UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2020
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number: 001-39030
CERENCE INC.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
83-4177087 |
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( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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15 Wayside Road Burlington, Massachusetts |
01803 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (857) 362-7300
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, par value $0.01 per share |
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CRNC |
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The Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☒ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☒ |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 30, 2020, the registrant had 36,722,585 shares of common stock, $0.01 par value per share, outstanding.
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Page |
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PART I. |
2 |
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Item 1. |
2 |
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2 |
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3 |
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4 |
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5 |
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7 |
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8 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
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Item 3. |
45 |
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Item 4. |
46 |
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PART II. |
47 |
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Item 1. |
47 |
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Item 1A. |
47 |
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Item 6. |
50 |
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51 |
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i
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”), filed by Cerence Inc. together with its consolidated subsidiaries, “Cerence” or the “Company,” “we,” “us” or “our” unless the context indicates otherwise, contains “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and our business and financial results. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,” “continues,” “believes,” “may,” “will,” “goals” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Although we believe that the forward-looking statements contained in this Form 10-Q are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:
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• |
the duration and severity of the COVID-19 pandemic and its impact on our business and financial performance; |
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• |
adverse conditions in the automotive industry or the global economy more generally, including as a result of the COVID-19 pandemic; |
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• |
our employees represented by workers councils or unions or are subject to local laws that are less favorable to employers than the laws of the U.S.; |
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• |
the highly competitive and rapidly changing market in which we operate; |
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• |
our strategy to increase cloud services and fluctuations in our operating results; |
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• |
escalating pricing pressures from our customers; |
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• |
our failure to win, renew or implement service contracts; |
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• |
the cancellation or postponement of service contracts after a design win; |
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• |
the loss of business from any of our largest customers; |
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• |
transition difficulties with our first senior management team; |
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• |
inability to recruit and retain qualified personnel; |
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• |
cybersecurity and data privacy incidents that damage client relations; |
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• |
economic, political, regulatory, foreign exchange and other risks of international operations; |
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• |
unforeseen U.S. and foreign tax liabilities; |
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• |
the failure to protect our intellectual property or allegations that we have infringed the intellectual property of others; |
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• |
defects in our software products that result in lost revenue, expensive corrections or claims against us; |
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• |
our inability to quickly respond to changes in technology and to develop our intellectual property into commercially viable products; |
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• |
a significant interruption in the supply or maintenance of our third-party hardware, software, services or data; and |
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• |
certain factors discussed elsewhere in this Form 10-Q. |
These and other factors are more fully discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and elsewhere in this Form 10-Q, including Part II, “Item 1A, Risk Factors”. These risks could cause actual results to differ materially from those implied by forward-looking statements in this Form 10-Q. Even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.
Any forward-looking statements made by us in this Form 10-Q speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law.
1
Item 1. Consolidated and Combined Financial Statements.
CERENCE INC.
CONSOLIDATED STATEMENT OF OPERATIONS FOR JUNE 30, 2020
COMBINED STATEMENT OF OPERATIONS FOR JUNE 30, 2019
(Dollars in thousands, except per share data)
(unaudited)
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Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
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||||||||||
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2020 |
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2019 |
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2020 |
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2019 |
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||||
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Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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License |
|
$ |
32,454 |
|
|
$ |
43,961 |
|
|
$ |
117,843 |
|
|
$ |
127,287 |
|
|
Connected services |
|
|
24,996 |
|
|
|
19,717 |
|
|
|
71,148 |
|
|
|
55,830 |
|
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Professional services |
|
|
17,360 |
|
|
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13,891 |
|
|
|
49,773 |
|
|
|
37,240 |
|
|
Total revenues |
|
|
74,810 |
|
|
|
77,569 |
|
|
|
238,764 |
|
|
|
220,357 |
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Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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License |
|
|
820 |
|
|
|
521 |
|
|
|
2,344 |
|
|
|
1,428 |
|
|
Connected services |
|
|
7,191 |
|
|
|
8,232 |
|
|
|
24,742 |
|
|
|
28,591 |
|
|
Professional services |
|
|
17,529 |
|
|
|
12,943 |
|
|
|
48,773 |
|
|
|
36,132 |
|
|
Amortization of intangible assets |
|
|
2,063 |
|
|
|
1,979 |
|
|
|
6,408 |
|
|
|
6,175 |
|
|
Total cost of revenues |
|
|
27,603 |
|
|
|
23,675 |
|
|
|
82,267 |
|
|
|
72,326 |
|
|
Gross profit |
|
|
47,207 |
|
|
|
53,894 |
|
|
|
156,497 |
|
|
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148,031 |
|
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Operating expenses: |
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|
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|
|
|
|
|
|
|
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Research and development |
|
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22,041 |
|
|
|
22,975 |
|
|
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66,898 |
|
|
|
69,344 |
|
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Sales and marketing |
|
|
9,180 |
|
|
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8,232 |
|
|
|
24,829 |
|
|
|
27,476 |
|
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General and administrative |
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|
14,261 |
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6,237 |
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|
36,456 |
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17,647 |
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Amortization of intangible assets |
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3,120 |
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3,132 |
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9,376 |
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9,396 |
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Restructuring and other costs, net |
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3,301 |
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9,691 |
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13,725 |
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17,147 |
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Acquisition-related costs |
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— |
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|
366 |
|
|
|
— |
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|
|
783 |
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Total operating expenses |
|
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51,903 |
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50,633 |
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151,284 |
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|
|
141,793 |
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(Loss) income from operations |
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(4,696 |
) |
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|
3,261 |
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|
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5,213 |
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|
|
6,238 |
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Interest income |
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|
38 |
|
|
|
— |
|
|
|
563 |
|
|
|
— |
|
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Interest expense |
|
|
(5,546 |
) |
|
|
— |
|
|
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(19,043 |
) |
|
|
— |
|
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Other income (expense), net |
|
|
(20,446 |
) |
|
|
(150 |
) |
|
|
(20,366 |
) |
|
|
100 |
|
|
(Loss) income before income taxes |
|
|
(30,650 |
) |
|
|
3,111 |
|
|
|
(33,633 |
) |
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|
6,338 |
|
|
(Benefit from) provision for income taxes |
|
|
(2,469 |
) |
|
|
1,341 |
|
|
|
(6,185 |
) |
|
|
1,859 |
|
|
Net (loss) income |
|
$ |
(28,181 |
) |
|
$ |
1,770 |
|
|
$ |
(27,448 |
) |
|
$ |
4,479 |
|
|
Net (loss) income per share: |
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|
|
|
|
|
|
|
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|
|
|
|
|
|
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Basic |
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$ |
(0.77 |
) |
|
$ |
0.05 |
|
|
$ |
(0.76 |
) |
|
$ |
0.12 |
|
|
Diluted |
|
$ |
(0.77 |
) |
|
$ |
0.05 |
|
|
$ |
(0.76 |
) |
|
$ |
0.12 |
|
|
Weighted-average common share outstanding: |
|
|
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|
|
|
|
|
|
|
|
|
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|
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Basic |
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|
36,509 |
|
|
|
36,391 |
|
|
|
36,315 |
|
|
|
36,391 |
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|
Diluted |
|
|
36,509 |
|
|
|
36,391 |
|
|
|
36,315 |
|
|
|
36,391 |
|
Refer to accompanying Notes to the unaudited consolidated and combined financials statements.
2
CERENCE INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS FOR JUNE 30, 2020
COMBINED STATEMENT OF COMPREHENSIVE INCOME FOR JUNE 30, 2019
(Dollars in thousands)
(unaudited)
|
|
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Net (loss) income |
|
$ |
(28,181 |
) |
|
$ |
1,770 |
|
|
$ |
(27,448 |
) |
|
$ |
4,479 |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
6,382 |
|
|
|
1,768 |
|
|
|
4,002 |
|
|
|
(1,412 |
) |
|
Pension adjustments |
|
|
16 |
|
|
|
(138 |
) |
|
|
1,032 |
|
|
|
229 |
|
|
Total other comprehensive income (loss) |
|
|
6,398 |
|
|
|
1,630 |
|
|
|
5,034 |
|
|
|
(1,183 |
) |
|
Comprehensive (loss) income |
|
$ |
(21,783 |
) |
|
$ |
3,400 |
|
|
$ |
(22,414 |
) |
|
$ |
3,296 |
|
Refer to accompanying Notes to the unaudited consolidated and combined financials statements.
3
CERENCE INC.
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2020 (UNAUDITED)
COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 2019
(Dollars in thousands, except per share amounts)
|
|
|
June 30, 2020 |
|
|
September 30, 2019 |
|
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ASSETS |
|
|||||||
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Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
132,844 |
|
|
$ |
- |
|
|
Accounts receivable, net of allowances of $1,406 and $865 at June 30, 2020 and September 30, 2019, respectively |
|
|
62,566 |
|
|
|
65,787 |
|
|
Deferred costs |
|
|
6,679 |
|
|
|
9,195 |
|
|
Prepaid expenses and other current assets |
|
|
34,389 |
|
|
|
17,343 |
|
|
Total current assets |
|
|
236,478 |
|
|
|
92,325 |
|
|
Property and equipment, net |
|
|
28,366 |
|
|
|
20,113 |
|
|
Deferred costs |
|
|
36,913 |
|
|
|
32,428 |
|
|
Operating lease right of use assets |
|
|
19,547 |
|
|
|
— |
|
|
Goodwill |
|
|
1,121,616 |
|
|
|
1,119,329 |
|
|
Intangible assets, net |
|
|
50,152 |
|
|
|
65,561 |
|
|
Deferred tax assets |
|
|
160,140 |
|
|
|
150,629 |
|
|
Other assets |
|
|
15,863 |
|
|
|
3,444 |
|
|
Total assets |
|
$ |
1,669,075 |
|
|
$ |
1,483,829 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
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Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
11,637 |
|
|
$ |
16,687 |
|
|
Deferred revenue |
|
|
116,894 |
|
|
|
88,233 |
|
|
Short-term operating lease liabilities |
|
|
5,727 |
|
|
|
— |
|
|
Short-term debt |
|
|
6,250 |
|
|
|
— |
|
|
Accrued expenses and other current liabilities |
|
|
54,672 |
|
|
|
24,194 |
|
|
Total current liabilities |
|
|
195,180 |
|
|
|
129,114 |
|
|
Long-term debt |
|
|
267,172 |
|
|
|
— |
|
|
Deferred revenue, net of current portion |
|
|
219,197 |
|
|
|
265,051 |
|
|
Long-term operating lease liabilities |
|
|
16,305 |
|
|
|
— |
|
|
Other liabilities |
|
|
32,528 |
|
|
|
21,536 |
|
|
Total liabilities |
|
|
730,382 |
|
|
|
415,701 |
|
|
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 600,000 shares authorized as of June 30, 2020; 36,520 shares issued and outstanding as of June 30, 2020 |
|
|
366 |
|
|
|
— |
|
|
Net parent investment |
|
|
- |
|
|
|
1,097,127 |
|
|
Accumulated other comprehensive loss |
|
|
(8,237 |
) |
|
|
(28,999 |
) |
|
Additional paid-in capital |
|
|
974,012 |
|
|
|
— |
|
|
Accumulated deficit |
|
|
(27,448 |
) |
|
|
— |
|
|
Total stockholders' equity |
|
|
938,693 |
|
|
|
1,068,128 |
|
|
Total liabilities and stockholders' equity |
|
$ |
1,669,075 |
|
|
$ |
1,483,829 |
|
Refer to accompanying Notes to the unaudited consolidated and combined financials statements.
4
CERENCE INC.
CONSOLIDATED STATEMENT OF EQUITY AND
COMBINED STATEMENT OF CHANGES IN PARENT COMPANY EQUITY
(Dollars in thousands)
(unaudited)
|
Three Months Ended June 30, 2020 |
|
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|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Earnings (Deficit) |
|
|
Net Parent Investment |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total |
|
|||||||
|
Balance at March 31, 2020 |
|
|
36,458 |
|
|
|
365 |
|
|
|
949,916 |
|
|
|
733 |
|
|
|
- |
|
|
|
(14,635 |
) |
|
|
936,379 |
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(28,181 |
) |
|
|
- |
|
|
|
- |
|
|
|
(28,181 |
) |
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,398 |
|
|
|
6,398 |
|
|
Stock issued pursuant to employee stock plans |
|
|
62 |
|
|
|
1 |
|
|
|
(696 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(695 |
) |
|
Convertible Senior Notes conversion feature (net of taxes of $4,678 and issuance costs of $629) |
|
|
- |
|
|
|
- |
|
|
|
14,369 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14,369 |
|
|
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
10,423 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,423 |
|
|
Balance at June 30, 2020 |
|
|
36,520 |
|
|
$ |
366 |
|
|
$ |
974,012 |
|
|
$ |
(27,448 |
) |
|
$ |
— |
|
|
$ |
(8,237 |
) |
|
$ |
938,693 |
|
|
Three Months Ended June 30, 2019 |
|
|||||||||||||||||||||||||||
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Earnings |
|
|
Net Parent Investment |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total |
|
|||||||
|
Balance at March 31, 2019 |
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,009,956 |
|
|
$ |
(26,770 |
) |
|
$ |
983,186 |
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,770 |
|
|
|
- |
|
|
|
1,770 |
|
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,630 |
|
|
|
1,630 |
|
|
Net transfer to Parent |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(21,710 |
) |
|
|
- |
|
|
|
(21,710 |
) |
|
Balance at June 30, 2019 |
|
|
- |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
990,016 |
|
|
$ |
(25,140 |
) |
|
$ |
964,876 |
|
5
CERENCE INC.
CONSOLIDATED STATEMENT OF EQUITY AND
COMBINED STATEMENT OF CHANGES IN PARENT COMPANY EQUITY (Cont.)
(Dollars in thousands)
(unaudited)
|
Nine Months Ended June 30, 2020 |
|
|||||||||||||||||||||||||||
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Deficit |
|
|
Net Parent Investment |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total |
|
|||||||
|
Balance at September 30, 2019 |
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,097,127 |
|
|
$ |
(28,999 |
) |
|
$ |
1,068,128 |
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(27,448 |
) |
|
|
- |
|
|
|
- |
|
|
|
(27,448 |
) |
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,034 |
|
|
|
5,034 |
|
|
Distribution to Parent |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(152,978 |
) |
|
|
- |
|
|
|
(152,978 |
) |
|
Net (decrease) increase in net parent investment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,275 |
) |
|
|
15,728 |
|
|
|
11,453 |
|
|
Reclassification of net parent investment in Cerence |
|
|
- |
|
|
|
- |
|
|
|
939,874 |
|
|
|
- |
|
|
|
(939,874 |
) |
|
|
- |
|
|
|
— |
|
|
Issuance of common stock at separation |
|
|
36,391 |
|
|
|
364 |
|
|
|
(364 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
— |
|
|
Stock issued pursuant to employee stock plans |
|
|
129 |
|
|
|
2 |
|
|
|
(1,615 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,613 |
) |
|
Convertible Senior Notes conversion feature (net of taxes of $4,678 and issuance costs of $629) |
|
|
- |
|
|
|
- |
|
|
|
14,369 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14,369 |
|
|
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
21,748 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,748 |
|
|
Balance at June 30, 2020 |
|
|
36,520 |
|
|
$ |
366 |
|
|
$ |
974,012 |
|
|
$ |
(27,448 |
) |
|
$ |
— |
|
|
$ |
(8,237 |
) |
|
$ |
938,693 |
|
|
Nine Months Ended June 30, 2019 |
|
|||||||||||||||||||||||||||
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Earnings |
|
|
Net Parent Investment |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total |
|
|||||||
|
Balance at September 30, 2018 (As reported, ASC 605) |
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,017,276 |
|
|
$ |
(23,957 |
) |
|
$ |
993,319 |
|
|
Accumulated adjustment related to the adoption of ASC 606 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,974 |
|
|
|
- |
|
|
|
6,974 |
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,479 |
|
|
|
- |
|
|
|
4,479 |
|
|
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,183 |
) |
|
|
(1,183 |
) |
|
Net transfer to Parent |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(38,713 |
) |
|
|
- |
|
|
|
(38,713 |
) |
|
Balance at June 30, 2019 |
|
|
- |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
990,016 |
|
|
$ |
(25,140 |
) |
|
$ |
964,876 |
|
Refer to accompanying Notes to the unaudited consolidated and combined financials statements.
6
CERENCE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR JUNE 30, 2020
COMBINED STATEMENT OF CASH FLOWS FOR JUNE 30, 2019
(Dollars in thousands)
(unaudited)
|
|
|
Nine Months Ended June 30, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(27,448 |
) |
|
$ |
4,479 |
|
|
Adjustments to reconcile net (loss) income to net cash provided by operations: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
22,704 |
|
|
|
21,522 |
|
|
Provision for doubtful accounts |
|
|
525 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
32,954 |
|
|
|
21,195 |
|
|
Non-cash interest expense |
|
|
4,025 |
|
|
|
— |
|
|
Loss on debt extinguishment |
|
|
19,279 |
|
|
|
— |
|
|
Deferred tax benefit |
|
|
(12,572 |
) |
|
|
(469 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
3,853 |
|
|
|
(7,368 |
) |
|
Prepaid expenses and other assets |
|
|
(21,328 |
) |
|
|
(5,513 |
) |
|
Deferred costs |
|
|
(749 |
) |
|
|
1,876 |
|
|
Accounts payable |
|
|
(170 |
) |
|
|
6,674 |
|
|
Accrued expenses and other liabilities |
|
|
19,283 |
|
|
|
4,441 |
|
|
Deferred revenue |
|
|
(21,779 |
) |
|
|
21,822 |
|
|
Net cash provided by operating activities |
|
|
18,577 |
|
|
|
68,659 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(16,075 |
) |
|
|
(2,868 |
) |
|
Net cash used in investing activities |
|
|
(16,075 |
) |
|
|
(2,868 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Net transaction with Parent |
|
|
12,964 |
|
|
|
(65,791 |
) |
|
Distribution to Parent |
|
|
(152,978 |
) |
|
|
— |
|
|
Proceeds from long-term debt, net of discount |
|
|
547,719 |
|
|
|
— |
|
|
Payments for long-term debt issuance costs |
|
|
(5,765 |
) |
|
|
— |
|