• Cerence Announces First Quarter Fiscal Year 2022 Results

    来源: Nasdaq GlobeNewswire / 07 2月 2022 06:30:01   America/Chicago

    Headlines

    • Delivered second largest bookings quarter in the Company’s history
    • Exceeded most profitability metrics for the quarter
    • Secured initial revenue contribution from fitness products, a new mobility market
    • Won another China-based two-wheeler customer
    • Company lowers FY2022 guidance

    BURLINGTON, Mass., Feb. 07, 2022 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today reported its first quarter fiscal year 2022 results for the quarter ended December 31, 2021.

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

       Three Months Ended  
       December 31,  
       2021   2020   
     GAAP Revenue  $94.4    $93.6   
     GAAP Gross Margin   74.3%     71.3%   
     Non-GAAP Gross Margin   77.5%     75.0%   
     GAAP Operating Margin   24.3%     18.7%   
     Non-GAAP Operating Margin   36.8%     38.9%   
     GAAP Net Income  $19.0    $20.9   
     Non-GAAP Net Income  $25.3    $23.6   
     Adjusted EBITDA  $36.9    $39.0   
     Adjusted EBITDA Margin   39.1%     41.6%   
     GAAP Net Income per Share - diluted  $0.47    $0.53   
     Non-GAAP Net Income per Share - diluted  $0.59    $0.57   

    (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.

    Stefan Ortmanns, Chief Executive Officer at Cerence, commented, “We had a strong start to the fiscal year. Our results underscore the strength of our business and reinforces Cerence as the global leader in unique, moving experiences for the mobility world. We’ve delivered important innovations and leading AI mobility solutions to customers in key markets, and our employees have demonstrated great commitment to supporting our customers and each other.”

    Ortmanns continued, “We remain focused on the markets, customers and products that will deliver long-term sustainable growth and that everything we do reinforces our vision of leadership in AI for mobility. We are intensely focused on bold innovation and executing at speed for our customers.”

    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  Q1FY22
    Percent of worldwide auto production with Cerence Technology (TTM)   52% 
    Average contract duration - years (TTM):   7.9 
    Repeatable software contribution (TTM):   81% 
    Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)   11% 
    Growth in billings per car (TTM over prior year TTM) (excludes legacy contract3)   0% 
    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 2% over the same time period ended December 31, 2021.
    3. Legacy contract is a connected services contract with Toyota acquired by Nuance through a 2013 acquisition.

    Second Quarter and Full Year Fiscal 2022 Outlook
    With recent changes in leadership, year-to-date performance, and further analysis of the business and market conditions, the company is providing guidance for Q2 2022 and updated guidance for the full fiscal year.

    Key factors include:

    • The rapidly evolving conditions within the automotive industry affecting vehicle production and delivery, including but not limited to ongoing supply chain challenges driven by the semiconductor shortage, and the still unknown and ongoing impact of Covid-19 variants such as Omicron affecting the delivery of new vehicles, factory shutdowns and labor shortages.
    • Analysis of each business unit’s plans, forecasts and assumptions that suggest the conversion from bookings to revenue will take longer than expected for new products. These new products remain attractive revenue streams and are expected to contribute to future growth, but will take longer than originally expected to recognize revenue.
    • Prior guidance assumed a number of one-time technology license opportunities in fiscal 2022. Although attractive opportunities remain, these may not all be realized during our fiscal year as previously expected.

    For the fiscal quarter ending March 31, 2022, revenue is expected to be in the range of $82 million to $86 million. Adjusted EBITDA is expected to be in the range of approximately $22 million to $26 million. The adjusted EBITDA guidance excludes acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs.

    The full-year guidance is for revenue to be in the range of $365 million to $385 million representing a 9% decrease at the midpoint compared to the initial FY22 guidance provided on November 22, 2021, and a 3% decrease at the mid-point compared to last year’s actual revenue of $387 million. Adjusted EBITDA for the full year is expected to be in the range of approximately $119 million to $139 million. The adjusted EBITDA guidance excludes acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs.

    Additional details regarding guidance will be provided on the earnings call.

    First Quarter Conference Call
    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 844.467.7116 (domestic) or +1.409.983.9838 (international) and entering the pass code 8094176. 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 February 14, 2022. The replay dial-in number is 1.855.859.2056 (domestic) or +1.404.537.3406 (international) using pass code 8094176. 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 months ended December 31, 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:

    1. 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.
    2. 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.
    3. 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:

    1. 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.
    2. 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 December 31, 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.

    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, 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 more than 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
    (in thousands, except per share data)

      Three Months Ended 
      December 31, 
      2021  2020 
    Revenues:        
    License $46,850  $46,414 
    Connected services  28,159   25,930 
    Professional services  19,417   21,299 
    Total revenues  94,426   93,643 
    Cost of revenues:        
    License  721   674 
    Connected services  5,724   7,013 
    Professional services  15,903   17,322 
    Amortization of intangible assets  1,879   1,879 
    Total cost of revenues  24,227   26,888 
    Gross profit  70,199   66,755 
    Operating expenses:        
    Research and development  25,792   24,131 
    Sales and marketing  5,879   9,008 
    General and administrative  7,527   12,434 
    Amortization of intangible assets  3,154   3,158 
    Restructuring and other costs, net  4,915   480 
    Total operating expenses  47,267   49,211 
    Income from operations  22,932   17,544 
    Interest income  90   18 
    Interest expense  (3,427)  (3,799)
    Other income (expense), net  (252)  (2,237)
    Income before income taxes  19,343   11,526 
    Provision for (benefit from) income taxes  299   (9,415)
    Net income $19,044  $20,941 
    Net income per share:        
    Basic $0.49  $0.56 
    Diluted $0.47  $0.53 
    Weighted-average common share outstanding:        
    Basic  38,839   37,180 
    Diluted  44,370   43,363 


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

      December 31,  September 30, 
      2021  2021 
      (Unaudited)     
    ASSETS        
    Current assets:        
    Cash and cash equivalents $117,236   128,428 
    Marketable securities  27,905   30,435 
    Accounts receivable, net of allowances of $181 and $395  37,765   45,560 
    Deferred costs  5,894   6,095 
    Prepaid expenses and other current assets  92,352   76,530 
    Total current assets  281,152   287,048 
    Long-term marketable securities  7,720   7,339 
    Property and equipment, net  34,437   31,505 
    Deferred costs  29,882   31,702 
    Operating lease right of use assets  16,525   14,901 
    Goodwill  1,125,648   1,128,511 
    Intangible assets, net  20,138   25,348 
    Deferred tax assets  157,833   159,293 
    Other assets  19,090   20,081 
    Total assets $1,692,425  $1,705,728 
    LIABILITIES AND STOCKHOLDERS' EQUITY        
    Current liabilities:        
    Accounts payable $8,322  $11,636 
    Deferred revenue  71,215   78,394 
    Short-term operating lease liabilities  5,386   4,562 
    Short-term debt  6,250   6,250 
    Accrued expenses and other current liabilities  50,309   64,467 
    Total current liabilities  141,482   165,309 
    Long-term debt  264,831   265,093 
    Deferred revenue, net of current portion  193,443   198,343 
    Long-term operating lease liabilities  12,998   12,216 
    Other liabilities  30,170   32,822 
    Total liabilities  642,924   673,783 
    Stockholders' Equity:        
    Common stock, $0.01 par value, 560,000 shares authorized; 39,162 and 38,025 shares issued and outstanding, respectively  392   381 
    Accumulated other comprehensive (loss) income  (3,717)  1,634 
    Additional paid-in capital  1,006,205   1,002,353 
    Retained earnings  46,621   27,577 
    Total stockholders' equity  1,049,501   1,031,945 
    Total liabilities and stockholders' equity $1,692,425  $1,705,728 


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

      Three Months Ended 
      December 31, 
      2021  2020 
    Cash flows from operating activities:        
    Net income $19,044  $20,941 
    Adjustments to reconcile net income to net cash provided by
    operating activities:
            
    Depreciation and amortization  7,210   7,624 
    Benefit from credit loss reserve  (418)  (410)
    Stock-based compensation expense  5,841   13,325 
    Non-cash interest expense  1,301   1,230 
    Deferred tax benefit  (1,455)  (16,137)
    Other  551   - 
    Changes in operating assets and liabilities:        
    Accounts receivable  7,555   (7,155)
    Prepaid expenses and other assets  (19,707)  1,025 
    Deferred costs  1,509   2,051 
    Accounts payable  (3,153)  (3,655)
    Accrued expenses and other liabilities  (2,797)  (1,527)
    Deferred revenue  (10,336)  (6,503)
    Net cash provided by operating activities  5,145   10,809 
    Cash flows from investing activities:        
    Capital expenditures  (4,410)  (2,369)
    Purchases of marketable securities  (3,593)  (6,358)
    Sale and maturities of marketable securities  5,706   - 
    Other investing activities  559   - 
    Net cash used in investing activities  (1,738)  (8,727)
    Cash flows from financing activities:        
    Payments for long-term debt issuance costs  -   (520)
    Principal payments of long-term debt  (1,563)  (1,563)
    Common stock repurchases for tax withholdings for net settlement of equity awards  (44,573)  (30,258)
    Principal payments of lease liabilities arising from a finance lease  (155)  (101)
    Proceeds from the issuance of common stock  32,139   3,663 
    Net cash used in financing activities  (14,152)  (28,779)
    Effects of exchange rate changes on cash and cash equivalents  (447)  990 
    Net change in cash and cash equivalents  (11,192)  (25,707)
    Cash and cash equivalents at the beginning of the period  128,428   136,067 
    Cash and cash equivalents at the end of the period $117,236  $110,360 


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

      Three Months Ended 
      December 31, 
      2021  2020 
    GAAP revenue $94,426  $93,643 
             
    GAAP gross profit $70,199  $66,755 
    Stock-based compensation  1,092   1,592 
    Amortization of intangible assets  1,879   1,879 
    Non-GAAP gross profit $73,170  $70,226 
    GAAP gross margin  74.3%  71.3%
    Non-GAAP gross margin  77.5%  75.0%
             
    GAAP operating income $22,932  $17,544 
    Stock-based compensation*  1,841   13,325 
    Amortization of intangible assets  5,033   5,037 
    Restructuring and other costs, net*  4,915   480 
    Non-GAAP operating income $34,721  $36,386 
    GAAP operating margin  24.3%  18.7%
    Non-GAAP operating margin  36.8%  38.9%
             
    GAAP net income $19,044  $20,941 
    Stock-based compensation*  1,841   13,325 
    Amortization of intangible assets  5,033   5,037 
    Restructuring and other costs, net*  4,915   480 
    Depreciation  2,177   2,587 
    Total other income (expense), net  (3,589)  (6,018)
    Provision for (benefit from) income taxes  299   (9,415)
    Adjusted EBITDA $36,898  $38,973 
    GAAP net income margin  20.2%  22.4%
    Adjusted EBITDA margin  39.1%  41.6%
    * - $4.0 million in stock-based compensation is included in Restructuring and other costs, net 


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

      Three Months Ended 
      December 31, 
      2021  2020 
    GAAP net income $19,044  $20,941 
    Stock-based compensation*  1,841   13,325 
    Amortization of intangible assets  5,033   5,037 
    Restructuring and other costs, net*  4,915   480 
    Non-cash interest expense  1,301   1,230 
    Indemnification asset release  1,302   - 
    Adjustments to income tax expense  (8,108)  (17,416)
    Non-GAAP net income $25,328  $23,597 
             
    Adjusted EPS:        
    GAAP Numerator:        
    Net income attributed to common shareholders $19,044  $20,941 
    Interest on Convertible Senior Notes, net of tax  1,911   1,831 
    Net income attributed to common shareholders - diluted $20,955  $22,772 
             
    Non-GAAP Numerator:        
    Net income attributed to common shareholders $25,328  $23,597 
    Interest on Convertible Senior Notes, net of tax  1,019   1,005 
    Net income attributed to common shareholders - diluted $26,347  $24,602 
             
    GAAP Denominator:        
    Weighted-average common shares outstanding - basic  38,839   37,180 
    Adjustment for diluted shares  5,531   6,183 
    Weighted-average common shares outstanding - diluted  44,370   43,363 
             
    Non-GAAP Denominator:        
    Weighted-average common shares outstanding- basic  38,839   37,180 
    Adjustment for diluted shares  5,531   6,183 
    Weighted-average common shares outstanding - diluted  44,370   43,363 
             
    GAAP net income per share - diluted $0.47  $0.53 
    Non-GAAP net income per share - diluted $0.59  $0.57 
             
    GAAP net cash provided by operating activities $5,145  $10,809 
    Capital expenditures  (4,410)  (2,369)
    Free Cash Flow $735  $8,440 
    * - $4.0 million in stock-based compensation is included in Restructuring and other costs, net 


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

      Q1FY22  Q4FY21  Q3FY21  Q2FY21 
    GAAP revenues $94,426  $98,076  $96,801  $98,662 
    Less: Professional services revenue  19,417   21,073   16,538   16,555 
    Non-GAAP Repeatable revenues $75,009  $77,003  $80,263  $82,107 
                     
    GAAP revenues TTM $387,965             
    Less: Professional services revenue TTM  73,583             
    Non-GAAP Repeatable revenues TTM $314,382             
    Repeatable software contribution  81%            


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

      Q2 2022  FY2022 
      Low  High  Low  High 
    GAAP revenue $82,000  $86,000  $365,000  $385,000 
                     
    GAAP gross profit $58,400  $62,400  $267,900  $287,900 
    Stock-based compensation  1,200   1,200   4,700   4,700 
    Amortization of intangible assets  900   900   3,000   3,000 
    Non-GAAP gross profit $60,500  $64,500  $275,600  $295,600 
    GAAP gross margin  71%  73%  73%  75%
    Non-GAAP gross margin  74%  75%  76%  77%
                     
    GAAP operating income $5,400  $9,400  $59,300  $79,300 
    Stock-based compensation  9,000   9,000   28,400   28,400 
    Amortization of intangible assets  4,100   4,100   14,700   14,700 
    Restructuring and other costs, net  500   500   6,300   6,300 
    Non-GAAP operating income $19,000  $23,000  $108,700  $128,700 
    GAAP operating margin  7%  11%  16%  21%
    Non-GAAP operating margin  23%  27%  30%  33%
                     
    GAAP net income $1,300  $3,700  $34,400  $49,200 
    Stock-based compensation  9,000   9,000   28,400   28,400 
    Amortization of intangible assets  4,100   4,100   14,700   14,700 
    Restructuring and other costs, net  500   500   6,300   6,300 
    Depreciation  2,500   2,500   10,000   10,000 
    Total other income (expense), net  (3,300)  (3,300)  (13,500)  (13,500)
    Provision for income taxes  800   2,400   11,400   16,600 
    Adjusted EBITDA $21,500  $25,500  $118,700  $138,700 
    GAAP net income margin  2%  4%  9%  13%
    Adjusted EBITDA margin  26%  30%  33%  36%


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

      Q2 2022  FY2022 
      Low  High  Low  High 
    GAAP net income $1,300  $3,700  $34,400  $49,200 
    Stock-based compensation  9,000   9,000   28,400   28,400 
    Amortization of intangibles  4,100   4,100   14,700   14,700 
    Restructuring and other costs, net  500   500   6,300   6,300 
    Non-cash interest expense  1,300   1,300   5,300   5,300 
    Adjustments to income tax expense  (3,400)  (2,800)  (13,100)  (12,100)
    Non-GAAP net income $12,800  $15,800  $76,000  $91,800 
                     
    Adjusted EPS:                
    GAAP Numerator:                
    Net income attributed to common shareholders $1,300  $3,700  $34,400  $49,200 
                     
    Non-GAAP Numerator:                
    Net income attributed to common shareholders $12,800  $15,800  $76,000  $91,800 
    Interest on Convertible Senior Notes, net of tax  1,000   1,000   4,000   4,000 
    Net income attributed to common shareholders - diluted $13,800  $16,800  $80,000  $95,800 
                     
    GAAP Denominator:                
    Weighted-average common shares outstanding - basic  39,200   39,200   39,100   39,100 
    Adjustment for diluted shares  600   600   700   700 
    Weighted-average common shares outstanding - diluted  39,800   39,800   39,800   39,800 
                     
    Non-GAAP Denominator:                
    Weighted-average common shares outstanding- basic  39,200   39,200   39,100   39,100 
    Adjustment for diluted shares  5,200   5,200   5,300   5,300 
    Weighted-average common shares outstanding - diluted  44,400   44,400   44,400   44,400 
                     
    GAAP net income per share - diluted $0.03  $0.09  $0.86  $1.24 
    Non-GAAP net income per share - diluted $0.31  $0.38  $1.80  $2.16 

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