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Cerence Announces Second Quarter Fiscal Year 2024 Results
ソース: Nasdaq GlobeNewswire / 09 5 2024 07:00:01 America/New_York
Headlines
- Q2 revenue above the high end of the guidance range due to OEM-related adjustments; however, Company lowering its FY24 guidance and withdrawing its multi-year plan
- Included in Q2 results is a Goodwill impairment charge of approximately $252 million
- Company believes that initial success with new generative AI products, including six design wins, and early validation of its next-gen platform will provide a solid foundation to reinvigorate future growth
BURLINGTON, Mass., May 09, 2024 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today reported its second quarter fiscal year 2024 results for the quarter ended March 31, 2024.
Results Summary (1,2)
(in millions, except per share data)
Three Months Ended Six Months Ended March 31, March 31, 2024 2023 2024 2023 GAAP revenue $67.8 $68.4 $206.2 $152.1 GAAP gross margin 69.2 % 63.4 % 77.1 % 66.3 % Non-GAAP gross margin 70.2 % 65.3 % 77.8 % 68.1 % GAAP operating margin(3) -389.8 % -30.1 % -99.8 % -14.9 % Non-GAAP operating margin -3.6 % -0.1 % 32.0 % 11.2 % GAAP net loss(3) $(278.0 ) $(26.1 ) $(254.1 ) $(28.2 ) GAAP net loss margin(3) -409.8 % -38.1 % -123.3 % -18.6 % Non-GAAP net (loss) income $(3.6 ) $(1.7 ) $50.7 $12.5 Adjusted EBITDA $(0.3 ) $2.5 $70.1 $22.2 Adjusted EBITDA margin -0.4 % 3.6 % 34.0 % 14.6 % GAAP net loss per share - diluted(3) $(6.66 ) $(0.65 ) $(6.13 ) $(0.70 ) Non-GAAP net (loss) income per share - diluted $(0.09 ) $(0.04 ) $1.07 $0.31 (1) As previously disclosed, Q1FY24 revenue includes the non-cash revenue associated with the Toyota “Legacy” contract and related impacts totaling $86.6M. (2) 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. (3) Includes a Goodwill impairment charge of $252M. Stefan Ortmanns, Chief Executive Officer at Cerence, commented, “After receiving Q1 royalty reports and noticing some downward trends, we commenced a deep account-by-account review of our backlog, which concluded in April. As a result of that review, we concluded that some customers’ production expectations are not materializing as expected or as reflected in our forecasts. Therefore, we are bringing down the full year revenue guidance by almost $40M at the midpoint, which represents an approximately 11% reduction in revenue.”
“As we look to the future, we are taking action to put Cerence in a position to deliver improved financial results, which includes developing plans to adjust our cost structure. At the same time, we are committed to delivering on our generative AI and large language model product roadmap, and we see positive momentum thus far, with six signed deals for our generative AI products since January. Further, we are already working with three global OEMs to advance and validate our next-gen AI computing platform – which we believe will give us a solid foundation to reinvigorate future growth,” continued Ortmanns.
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 Q2FY24 Percent of worldwide auto production with Cerence Technology (TTM) 54 % Change in number of Cerence connected cars shipped2 (TTM over prior year TTM) 23 % Change in Adjusted Total Billings (TTM over prior year TTM)3 9 % (1) Please refer to the “Key Performance Indicators” section included elsewhere in this release for more information regarding the definitions and our use of key performance indicators. (2) Based on IHS Markit data, global auto production increased 8% over the same time period ended on March 31, 2024. (3) Change in 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. Third Quarter and Full Year Fiscal 2024 Outlook
For the fiscal quarter ending June 30, 2024, revenue is expected to be in the range of $66 million to $72 million. GAAP net income is expected to be in the range of ($4) million to $2 million. Adjusted EBITDA is expected to be in the range of approximately $5 million to $11 million.
For the full fiscal year ending September 30, 2024, the company expects revenue to be in the range of $318 million to $332 million which includes an estimated $30 million of fixed contracts. GAAP Net loss is expected to be in the range of ($256) million to ($242) million. Adjusted EBITDA is expected to be in the range of approximately $58 million to $72 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 and 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 join the call by dialing +1.888.596.4144 for U.S. and Canada or +1.646.968.2525 for international and then entering the conference ID 3095543#.
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 and profitability; outlook; strategy; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; revenue visibility; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology; expected benefits of technology partnerships; cost efficiency initiatives; and management’s future expectations, estimates, assumptions, beliefs, goals, objectives, targets, 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,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will.” “may,” 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; automotive production delays; changes in customer forecasts; the impacts of the COVID-19 pandemic on our and our customers’ businesses; the impact of the war in Ukraine, conflict between Israel and Hamas and attacks on commercial ships in the Red Sea by the Houthi groups 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 expand into adjacent markets; 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, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. 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 months ended March 31, 2024 and 2023, 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 costs, 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, and the release of a pre-acquisition contingency.
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 March 31, 2024, 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 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.
- Change in Adjusted total billings YoY (TTM): The year over year change in total billings adjusted to exclude Professional Services, prepay billings and prepay consumption.
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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 Yerganian
Senior Vice President of Investor Relations
Cerence Inc.
Tel: 617-987-4799
Email: richard.yerganian@cerence.comCERENCE INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)Three Months Ended Six Months Ended March 31, March 31, 2024 2023 2024 2023 Revenues: License $ 35,527 $ 30,800 $ 56,350 $ 76,217 Connected services 13,597 18,926 110,417 37,320 Professional services 18,701 18,667 39,393 38,514 Total revenues 67,825 68,393 206,160 152,051 Cost of revenues: License 1,404 2,209 3,008 3,823 Connected services 5,359 6,114 12,662 12,656 Professional services 14,119 16,587 31,444 34,511 Amortization of intangible assets — 104 103 207 Total cost of revenues 20,882 25,014 47,217 51,197 Gross profit 46,943 43,379 158,943 100,854 Operating expenses: Research and development 31,846 28,494 65,152 57,988 Sales and marketing 5,619 8,217 11,690 17,379 General and administrative 16,659 19,177 29,452 33,434 Amortization of intangible assets 555 2,394 1,100 4,744 Restructuring and other costs, net 4,551 5,714 5,256 9,903 Goodwill impairment 252,096 — 252,096 — Total operating expenses 311,326 63,996 364,746 123,448 Loss from operations (264,383 ) (20,617 ) (205,803 ) (22,594 ) Interest income 1,190 1,163 2,622 2,033 Interest expense (3,111 ) (4,003 ) (6,347 ) (7,517 ) Other (expense) income, net (25 ) 1,074 1,397 4,787 Loss before income taxes (266,329 ) (22,383 ) (208,131 ) (23,291 ) Provision for income taxes 11,647 3,706 45,988 4,956 Net loss $ (277,976 ) $ (26,089 ) $ (254,119 ) $ (28,247 ) Net loss per share: Basic $ (6.66 ) $ (0.65 ) $ (6.13 ) $ (0.70 ) Diluted $ (6.66 ) $ (0.65 ) $ (6.13 ) $ (0.70 ) Weighted-average common share outstanding: Basic 41,724 40,219 41,452 40,088 Diluted 41,724 40,219 41,452 40,088 CERENCE INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)March 31, September 30, 2024 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 99,176 101,154 Marketable securities 9,356 9,211 Accounts receivable, net of allowances of $4,101 and $4,044 66,787 61,270 Deferred costs 5,296 6,935 Prepaid expenses and other current assets 52,121 47,157 Total current assets 232,736 225,727 Long-term marketable securities 6,711 10,607 Property and equipment, net 32,242 34,013 Deferred costs 18,857 20,299 Operating lease right of use assets 10,941 11,961 Goodwill 650,623 900,342 Intangible assets, net 2,750 3,875 Deferred tax assets 7,059 46,601 Other assets 25,173 44,165 Total assets $ 987,092 $ 1,297,590 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 16,429 $ 16,873 Deferred revenue 45,483 77,068 Short-term operating lease liabilities 5,188 5,434 Accrued expenses and other current liabilities 39,552 48,718 Total current liabilities 106,652 148,093 Long-term debt 278,890 275,951 Deferred revenue, net of current portion 103,468 145,531 Long-term operating lease liabilities 7,010 7,947 Other liabilities 27,672 25,193 Total liabilities 523,692 602,715 Stockholders' Equity: Common stock, $0.01 par value, 560,000 shares authorized; 41,777 and 40,423 shares issued and outstanding, respectively 417 404 Accumulated other comprehensive loss (26,763 ) (27,966 ) Additional paid-in capital 1,077,527 1,056,099 Accumulated deficit (587,781 ) (333,662 ) Total stockholders' equity 463,400 694,875 Total liabilities and stockholders' equity $ 987,092 $ 1,297,590 CERENCE INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)Six Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ (254,119 ) $ (28,247 ) Adjustments to reconcile net loss to net cash (used in) provided by operations: Depreciation and amortization 5,384 10,033 Provision for credit loss reserve 6,065 3,626 Stock-based compensation 13,125 24,827 Non-cash interest expense 2,939 910 Deferred tax provision (benefit) 40,949 (422 ) Goodwill impairment 252,096 - Unrealized foreign currency transaction gains (262 ) (6,461 ) Other 474 (608 ) Changes in operating assets and liabilities: Accounts receivable (75 ) (14,836 ) Prepaid expenses and other assets 5,854 13,014 Deferred costs 3,423 2,559 Accounts payable (292 ) 7,864 Accrued expenses and other liabilities (1,673 ) 2,930 Deferred revenue (75,659 ) (10,752 ) Net cash (used in) provided by operating activities (1,771 ) 4,437 Cash flows from investing activities: Capital expenditures (2,776 ) (2,077 ) Purchases of marketable securities - (11,045 ) Sale and maturities of marketable securities 3,912 15,900 Other investing activities (891 ) (552 ) Net cash provided by investing activities 245 2,226 Cash flows from financing activities: Payments for long-term debt issuance costs - (403 ) Principal payments of long-term debt - (4,688 ) Common stock repurchases for tax withholdings for net settlement of equity awards (9,744 ) (4,430 ) Principal payment of lease liabilities arising from a finance lease (202 ) (316 ) Proceeds from the issuance of common stock 10,461 4,394 Net cash provided by (used in) financing activities 515 (5,443 ) Effects of exchange rate changes on cash and cash equivalents (967 ) (690 ) Net change in cash and cash equivalents (1,978 ) 530 Cash and cash equivalents at beginning of period 101,154 94,847 Cash and cash equivalents at end of period $ 99,176 $ 95,377 CERENCE INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(unaudited - in thousands)Three Months Ended Six Months Ended March 31, March 31, 2024 2023 2024 2023 GAAP revenue $ 67,825 $ 68,393 $ 206,160 $ 152,051 GAAP gross profit $ 46,943 $ 43,379 $ 158,943 $ 100,854 Stock-based compensation 665 1,187 1,306 2,536 Amortization of intangible assets - 104 103 207 Non-GAAP gross profit $ 47,608 $ 44,670 $ 160,352 $ 103,597 GAAP gross margin 69.2 % 63.4 % 77.1 % 66.3 % Non-GAAP gross margin 70.2 % 65.3 % 77.8 % 68.1 % GAAP operating loss $ (264,383 ) $ (20,617 ) $ (205,803 ) $ (22,594 ) Stock-based compensation 4,745 12,355 13,125 24,827 Amortization of intangible assets 555 2,498 1,203 4,951 Restructuring and other costs, net 4,551 5,714 5,256 9,903 Goodwill Impairment 252,096 - 252,096 - Non-GAAP operating (loss) income $ (2,436 ) $ (50 ) $ 65,877 $ 17,087 GAAP operating margin -389.8 % -30.1 % -99.8 % -14.9 % Non-GAAP operating margin -3.6 % -0.1 % 32.0 % 11.2 % GAAP net loss $ (277,976 ) $ (26,089 ) $ (254,119 ) $ (28,247 ) Stock-based compensation 4,745 12,355 13,125 24,827 Amortization of intangible assets 555 2,498 1,203 4,951 Restructuring and other costs, net 4,551 5,714 5,256 9,903 Goodwill Impairment 252,096 - 252,096 - Depreciation 2,143 2,527 4,181 5,082 Total other expense, net (1,946 ) (1,766 ) (2,328 ) (697 ) Provision for income taxes 11,647 3,706 45,988 4,956 Adjusted EBITDA $ (293 ) $ 2,477 $ 70,058 $ 22,169 GAAP net loss margin -409.8 % -38.1 % -123.3 % -18.6 % Adjusted EBITDA margin -0.4 % 3.6 % 34.0 % 14.6 % CERENCE INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
(unaudited - in thousands, except per share data)Three Months Ended Six Months Ended March 31, March 31, 2024 2023 2024 2023 GAAP net loss $ (277,976 ) $ (26,089 ) $ (254,119 ) $ (28,247 ) Stock-based compensation 4,745 12,355 13,125 24,827 Amortization of intangible assets 555 2,498 1,203 4,951 Restructuring and other costs, net 4,551 5,714 5,256 9,903 Goodwill impairment 252,096 - 252,096 - Non-cash interest expense 1,471 466 2,939 910 Other (29 ) (819 ) (56 ) (819 ) Adjustments to income tax expense 11,004 4,148 30,282 963 Non-GAAP net (loss) income $ (3,583 ) $ (1,727 ) $ 50,726 $ 12,488 Adjusted EPS: GAAP Numerator: Net loss attributed to common shareholders - basic and diluted $ (277,976 ) $ (26,089 ) $ (254,119 ) $ (28,247 ) Non-GAAP Numerator: Net (loss) income attributed to common shareholders - basic $ (3,583 ) $ (1,727 ) $ 50,726 $ 12,488 Interest on the Notes, net of tax - - 2,228 - Net (loss) income attributed to common shareholders - diluted $ (3,583 ) $ (1,727 ) $ 52,954 $ 12,488 GAAP Denominator: Weighted-average common shares outstanding - basic and diluted 41,724 40,219 41,452 40,088 Non-GAAP Denominator: Weighted-average common shares outstanding- basic 41,724 40,219 41,452 40,088 Adjustment for diluted shares - - 7,891 - Weighted-average common shares outstanding - diluted 41,724 40,219 49,343 40,088 GAAP net loss per share - diluted $ (6.66 ) $ (0.65 ) $ (6.13 ) $ (0.70 ) Non-GAAP net (loss) income per share - diluted $ (0.09 ) $ (0.04 ) $ 1.07 $ 0.31 GAAP net cash provided by (used in) operating activities $ 1,044 $ 6,555 $ (1,771 ) $ 4,437 Capital expenditures (1,845 ) (1,394 ) (2,776 ) (2,077 ) Free Cash Flow $ (801 ) $ 5,161 $ (4,547 ) $ 2,360 CERENCE INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
(unaudited - in thousands)Q3 2024 FY2024 Low High Low High GAAP revenue $ 66,000 $ 72,000 $ 318,000 $ 332,000 GAAP gross profit $ 46,000 $ 52,000 $ 231,100 $ 245,100 Stock-based compensation 600 600 2,500 2,500 Amortization of intangible assets - - 100 100 Non-GAAP gross profit $ 46,600 $ 52,600 $ 233,700 $ 247,700 GAAP gross margin 70 % 72 % 73 % 74 % Non-GAAP gross margin 71 % 73 % 73 % 75 % GAAP operating loss $ (7,100 ) $ (1,100 ) $ (240,800 ) $ (226,800 ) Stock-based compensation 7,700 7,700 29,200 29,200 Amortization of intangible assets 600 600 2,300 2,300 Restructuring and other costs, net 1,200 1,200 6,800 6,800 Goodwill impairment - - 252,100 252,100 Non-GAAP operating income $ 2,400 $ 8,400 $ 49,600 $ 63,600 GAAP operating margin -11 % -2 % -76 % -68 % Non-GAAP operating margin 4 % 12 % 16 % 19 % GAAP net (loss) income $ (4,000 ) $ 2,000 $ (255,800 ) $ (241,800 ) Stock-based compensation 7,700 7,700 29,200 29,200 Amortization of intangible assets 600 600 2,300 2,300 Restructuring and other costs, net 1,200 1,200 6,800 6,800 Goodwill impairment - - 252,100 252,100 Depreciation 2,100 2,100 8,500 8,500 Total other expense, net (2,000 ) (2,000 ) (5,500 ) (5,500 ) (Benefit from) provision for income taxes (5,100 ) (5,100 ) 9,500 9,500 Adjusted EBITDA $ 4,500 $ 10,500 $ 58,100 $ 72,100 GAAP net (loss) income margin -6 % 3 % -80 % -73 % Adjusted EBITDA margin 7 % 15 % 18 % 22 % CERENCE INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
(unaudited - in thousands, except per share data)Q3 2024 FY2024 Low High Low High GAAP net (loss) income $ (4,000 ) $ 2,000 $ (255,800 ) $ (241,800 ) Stock-based compensation 7,700 7,700 29,200 29,200 Amortization of intangibles 600 600 2,300 2,300 Restructuring and other costs, net 1,200 1,200 6,800 6,800 Non-cash interest expense 1,500 1,500 6,000 6,000 Goodwill impairment - - 252,100 252,100 Other - - (100 ) (100 ) Adjustments to income tax expense (7,500 ) (7,500 ) (5,200 ) (19,200 ) Non-GAAP net (loss) income $ (500 ) $ 5,500 $ 35,300 $ 35,300 Adjusted EPS: GAAP Numerator: Net (loss) income attributed to common shareholders - basic and diluted $ (4,000 ) $ 2,000 $ (255,800 ) $ (241,800 ) Non-GAAP Numerator: Net (loss) income attributed to common shareholders - basic $ (500 ) $ 5,500 $ 35,300 $ 35,300 Interest on the Notes, net of tax - 600 2,400 2,400 Net (loss) income attributed to common shareholders - diluted $ (500 ) $ 6,100 $ 37,700 $ 37,700 GAAP Denominator: Weighted-average common shares outstanding - basic and diluted 41,800 41,800 41,600 41,600 Non-GAAP Denominator: Weighted-average common shares outstanding- basic 41,800 41,800 41,600 41,600 Adjustment for diluted shares - 5,200 5,400 5,400 Weighted-average common shares outstanding - diluted 41,800 47,000 47,000 47,000 GAAP net (loss) income per share - diluted $ (0.10 ) $ 0.05 $ (6.15 ) $ (5.81 ) Non-GAAP net (loss) income per share - diluted $ (0.01 ) $ 0.13 $ 0.80 $ 0.80 
