• Cerence Announces Strong Third Quarter 2021 Results

    ソース: Nasdaq GlobeNewswire / 09 8 2021 07:00:01   America/New_York

    Cerence Third Quarter Highlights

    • Revenue grew 29% year-over-year
    • Exceeded company quarterly guidance on key GAAP and non-GAAP profitability metrics
    • Increased FY24 revenue Target from $600M to $700M, and improved key profitability metrics
    • Record number of auto SOPs (Start Of Production) from over 15 auto OEMs
    • Strategic collaborations announced in the quarter with Sirius XM, Visteon and Harman

    BURLINGTON, Mass., Aug. 09, 2021 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today reported its third fiscal quarter 2021 results for the quarter ended June 30, 2021.

    Results Summary (1)
    (in millions, except per share data)

      Three Months Ended  Nine Months Ended 
      June 30,  June 30, 
      2021   2020   2021   2020  
    GAAP Revenue  $96.8    $75.2    $289.1    $239.7  
    GAAP Gross Margin   75.4%    63.3%    73.4%    65.7% 
    Non-GAAP Gross Margin   79.1%    68.9%    77.0%    70.0% 
    GAAP Operating Margin   15.4%    -5.7%    17.2%    2.6% 
    Non-GAAP Operating Margin   37.7%    28.7%    38.0%    28.6% 
    GAAP Net Income (Loss)  $5.8    $(28.1)   $37.9    $(26.5) 
    Non-GAAP Net Income  $26.1    $12.4    $78.8    $39.3  
    Adjusted EBITDA  $38.7    $24.2    $117.1    $75.6  
       Adjusted EBITDA Margin   40.0%    32.1%    40.5%    31.5% 
    GAAP Net Income (Loss) per Share - diluted  $0.15    $(0.77)   $0.97    $(0.73) 
    Non-GAAP Net Income per Share - diluted  $0.62    $0.32    $1.87    $1.05  

    (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.

    Sanjay Dhawan, Chief Executive Officer of Cerence, stated, “According to IHS Markit, calendar Q2 is expected to be the quarter with the most disruption due to the semiconductor shortage yet we delivered 29% revenue growth over the prior year period. This growth is testament to our breadth of customers, products and services. With a record of more than 60 SOPs in the quarter from more than 15 different auto makers, and the bookings momentum for our new products and connected services, we expect to continue to grow faster than the auto SAAR (seasonally adjusted annual rate).”

    Dhawan concluded, “Enhancing our future growth opportunities are the strategic collaborations we announced in the quarter with Sirius XM, Visteon and Harman. In the case of Visteon, the collaboration extends into the two-wheeler market, a new adjacent market in which we are making steady progress.”

    Cerence Key Performance Indicators
    To help investors gain further insight into Cerence’s business and its performance, management provides a set of key performance indicators that includes:

    Key Performance Indicator1  Q3FY21
    Percent of worldwide auto production with Cerence Technology (TTM)   53%
    Average contract duration - years (TTM):   6.8 
    Repeatable software contribution (TTM):    81%
    Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)   12%
    Growth in billings per car (TTM over prior year TTM) (excludes legacy contract)   13%


    (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)Based on IHS Markit data, global auto production increased 11% over the same time period ended June 30, 2021.

    Fourth Quarter Fiscal 2021
    For the fiscal quarter ending September 30, 2021, Revenue is expected to be in the range of $97M to $101M representing a 6% to 11% increase compared to the same period in the prior year. GAAP Net Income is expected to be in the range of $3M to $7M, and Adjusted EBITDA is expected to be in the range of $36M to $39M. The Adjusted EBITDA guidance excludes acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs.

    Third Quarter Conference Call
    The company will host a live conference call and webcast with slides to discuss the results at 10:00 a.m. Eastern Time/7:00 a.m. Pacific Time today. Further details on the updated FY2024 model will also be provided on the call. Interested investors and analysts are invited to dial into the conference call by using 1.844.467.7116 (domestic) or +1.409.983.9838 (international) and entering the pass code 9974299. Webcast access will be available on the Investor Information section of the company’s website at https://www.cerence.com/investors/events-and-resources.

    The teleconference replay will be available through August 16, 2021. The replay dial-in number is 1.855.859.2056 (domestic) or +1.404.537.3406 (international) using pass code 9974299. A replay of the webcast can be accessed by visiting our web site 90 minutes following the conference call at https://www.cerence.com/investors/events-and-resources.

    Forward Looking Statements
    Statements in this presentation regarding Cerence’s future performance, results and financial condition, expected growth, business and market trends, and innovation and our management’s future expectations, 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: impacts of the COVID-19 pandemic on our and our customer’s businesses; the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain, or the global economy more generally; our ability to control and successfully manage our expenses and cash position; our strategy to increase cloud offerings; escalating pricing pressures from our customers; our failure to win, renew or implement service 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; the inability to recruit and retain qualified personnel; cybersecurity and data privacy incidents; fluctuating currency rates; 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 and nine months ended June 30, 2021 and 2020, 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 duplication facilities, and separation costs directly attributable to the Cerence business becoming a standalone public company.

    Acquisition-related costs, net.
    In the past, we have completed a number of acquisitions, which result in operating expenses, which would not otherwise have been incurred. We provide supplementary non-GAAP financial measures, which exclude certain transition, integration and other acquisition-related expense items resulting from acquisitions, to allow more accurate comparisons of the financial results to historical operations, forward looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition related costs, may not be indicative of the size, complexity and/or volume of future acquisitions. By excluding acquisition-related costs and adjustments from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us. We believe that providing a supplemental non-GAAP measure, which excludes these items allows management and investors to consider the ongoing operations of the business both with, and without, such expenses.

    These acquisition-related costs fall into the following categories: (i) transition and integration costs; (ii) professional service fees and expenses; and (iii) acquisition-related adjustments. Although these expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. These categories are further discussed as follows:

    (i) Transition and integration costs. Transition and integration costs include retention payments, transitional employee costs, and earn-out payments treated as compensation expense, as well as the costs of integration-related activities, including services provided by third-parties.
    (ii) Professional service fees and expenses. Professional service fees and expenses include financial advisory, legal, accounting and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities.
    (iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to acquisition-related items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended, such as gains or losses on settlements of pre-acquisition contingencies.

    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.

    Bookings.
    Bookings is defined as the amount of revenue we expect to earn from an agreement with our customers for products and services. To count as a booking, we expect there to be persuasive evidence of an arrangement, which may be evidenced by a legally binding document or documents, and that the collectability of the amounts payable under the arrangement are reasonably assured. The revenue we may actually recognize from our estimated bookings is subject to multiple factors, including but not limited to the timing of satisfying performance obligations, potential terminations, or changes in the scope of programs utilizing our technology and currency fluctuations. There is no comparable GAAP financial measure.

    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 June 30, 2021, 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.
    • Average contract duration: The weighted average annual period over which we expect to recognize the estimated revenues from new license and connected contracts signed during the quarter, calculated on a trailing twelve months (“TTM”) basis and presented in years.
    • 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.
    • Growth in billings per car: The rate of growth calculated from the average billings per car based on a TTM basis, excluding legacy contract and adjusted for prepay usage.

    See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures.

    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, powerful interaction between humans and their cars, two-wheelers, and even elevators, 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 nearly 400 million cars shipped with Cerence technology. Whether it’s connected cars, autonomous driving, e-vehicles, or buildings, Cerence is mapping the road ahead. For more information, visit www.cerence.com.

    Contact Information
    Rich Yerganian
    Cerence Inc.
    Tel: 617-987-4799
    Email: richard.yerganian@cerence.com


    CERENCE INC.
    Condensed Consolidated Statements of Operations
    (unaudited - in thousands, except per share data)

      Three Months Ended  Nine Months Ended 
      June 30,  June 30, 
      2021  2020  2021  2020 
    Revenues:                
    License $49,980  $32,454  $150,765  $117,843 
    Connected services  30,283   25,383   83,949   72,109 
    Professional services  16,538   17,360   54,392   49,773 
    Total revenues  96,801   75,197   289,106   239,725 
    Cost of revenues:                
    License  863   820   2,718   2,344 
    Connected services  6,108   7,191   19,960   24,742 
    Professional services  14,985   17,529   48,632   48,773 
    Amortization of intangible assets  1,879   2,063   5,637   6,408 
    Total cost of revenues  23,835   27,603   76,947   82,267 
    Gross profit  72,966   47,594   212,159   157,458 
    Operating expenses:                
    Research and development  30,370   22,041   83,365   66,898 
    Sales and marketing  9,534   9,180   28,097   24,829 
    General and administrative  13,173   14,261   38,563   36,456 
    Amortization of intangible assets  3,180   3,120   9,521   9,376 
    Restructuring and other costs, net  1,760   3,301   2,777   13,725 
    Total operating expenses  58,017   51,903   162,323   151,284 
    Income (loss) from operations  14,949   (4,309)  49,836   6,174 
    Interest income  34   38   68   563 
    Interest expense  (3,294)  (5,546)  (10,569)  (19,043)
    Other income (expense), net  173   (20,446)  1,432   (20,366)
    Income (loss) before income taxes  11,862   (30,263)  40,767   (32,672)
    Provision for (benefit from) income taxes  6,064   (2,211)  2,865   (6,149)
    Net income (loss) $5,798  $(28,052) $37,902  $(26,523)
    Net income (loss) per share:                
    Basic $0.15  $(0.77) $1.01  $(0.73)
    Diluted $0.15  $(0.77) $0.97  $(0.73)
    Weighted-average common share outstanding:                
    Basic  37,825   36,509   37,664   36,315 
    Diluted  39,296   36,509   39,135   36,315 


    CERENCE INC.
    Condensed Consolidated Balance Sheets
    (in thousands, except per share data)

      June 30,  September 30, 
      2021  2020 
      (Unaudited)     
    ASSETS        
    Current assets:        
    Cash and cash equivalents $120,840   136,067 
    Marketable securities  29,100   11,662 
    Accounts receivable, net of allowances of $404 and $1,394  53,141   50,900 
    Deferred costs  7,330   7,256 
    Prepaid expenses and other current assets  61,328   44,220 
    Total current assets  271,739   250,105 
    Long-term marketable securities  7,348   - 
    Property and equipment, net  30,723   29,529 
    Deferred costs  33,446   38,161 
    Operating lease right of use assets  16,837   20,096 
    Goodwill  1,132,897   1,128,198 
    Intangible assets, net  30,618   45,616 
    Deferred tax assets  165,077   160,974 
    Other assets  20,354   14,938 
    Total assets $1,709,039  $1,687,617 
    LIABILITIES AND STOCKHOLDERS' EQUITY        
    Current liabilities:        
    Accounts payable $11,187  $8,447 
    Deferred revenue  84,993   112,156 
    Short-term operating lease liabilities  5,497   5,700 
    Short-term debt  6,250   6,250 
    Accrued expenses and other current liabilities  60,955   66,078 
    Total current liabilities  168,882   198,631 
    Long-term debt  265,372   266,872 
    Deferred revenue, net of current portion  204,790   212,573 
    Long-term operating lease liabilities  13,157   17,821 
    Other liabilities  34,989   31,649 
    Total liabilities  687,190   727,546 
    Stockholders' Equity:        
    Common stock, $0.01 par value, 560,000 shares authorized; 37,828 shares issued and outstanding as of June 30, 2021; 36,842 shares issued and outstanding as of September 30, 2020.  379   369 
    Accumulated other comprehensive income  9,579   3,711 
    Additional paid-in capital  992,305   974,307 
    Retained earnings (accumulated deficit)  19,586   (18,316)
    Total stockholders' equity  1,021,849   960,071 
    Total liabilities and stockholders' equity $1,709,039  $1,687,617 


    CERENCE INC.
    Condensed Consolidated Statements of Cash Flows
    (unaudited - in thousands)

      Nine Months Ended 
      June 30, 
      2021  2020 
    Cash flows from operating activities:        
    Net income (loss) $37,902  $(26,523)
    Adjustments to reconcile net income (loss) to net cash provided by
    operating activities:
            
    Depreciation and amortization  22,276   22,704 
    (Benefit from) provision for credit loss reserve  (412)  525 
    Stock-based compensation expense  42,179   32,954 
    Non-cash interest expense  3,730   4,025 
    Loss on debt extinguishment  -   19,279 
    Deferred tax benefit  (3,812)  (12,535)
    Other  (1,590)  - 
    Changes in operating assets and liabilities:        
    Accounts receivable  (1,698)  3,164 
    Prepaid expenses and other assets  (17,065)  (21,328)
    Deferred costs  5,078   (749)
    Accounts payable  2,906   (170)
    Accrued expenses and other liabilities  (4,026)  19,283 
    Deferred revenue  (34,400)  (22,052)
    Net cash provided by operating activities  51,068   18,577 
    Cash flows from investing activities:        
    Capital expenditures  (8,055)  (16,075)
    Purchases of marketable securities  (33,800)  - 
    Sale and maturities of marketable securities  9,000   - 
    Payments for equity investments  (2,563)  - 
    Other investing activities  702   - 
    Net cash used in investing activities  (34,716)  (16,075)
    Cash flows from financing activities:        
    Net transactions with Parent  -   12,964 
    Distributions to Parent  -   (152,978)
    Proceeds from long-term debt, net of discount  -   547,719 
    Payments for long-term debt issuance costs  (520)  (5,765)
    Principal payments of long-term debt  (4,689)  (270,000)
    Common stock repurchases for tax withholdings for net settlement of equity awards  (34,089)  (1,613)
    Principal payments of lease liabilities arising from a finance lease  (326)  (96)
    Proceeds from the issuance of common stock  6,682   - 
    Net cash (used in) provided by financing activities  (32,942)  130,231 
    Effects of exchange rate changes on cash and cash equivalents  1,363   111 
    Net change in cash and cash equivalents  (15,227)  132,844 
    Cash and cash equivalents at the beginning of the period  136,067   - 
    Cash and cash equivalents at the end of the period $120,840  $132,844 


    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
    (unaudited - in thousands)

      Three Months Ended  Nine Months Ended 
      June 30,  June 30, 
      2021  2020  2021  2020 
    GAAP revenue $96,801  $75,197  $289,106  $239,725 
                     
    GAAP gross profit $72,966  $47,594  $212,159  $157,458 
    Stock-based compensation  1,708   2,141   4,945   3,985 
    Amortization of intangible assets  1,879   2,063   5,637   6,408 
    Non-GAAP gross profit $76,553  $51,798  $222,741  $167,851 
    GAAP gross margin  75.4%  63.3%  73.4%  65.7%
    Non-GAAP gross margin  79.1%  68.9%  77.0%  70.0%
                     
    GAAP operating income (loss) $14,949  $(4,309) $49,836  $6,174 
    Stock-based compensation  14,710   17,425   42,179   32,954 
    Amortization of intangible assets  5,059   5,183   15,158   15,784 
    Restructuring and other costs, net  1,760   3,301   2,777   13,725 
    Non-GAAP operating income $36,478  $21,600  $109,950  $68,637 
    GAAP operating margin  15.4%  -5.7%  17.2%  2.6%
    Non-GAAP operating margin  37.7%  28.7%  38.0%  28.6%
                     
    GAAP net income (loss) $5,798  $(28,052) $37,902  $(26,523)
    Stock-based compensation  14,710   17,425   42,179   32,954 
    Amortization of intangible assets  5,059   5,183   15,158   15,784 
    Restructuring and other costs, net  1,760   3,301   2,777   13,725 
    Depreciation  2,270   2,550   7,118   6,920 
    Total other income (expense), net  (3,087)  (25,954)  (9,069)  (38,846)
    Provision for (benefit from) income taxes  6,064   (2,211)  2,865   (6,149)
    Adjusted EBITDA $38,748  $24,150  $117,068  $75,557 
    GAAP net income margin  6.0%  -37.3%  13.1%  -11.1%
    Adjusted EBITDA margin  40.0%  32.1%  40.5%  31.5%


    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited - in thousands, except per share data)

      Three Months Ended  Nine Months Ended 
      June 30,  June 30, 
      2021  2020  2021  2020 
    GAAP net income (loss) $5,798  $(28,052) $37,902  $(26,523)
    Stock-based compensation  14,710   17,425   42,179   32,954 
    Amortization of intangible assets  5,059   5,183   15,158   15,784 
    Restructuring and other costs, net  1,760   3,301   2,777   13,725 
    Loss on debt extinguishment  -   19,279   -   19,279 
    Non-cash interest expense  1,276   1,379   3,730   4,025 
    Adjustments to income tax expense  (2,517)  (6,088)  (22,984)  (19,901)
    Non-GAAP net income $26,086  $12,427  $78,762  $39,343 
                     
    Adjusted EPS:                
    GAAP Numerator:                
    Net income (loss) attributed to common shareholders $5,798  $(28,052) $37,902  $(26,523)
                     
    Non-GAAP Numerator:                
    Net income attributed to common shareholders $26,086  $12,427  $78,762  $39,343 
    Interest on Convertible Senior Notes, net of tax  988   325   2,965   325 
    Net income attributed to common shareholders - diluted $27,074  $12,752  $81,727  $39,668 
                     
    GAAP Denominator:                
    Weighted-average common shares outstanding - basic  37,825   36,509   37,664   36,315 
    Adjustment for diluted shares  1,471   -   1,471   - 
    Weighted-average common shares outstanding - diluted  39,296   36,509   39,135   36,315 
                     
    Non-GAAP Denominator:                
    Weighted-average common shares outstanding- basic  37,825   36,509   37,664   36,315 
    Adjustment for diluted shares  6,148   3,047   6,148   1,334 
    Weighted-average common shares outstanding - diluted  43,973   39,556   43,812   37,649 
                     
    GAAP net income (loss) per share - diluted $0.15  $(0.77) $0.97  $(0.73)
    Non-GAAP net income per share - diluted $0.62  $0.32  $1.87  $1.05 
                     
    GAAP net cash provided by operating activities $24,059  $19,312  $51,068  $18,577 
    Capital expenditures  (2,874)  (5,930)  (8,055)  (16,075)
    Free Cash Flow $21,185  $13,382  $43,013  $2,502 


    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited - in thousands)

      Q3FY21  Q2FY21  Q1FY21  Q4FY20 
    GAAP revenues $96,801  $98,662  $93,643  $91,242 
    Less: Professional services revenue  16,538   16,555   21,299   19,457 
    Non-GAAP Repeatable revenues $80,263  $82,107  $72,344  $71,785 
                     
    GAAP revenues TTM $380,348             
    Less: Professional services revenue TTM  73,849             
    Non-GAAP Repeatable revenues TTM $306,499             
    Repeatable software contribution  81%            


    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited - in thousands)

      Q4 2021 
      Low  High 
    GAAP revenue $97,000  $101,000 
             
    GAAP gross profit $71,400  $75,400 
    Stock-based compensation  1,500   1,500 
    Amortization of intangible assets  1,900   1,900 
    Non-GAAP gross profit $74,800  $78,800 
    GAAP gross margin  74%  75%
    Non-GAAP gross margin  77%  78%
             
    GAAP operating income $14,000  $17,400 
    Stock-based compensation  13,200   13,200 
    Amortization of intangible assets  5,100   5,100 
    Restructuring and other costs, net  1,200   1,200 
    Non-GAAP operating income $33,500  $36,900 
    GAAP operating margin  14%  17%
    Non-GAAP operating margin  35%  37%
             
    GAAP net income $3,300  $6,600 
    Stock-based compensation  13,200   13,200 
    Amortization of intangible assets  5,100   5,100 
    Restructuring and other costs, net  1,200   1,200 
    Depreciation  2,600   2,600 
    Total other income (expense), net  (3,600)  (3,600)
    Provision for income taxes  7,100   7,100 
    Adjusted EBITDA $36,100  $39,400 
    GAAP net income margin  3%  7%
    Adjusted EBITDA margin  37%  39%


    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited - in thousands, except per share data)

      Q4 2021 
      Low  High 
    GAAP net income $3,300  $6,600 
    Stock-based compensation  13,200   13,200 
    Amortization of intangibles  5,100   5,100 
    Restructuring and other costs, net  1,200   1,200 
    Non-cash interest expense  1,300   1,300 
    Adjustments to income tax expense  (700)  (1,500)
    Non-GAAP net income $23,400  $25,900 
             
    Adjusted EPS:        
    GAAP Numerator:        
    Net income attributed to common shareholders $3,300  $6,600 
    Interest on Convertible Senior Notes, net of tax  -   - 
    Net income attributed to common shareholders - diluted $3,300  $6,600 
             
    Non-GAAP Numerator:        
    Net income attributed to common shareholders $23,400  $25,900 
    Interest on Convertible Senior Notes, net of tax  1,000   1,000 
    Net income attributed to common shareholders - diluted $24,400  $26,900 
             
    GAAP Denominator:        
    Weighted-average common shares outstanding - basic  38,000   38,000 
    Adjustment for diluted shares  1,700   1,700 
    Weighted-average common shares outstanding - diluted  39,700   39,700 
             
    Non-GAAP Denominator:        
    Weighted-average common shares outstanding- basic  38,000   38,000 
    Adjustment for diluted shares  6,400   6,400 
    Weighted-average common shares outstanding - diluted  44,400   44,400 
             
    GAAP net income per share - diluted $0.08  $0.17 
    Non-GAAP net income per share - diluted $0.55  $0.61 

     


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