|
|
39,187 |
|
|
Adjustment for diluted shares |
|
|
1,101 |
|
|
|
- |
|
|
|
423 |
|
|
|
4,912 |
|
|
Weighted-average common shares outstanding - diluted |
|
|
41,458 |
|
|
|
39,407 |
|
|
|
40,638 |
|
|
|
44,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share - diluted |
|
$ |
(0.29 |
) |
|
$ |
(5.84 |
) |
|
$ |
(1.40 |
) |
|
$ |
(7.93 |
) |
|
Non-GAAP net income (loss) per share -
diluted |
|
$ |
0.09 |
|
|
$ |
(0.14 |
) |
|
$ |
0.36 |
|
|
$ |
1.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net cash provided by (used in) operating
activities |
|
$ |
11,258 |
|
|
$ |
(4,953 |
) |
|
$ |
7,498 |
|
|
$ |
(2,138 |
) |
| Capital
expenditures |
|
|
(1,527 |
) |
|
|
(3,028 |
) |
|
|
(5,124 |
) |
|
|
(17,446 |
) |
|
Free Cash Flow |
|
$ |
9,731 |
|
|
$ |
(7,981 |
) |
|
$ |
2,374 |
|
|
$ |
(19,584 |
) |
| * - $4.0 million
in stock-based compensation is included in Restructuring and other
costs, net in Q1’22. |
|
| |
|
CERENCE INC.Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
(cont.)(unaudited - in thousands)
|
|
|
Q4FY23 |
|
|
Q3FY23 |
|
|
Q2FY23 |
|
|
Q1FY23 |
|
|
GAAP revenues |
|
$ |
80,764 |
|
|
$ |
61,660 |
|
|
$ |
68,393 |
|
|
$ |
83,658 |
|
| Less:
Professional services revenue |
|
|
18,491 |
|
|
|
17,240 |
|
|
|
18,667 |
|
|
|
19,847 |
|
|
Non-GAAP Repeatable revenues |
|
$ |
62,273 |
|
|
$ |
44,420 |
|
|
$ |
49,726 |
|
|
$ |
63,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenues TTM |
|
$ |
294,475 |
|
|
|
|
|
|
|
|
|
|
| Less:
Professional services revenue TTM |
|
|
74,245 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Repeatable revenues TTM |
|
$ |
220,230 |
|
|
|
|
|
|
|
|
|
|
|
Repeatable software contribution |
|
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CERENCE INC.Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
(cont.)(unaudited - in thousands)
| |
|
Q1 2024 |
|
|
FY2024 |
|
| |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
GAAP revenue |
|
$ |
128,000 |
|
|
$ |
132,000 |
|
|
$ |
355,000 |
|
|
$ |
375,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP gross
profit |
|
$ |
103,000 |
|
|
$ |
107,000 |
|
|
$ |
265,000 |
|
|
$ |
285,000 |
|
| Stock-based compensation |
|
|
700 |
|
|
|
700 |
|
|
|
3,100 |
|
|
|
3,100 |
|
| Amortization of intangible
assets |
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
| Non-GAAP gross
profit |
|
$ |
103,800 |
|
|
$ |
107,800 |
|
|
$ |
268,200 |
|
|
$ |
288,200 |
|
| GAAP gross
margin |
|
|
80 |
% |
|
|
81 |
% |
|
|
75 |
% |
|
|
76 |
% |
| Non-GAAP gross
margin |
|
|
81 |
% |
|
|
82 |
% |
|
|
76 |
% |
|
|
77 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP operating
income |
|
$ |
46,500 |
|
|
$ |
50,500 |
|
|
$ |
43,300 |
|
|
$ |
58,300 |
|
| Stock-based compensation |
|
|
8,800 |
|
|
|
8,800 |
|
|
|
38,900 |
|
|
|
38,900 |
|
| Amortization of intangible
assets |
|
|
700 |
|
|
|
700 |
|
|
|
2,300 |
|
|
|
2,300 |
|
| Restructuring and other costs,
net |
|
|
200 |
|
|
|
200 |
|
|
|
2,400 |
|
|
|
2,400 |
|
| Non-GAAP operating
income |
|
$ |
56,200 |
|
|
$ |
60,200 |
|
|
$ |
86,900 |
|
|
$ |
101,900 |
|
| GAAP operating
margin |
|
|
36 |
% |
|
|
38 |
% |
|
|
12 |
% |
|
|
16 |
% |
| Non-GAAP operating
margin |
|
|
44 |
% |
|
|
46 |
% |
|
|
24 |
% |
|
|
27 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net
income |
|
$ |
18,900 |
|
|
$ |
22,900 |
|
|
$ |
20,200 |
|
|
$ |
35,200 |
|
| Stock-based compensation |
|
|
8,800 |
|
|
|
8,800 |
|
|
|
38,900 |
|
|
|
38,900 |
|
| Amortization of intangible
assets |
|
|
700 |
|
|
|
700 |
|
|
|
2,300 |
|
|
|
2,300 |
|
| Restructuring and other costs,
net |
|
|
200 |
|
|
|
200 |
|
|
|
2,400 |
|
|
|
2,400 |
|
| Depreciation |
|
|
1,800 |
|
|
|
1,800 |
|
|
|
7,500 |
|
|
|
7,500 |
|
| Total other income (expense),
net |
|
|
(1,800 |
) |
|
|
(1,800 |
) |
|
|
(7,100 |
) |
|
|
(7,100 |
) |
| Provision for income
taxes |
|
|
25,800 |
|
|
|
25,800 |
|
|
|
16,000 |
|
|
|
16,000 |
|
| Adjusted
EBITDA |
|
$ |
58,000 |
|
|
$ |
62,000 |
|
|
$ |
94,400 |
|
|
$ |
109,400 |
|
| GAAP net income
margin |
|
|
15 |
% |
|
|
17 |
% |
|
|
6 |
% |
|
|
9 |
% |
| Adjusted EBITDA
margin |
|
|
45 |
% |
|
|
47 |
% |
|
|
27 |
% |
|
|
29 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CERENCE INC.Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
(cont.)(unaudited - in thousands)
| |
|
Q1 2024 |
|
|
FY2024 |
|
| |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
GAAP net income |
|
$ |
18,900 |
|
|
$ |
22,900 |
|
|
$ |
20,200 |
|
|
$ |
35,200 |
|
| Stock-based compensation |
|
|
8,800 |
|
|
|
8,800 |
|
|
|
38,900 |
|
|
|
38,900 |
|
| Amortization of intangible
assets |
|
|
700 |
|
|
|
700 |
|
|
|
2,300 |
|
|
|
2,300 |
|
| Restructuring and other costs,
net |
|
|
200 |
|
|
|
200 |
|
|
|
2,400 |
|
|
|
2,400 |
|
| Non-cash interest expense |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
6,000 |
|
|
|
6,000 |
|
| Other |
|
|
- |
|
|
|
- |
|
|
|
(100 |
) |
|
|
(100 |
) |
| Income tax impact of Non-GAAP
adjustments |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
(10,200 |
) |
|
|
(10,200 |
) |
| Non-GAAP net
income |
|
$ |
40,100 |
|
|
$ |
44,100 |
|
|
$ |
59,500 |
|
|
$ |
74,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted
EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributed to common shareholders |
|
$ |
18,900 |
|
|
$ |
22,900 |
|
|
$ |
20,200 |
|
|
$ |
35,200 |
|
|
Interest on the Notes, net of tax |
|
|
700 |
|
|
|
700 |
|
|
|
- |
|
|
|
2,800 |
|
|
Net income attributed to common shareholders - diluted |
|
$ |
19,600 |
|
|
$ |
23,600 |
|
|
$ |
20,200 |
|
|
$ |
38,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributed to common shareholders |
|
$ |
40,100 |
|
|
$ |
44,100 |
|
|
$ |
59,500 |
|
|
$ |
74,500 |
|
|
Interest on the Notes, net of tax |
|
|
1,100 |
|
|
|
1,100 |
|
|
|
4,500 |
|
|
|
4,500 |
|
|
Net income attributed to common shareholders - diluted |
|
$ |
41,200 |
|
|
$ |
45,200 |
|
|
$ |
64,000 |
|
|
$ |
79,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic and diluted |
|
|
41,300 |
|
|
|
41,300 |
|
|
|
41,800 |
|
|
|
41,800 |
|
|
Adjustment for diluted shares |
|
|
5,700 |
|
|
|
5,700 |
|
|
|
500 |
|
|
|
5,600 |
|
|
Weighted-average common shares outstanding - diluted |
|
|
47,000 |
|
|
|
47,000 |
|
|
|
42,300 |
|
|
|
47,400 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding- basic and diluted |
|
|
41,300 |
|
|
|
41,300 |
|
|
|
41,800 |
|
|
|
41,800 |
|
|
Adjustment for diluted shares |
|
|
8,000 |
|
|
|
8,000 |
|
|
|
8,000 |
|
|
|
8,000 |
|
|
Weighted-average common shares outstanding - diluted |
|
|
49,300 |
|
|
|
49,300 |
|
|
|
49,800 |
|
|
|
49,800 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per share - diluted |
|
$ |
0.42 |
|
|
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
0.80 |
|
|
Non-GAAP net income per share - diluted |
|
$ |
0.84 |
|
|
$ |
0.92 |
|
|
$ |
1.29 |
|
|
$ |
1.59 |
|
Cerence (NASDAQ:CRNC)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Cerence (NASDAQ:CRNC)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024
