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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 29, 2022

 

CERENCE INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware		001-39030		83-4177087
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
1 Burlington Woods Drive, Suite 301A Burlington, Massachusetts				01803
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (857) 362-7300

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.01 par value		CRNC		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On November 29, 2022, Cerence Inc. (the "Company") announced its financial results for the fiscal year ended September 30, 2022. The press release, including the financial information contained therein, is attached hereto as Exhibit 99.1, and is incorporated herein by reference. A description of the non-GAAP measures, the reasons for their use, and GAAP to non-GAAP reconciliations are included in the press release.

The information in this Item 2.02 and the exhibit attached hereto are being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press Release announcing financial results dated November 29, 2022.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		Cerence Inc.
Date: November 29, 2022		By:	/s/ Thomas L. Beaudoin
			Name: Thomas L. Beaudoin
			Title: Executive Vice President and Chief Financial Officer

 

 

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Exhibit 99.1

Cerence Announces Fourth Quarter and Fiscal Year 2022 Results

Headlines

BURLINGTON, Mass., November 29, 2022 – Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today reported its fourth quarter and fiscal year 2022 results for the year ended September 30, 2022.

 

Results Summary (1)

(in millions, except per share data)

		Three Months Ended								Twelve Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
GAAP revenue		$	58.1			$	98.1			$	327.9			$	387.2
GAAP gross margin			58.1	%			75.4	%			70.4	%			73.9	%
Non-GAAP gross margin			58.9	%			78.1	%			72.4	%			77.3	%
GAAP operating margin			-394.4	%			11.0	%			-56.2	%			15.7	%
Non-GAAP operating margin			-9.8	%			37.2	%			23.5	%			37.8	%
GAAP net (loss) income (2)(3)		$	(230.1	)		$	8.0			$	(310.8	)		$	45.9
Non-GAAP net (loss) income		$	(5.5	)		$	28.4			$	50.4			$	107.2
Adjusted EBITDA		$	(3.1	)		$	38.8			$	86.4			$	155.9
Adjusted EBITDA margin			-5.3	%			39.6	%			26.3	%			40.3	%
GAAP net (loss) income per share - diluted		$	(5.84	)		$	0.20			$	(7.93	)		$	1.17
Non-GAAP net (loss) income per share - diluted		$	(0.14	)		$	0.66			$	1.24			$	2.53

 

 

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Stefan Ortmanns, Chief Executive Officer at Cerence, commented, “Our fourth quarter operating results were better than expected, and as committed, included no contribution from fixed contracts. Most importantly, our bookings at $684M represent an increase of 16% compared to fiscal 2021 and include a number of key program wins for some of our latest product offerings, indicating continued innovation partnerships with the world's leading automakers and transportation OEMs as they continue to adopt new technologies from Cerence.”

Ortmanns continued, “As we look to the future, we see significant opportunities for growth as we expand our focus from the driver-centric cockpit to the fully immersive digital cabin. During our investor day presentation, we are excited to share with investors our organic growth strategy, the technology roadmap to support it, and the accompanying multi-year plan that will drive long-term sustainable growth.”

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		Q4FY22
Percent of worldwide auto production with Cerence Technology (TTM)			51	%
Average contract duration - years (TTM):			7.2
Repeatable software contribution (TTM):			74	%
Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)			(13	%)
Growth in billings per car (TTM over prior year TTM) (excludes legacy contract)3			8	%

 

First Quarter and Full Year Fiscal 2023 Outlook

First quarter and full fiscal 2023 guidance will be provided during the investor day presentation.

Cerence Investor Day Webcast

The company is hosting a live investor day in New York City and will also webcast the event, starting at 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time on November 29, 2022. The agenda for the investor day will include a review of Q4 and full fiscal year 2022 results and fiscal 2023 guidance. Additionally, the company will share Cerence’s market and growth strategy, a deeper dive into its technology roadmap and competitive position supporting our strategy, and the multi-year financial targets.

All interested investors and analysts are invited to join the live webcast by registering here.

 

 

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Cerence intends to use the investor relations portion of its website as a means of disclosing material non-public information and for complying with disclosure obligations under Regulation FD.

 

Webcast access, along with related materials, 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 presentation regarding: Cerence’s future performance, results and financial condition; expected growth; multi-year targets; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; demand for Cerence products; innovation and new product offerings; cost efficiency initiatives; and 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: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain and semiconductor shortage, or the global economy more generally; the impacts of the COVID-19 pandemic on our and our customers’ businesses; the impact of the war in Ukraine 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 strategy to increase cloud offerings; 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 for the fiscal year ended September 30, 2022 and other filings with the Securities and Exchange Commission. Further, the inclusion of Cerence’s multi-year plan in this presentation should not be regarded as predictive of actual future events, and such targets, which were based on numerous variables and assumptions that necessarily involve judgments, should not be relied upon as such or construed as financial guidance. Such plan covers multiple years, and thus, by their nature, the targets included in the plan become subject to greater uncertainty with each successive year. Accordingly, there can be no assurance that any of the targets set forth in the multi-year plan will be realized, and actual results may vary materially from those targets. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

 

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Discussion of Non-GAAP Financial Measures

We believe that providing the non-GAAP information in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements.

Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. In assessing the overall health of the business during the three and twelve months ended September 30, 2022 and 2021, 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 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

 

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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:

Amortization of acquired intangible assets.

 

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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:

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.

 

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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.

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 September 30, 2022, our management has reviewed the following KPIs, each of which is described below:

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.

 

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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 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 more than 450 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.com

 

 

 

 

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CERENCE INC.

Consolidated Statements of Operations

(in thousands, except per share data)

		Three Months Ended								Twelve Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
Revenues:
License		$	19,000			$	51,418			$	158,610			$	202,183
Connected service			18,096				25,585				85,571				109,534
Professional service			21,048				21,073				83,710				75,465
Total revenues			58,144				98,076				327,891				387,182
Cost of revenues:
License			1,006				826				2,698				3,544
Connected service			5,956				5,767				22,722				25,727
Professional service			17,316				15,655				68,764				64,287
Amortization of intangible assets			105				1,879				2,984				7,516
Total cost of revenues			24,383				24,127				97,168				101,074
Gross profit			33,761				73,949				230,723				286,108
Operating expenses:
Research and development			25,308				28,705				107,116				112,070
Sales and marketing			8,611				10,586				31,098				38,683
General and administrative			10,712				18,416				42,653				56,979
Amortization of intangible assets			2,365				3,169				11,516				12,690
Restructuring and other costs, net			2,379				2,315				8,965				5,092
Goodwill impairment			213,720				—				213,720				—
Total operating expenses			263,095				63,191				415,068				225,514
(Loss) income from operations			(229,334	)			10,758				(184,345	)			60,594
Interest income			591				41				1,007				109
Interest expense			(3,792	)			(3,428	)			(14,394	)			(13,997	)
Other (expense) income, net			(255	)			131				(1,019	)			1,563
(Loss) income before income taxes			(232,790	)			7,502				(198,751	)			48,269
(Benefit from) provision for income taxes			(2,663	)			(489	)			112,075				2,376
Net (loss) income		$	(230,127	)		$	7,991			$	(310,826	)		$	45,893
Net (loss) income per share:
Basic			(5.84	)			0.21				(7.93	)			1.22
Diluted			(5.84	)			0.20				(7.93	)			1.17
Weighted-average common share outstanding:
Basic			39,407				38,015				39,187				37,752
Diluted			39,407				39,748				39,187				39,289

 

 

 

 

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CERENCE INC.

Consolidated Balance Sheets

(in thousands, except per share amounts)

		September 30,				September 30,
		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	94,847			$	128,428
Marketable securities			20,317				30,435
Accounts receivable, net of allowances of $157 and $395 at September 30, 2022 and September 30, 2021, respectively			45,073				45,560
Deferred costs			7,098				6,095
Prepaid expenses and other current assets			60,184				76,530
Total current assets			227,519				287,048
Long-term marketable securities			11,584				7,339
Property and equipment, net			37,707				31,505
Deferred costs			22,451				31,702
Operating lease right of use assets			14,702				14,901
Goodwill			890,802				1,128,511
Intangible assets, net			9,700				25,348
Deferred tax assets			51,989				159,293
Other assets			52,039				20,081
Total assets		$	1,318,493			$	1,705,728
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	10,372			$	11,636
Deferred revenue			72,662				78,394
Short-term operating lease liabilities			5,071				4,562
Short-term debt			10,938				6,250
Accrued expenses and other current liabilities			47,990				64,467
Total current liabilities			147,033				165,309
Long-term debt, net of discounts and issuance costs			259,436				265,093
Deferred revenue, net of current portion			165,972				198,343
Long-term operating lease liabilities			11,375				12,216
Other liabilities			21,727				32,822
Total liabilities			605,543				673,783
Stockholders' Equity:
Common stock, $0.01 par value, 560,000 shares authorized as of September 30, 2022; 39,430 and 38,025 shares issued and outstanding as of September 30, 2022 and September 30, 2021, respectively			394				381
Accumulated other comprehensive (loss) income			(33,737	)			1,634
Additional paid-in capital			1,029,542				1,002,353
(Accumulated deficit) Retained earnings			(283,249	)			27,577
Total stockholders' equity			712,950				1,031,945
Total liabilities and stockholders' equity		$	1,318,493			$	1,705,728

 

 

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CERENCE INC.

Consolidated Statements of Cash Flows

(in thousands)

		Twelve Months Ended
		September 30,
		2022				2021
Cash flows from operating activities:
Net (loss) income		$	(310,826	)		$	45,893
Adjustments to reconcile net (loss) income to net cash (used in) provided by operations:
Depreciation and amortization			23,939				29,661
(Benefit from) provision for credit loss reserve			(413	)			(415	)
Stock-based compensation			28,076				60,555
Non-cash interest expense			5,281				5,013
Deferred tax provision (benefit)			97,287				(4,419	)
Goodwill impairment			213,720				-
Other			6,115				(606	)
Changes in operating assets and liabilities:
Accounts receivable			(6,590	)			5,751
Prepaid expenses and other assets			(33,756	)			(30,661	)
Deferred costs			4,654				6,984
Accounts payable			157				3,411
Accrued expenses and other liabilities			(1,479	)			(1,125	)
Deferred revenue			(28,303	)			(45,653	)
Net cash (used in) provided by operating activities			(2,138	)			74,389
Cash flows from investing activities:
Capital expenditures			(17,446	)			(12,047	)
Purchases of marketable securities			(31,757	)			(42,471	)
Sale and maturities of marketable securities			37,203				16,350
Purchase of debt securities			-				(2,000	)
Payments for equity securities			(584	)			(2,563	)
Other investing activities			2,019				1,100
Net cash used in investing activities			(10,565	)			(41,631	)
Cash flows from financing activities:
Payments for long-term debt issuance costs			-				(520	)
Principal payments of long-term debt			(6,250	)			(6,252	)
Common stock repurchases for tax withholdings for net settlement of equity awards			(49,003	)			(45,769	)
Principal payments of lease liabilities arising from a finance leases			(415	)			(486	)
Proceeds from the issuance of common stock			36,062				11,522
Net cash used in financing activities			(19,606	)			(41,505	)
Effects of exchange rate changes on cash and cash equivalents			(1,272	)			1,108
Net change in cash and cash equivalents			(33,581	)			(7,639	)
Cash and cash equivalents at beginning of year			128,428				136,067
Cash and cash equivalents at end of year		$	94,847			$	128,428

 

 

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CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

(unaudited - in thousands)

		Three Months Ended								Twelve Months Ended
(unaudited - in thousands)		September 30,								September 30,
		2022				2021				2022				2021
GAAP revenue		$	58,144			$	98,076			$	327,891			$	387,182
GAAP gross profit		$	33,761			$	73,949			$	230,723			$	286,108
Stock-based compensation			382				815				3,766				5,760
Amortization of intangible assets			105				1,879				2,984				7,516
Non-GAAP gross profit		$	34,248			$	76,643			$	237,473			$	299,384
GAAP gross margin			58.1	%			75.4	%			70.4	%			73.9	%
Non-GAAP gross margin			58.9	%			78.1	%			72.4	%			77.3	%
GAAP operating (loss) income		$	(229,334	)		$	10,758			$	(184,345	)		$	60,594
Stock-based compensation*			5,056				18,376				24,076				60,555
Amortization of intangible assets			2,470				5,048				14,500				20,206
Restructuring and other costs, net*			2,379				2,315				8,965				5,092
Goodwill impairment			213,720				-				213,720				-
Non-GAAP operating (loss) income		$	(5,709	)		$	36,497			$	76,916			$	146,447
GAAP operating margin			-394.4	%			11.0	%			-56.2	%			15.7	%
Non-GAAP operating margin			-9.8	%			37.2	%			23.5	%			37.8	%
GAAP net (loss) income		$	(230,127	)		$	7,991			$	(310,826	)		$	45,893
Stock-based compensation*			5,056				18,376				24,076				60,555
Amortization of intangible assets			2,470				5,048				14,500				20,206
Restructuring and other costs, net*			2,379				2,315				8,965				5,092
Goodwill impairment			213,720				-				213,720				-
Depreciation			2,616				2,337				9,439				9,455
Total other (expense) income, net			(3,456	)			(3,256	)			(14,406	)			(12,325	)
(Benefit from) provision for income taxes			(2,663	)			(489	)			112,075				2,376
Adjusted EBITDA		$	(3,093	)		$	38,834			$	86,355			$	155,902
GAAP net (loss) income margin			-395.8	%			8.1	%			-94.8	%			11.9	%
Adjusted EBITDA margin			-5.3	%			39.6	%			26.3	%			40.3	%
* - $4.0 million in stock-based compensation is included in Restructuring and other costs, net

 

 

 

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CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands, except per share data)

		Three Months Ended								Twelve Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
GAAP net (loss) income		$	(230,127	)		$	7,991			$	(310,826	)		$	45,893
Stock-based compensation*			5,056				18,376				24,076				60,555
Amortization of intangible assets			2,470				5,048				14,500				20,206
Restructuring and other costs, net*			2,379				2,315				8,965				5,092
Goodwill impairment			213,720				-				213,720				-
Non-cash interest expense			1,359				1,283				5,281				5,013
Indemnification asset release			-				-				1,302				-
Adjustments to income tax expense			(362	)			(6,599	)			93,405				(29,582	)
Non-GAAP net (loss) income		$	(5,505	)		$	28,414			$	50,423			$	107,177
Adjusted EPS:
GAAP Numerator:
Net (loss) income attributed to common shareholders		$	(230,127	)		$	7,991			$	(310,826	)		$	45,893
Non-GAAP Numerator:
Net (loss) income attributed to common shareholders		$	(5,505	)		$	28,414			$	50,423			$	107,177
Interest on Convertible Senior Notes, net of tax			-				1,019				4,068				4,043
Net (loss) income attributed to common shareholders - diluted		$	(5,505	)		$	29,433			$	54,491			$	111,220
GAAP Denominator:
Weighted-average common shares outstanding - basic			39,407				38,015				39,187				37,752
Adjustment for diluted shares			-				1,733				-				1,537
Weighted-average common shares outstanding - diluted			39,407				39,748				39,187				39,289
Non-GAAP Denominator:
Weighted-average common shares outstanding- basic			39,407				38,015				39,187				37,752
Adjustment for diluted shares			-				6,410				4,912				6,214
Weighted-average common shares outstanding - diluted			39,407				44,425				44,099				43,966
GAAP net (loss) income per share - diluted		$	(5.84	)		$	0.20			$	(7.93	)		$	1.17
Non-GAAP net (loss) income per share - diluted		$	(0.14	)		$	0.66			$	1.24			$	2.53
GAAP net cash (used in) provided by operating activities		$	(4,953	)		$	23,321			$	(2,138	)		$	74,389
Capital expenditures			(3,028	)			(3,992	)			(17,446	)			(12,047	)
Free Cash Flow		$	(7,981	)		$	19,329			$	(19,584	)		$	62,342
* - $4.0 million in stock-based compensation is included in Restructuring and other costs, net

 

 

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CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands)

		Q4FY22				Q3FY22				Q2FY22				Q1FY22
GAAP revenues		$	58,144			$	89,041			$	86,280			$	94,426
Less: Professional services revenue			21,048				22,599				20,646				19,417
Non-GAAP Repeatable revenues		$	37,096			$	66,442			$	65,634			$	75,009
GAAP revenues TTM		$	327,891
Less: Professional services revenue TTM			83,710
Non-GAAP Repeatable revenues TTM		$	244,181
Repeatable software contribution			74	%

 

 

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