BURLINGTON, Mass., Aug. 5, 2020 /PRNewswire/ -- Nuance
Communications, Inc. (NASDAQ: NUAN) today announced financial
results for its third quarter ended June 30,
2020.
Q3 2020 Performance Summary
- GAAP revenue of $338.4 million
and GAAP earnings per diluted share of $0.06.
- Non-GAAP revenue of $338.4
million and non-GAAP earnings per diluted share of
$0.18.
"We are very pleased with our performance this quarter, as we
delivered revenue and EPS above the high end of our guidance
range," said Mark Benjamin, Chief
Executive Officer at Nuance. "Despite COVID-19 related headwinds,
we continued to advance our strategic initiatives and execute on
our financial and operational targets. Our ongoing shift to the
cloud was bolstered by strong performance in Dragon Medical Cloud,
which grew 34% year-over-year, as well as solid demand for our
newer cloud-based healthcare offerings, such as PowerScribe One and
CDE One. Overall, Healthcare organic revenue declined 13%
year-over-year, as the COVID-19 related impact on our non-strategic
HIM transcription and EHR implementation services businesses more
than offset strength in Dragon Medical Cloud. Within our Enterprise
segment, revenues declined 5% year-over-year due to timing of
licensing and professional service projects, as well as an impact
from COVID-19. Together, our strong performance from our strategic
business lines and softer than anticipated COVID impacts during the
quarter enable us to raise our FY 2020 guidance for revenue and
Healthcare ARR."
Mr. Benjamin concluded, "We continue to focus on prudent capital
allocation, fully repaying our $230
million of revolver borrowings during the quarter. We remain
confident in our overall liquidity position and strength of our
balance sheet."
Q3 2020 Performance Summary
Q3 2020 results for continuing operations include:
- Revenue of $338.4 million,
compared to $377.4 million in the
same period last year.
- Non-GAAP revenue of $338.4
million, compared to $378.1
million in the same period last year.
- GAAP operating income of $22.4
million, compared to $31.3
million in the same period last year.
- Non-GAAP operating income of $78.4
million, compared to $91.8
million in the same period last year.
- GAAP operating margin of 6.6%, compared to 8.3% in the same
period last year.
- Non-GAAP operating margin of 23.2%, compared to 24.3% in the
same period last year.
- GAAP net income of $16.7 million,
compared to a net loss of $0.7
million in the same period last year.
- Non-GAAP net income of $51.0
million, compared to $57.2
million in the same period last year.
- GAAP EPS of $0.06, compared to
$0.00 in the same period last
year.
- Non-GAAP EPS of $0.18, compared
to $0.20 in the same period last
year.
- Operating cash flows from continuing operations was
$32.3 million, compared to
$73.2 million in the same period last
year.
Capital Allocation
During the quarter, we fully repaid the $230 million that was borrowed under our
revolving credit facility in March
2020. Additionally, on July
31, we executed a 12-month extension of our credit facility,
which now has an updated maturity date of April 2022. We remain confident in the strength
of our balance sheet and our solid liquidity position, ending the
quarter with a cash and marketable securities balance of
$313 million. We did not repurchase
any of our common shares during the quarter.
For a complete discussion of Nuance's results and business
outlook, including our updated guidance, please see the Company's
Prepared Remarks document available at
http://www.nuance.com/earnings-results/.
Please refer to the "Discussion of Non-GAAP Financial Measures,"
and "GAAP to Non-GAAP Reconciliations," included elsewhere in this
release, for more information regarding the Company's use of
non-GAAP financial measures.
Conference Call and Prepared Remarks
Nuance will host a conference call today at 5:00 p.m. ET. To participate, please access the
live webcast at http://investors.nuance.com, or by dialing
1-888-317-6003 (US and Canada) or
1-412-317-6061 (international) and referencing code 3763097.
Nuance will provide a copy of Prepared Remarks in combination
with its press release. These remarks are offered to provide
shareholders and analysts additional detail for analyzing the
results. The remarks are available at
http://investors.nuance.com/ and will not be read on the
call.
About Nuance Communications, Inc.
Nuance Communications (NASDAQ: NUAN) is the pioneer and leader
in conversational AI innovations that bring intelligence to
everyday work and life. The company delivers solutions that
understand, analyze, and respond to people – amplifying human
intelligence to increase productivity and security. With decades of
domain and AI expertise, Nuance works with thousands of
organizations globally across healthcare, financial services,
telecommunications, government, and retail – to create stronger
relationships and better experiences for their customers and
workforce. For more information, please visit www.nuance.com.
Trademark reference: Nuance and the Nuance logo are
registered trademarks or trademarks of Nuance Communications, Inc.
or its affiliates in the United
States and/or other countries. All other trademarks
referenced herein are the property of their respective
owners.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding future performance 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. There are a
number of important factors that could cause actual results or
events to differ materially from those indicated by such forward-
looking statements, including but not limited to: the impact of the
COVID-19 pandemic, the effects of competition, including pricing
pressure, and changing business models in the markets and
industries in which we operate; fluctuations in demand for our
existing and future products; changes to economic, political, and
regulatory conditions in the United
States and internationally; our ability to attract and
retain key personnel; our ability to control and successfully
manage our expenses and cash position; cybersecurity and data
privacy incidents or breaches, and related remediation and
investigation; our ability to comply with applicable domestic and
international laws and policies; fluctuating currency rates;
possible quality issues in our products and technologies; our
ability to realize anticipated synergies from acquired businesses,
to cut stranded costs related to divested businesses, and to
capture the expected value from strategic transactions; and the
other factors described in our most recent Form 10-K, 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 non-GAAP ("Generally Accepted
Accounting Principles") information to investors, 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
not only to 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 included in this press
release 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. Our annual financial plan is
prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual
financial plan is approved by our board of directors. Continuous
budgeting and forecasting for revenue and expenses are conducted on
a consistent non-GAAP basis (in addition to GAAP) and actual
results on a non-GAAP basis are assessed against the non-GAAP
annual financial plan. The board of directors and management
utilize these non-GAAP measures and results (in addition to the
GAAP results) to determine our allocation of resources. In
addition, and as a consequence of the importance of these measures
in managing the business, we use non-GAAP measures and results in
the evaluation process to establish management's compensation. For
example, our annual bonus program payments are based upon the
achievement of consolidated non-GAAP revenue and consolidated
non-GAAP earnings per share financial targets. We consider the use
of non-GAAP revenue helpful in understanding the performance of our
business, as it excludes the purchase accounting impact on acquired
deferred revenue and other acquisition-related adjustments to
revenue. We also consider the use of non-GAAP earnings per share
helpful in assessing the organic performance of the continuing
operations of our business. By organic performance we mean
performance as if we had owned an acquired business in the same
period a year ago. By constant currency organic performance, we
mean performance excluding the effect of current foreign currency
rate fluctuations. By continuing operations, we mean the ongoing
results of the business excluding certain unplanned costs. 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 June
30, 2020 and 2019, our management has either included or
excluded items in seven general categories, each of which is
described below.
Acquisition-related revenue and cost of revenue.
We provide supplementary non-GAAP financial measures of revenue
that include revenue that we would have recognized but for the
purchase accounting treatment of acquisition transactions. Non-GAAP
revenue also includes revenue that we would have recognized had we
not acquired intellectual property and other assets from the same
customer. Because GAAP accounting requires the elimination of this
revenue, GAAP results alone do not fully capture all of our
economic activities. These non-GAAP adjustments are intended to
reflect the full amount of such revenue. We include non-GAAP
revenue and cost of revenue to allow for more complete comparisons
to the financial results of historical operations, forward-looking
guidance and the financial results of peer companies. We believe
these adjustments are useful to management and investors as a
measure of the ongoing performance of the business because,
although we cannot be certain that customers will renew their
contracts, we have historically experienced high renewal rates on
maintenance and support agreements and other customer contracts.
Additionally, although acquisition-related revenue adjustments are
non-recurring with respect to past acquisitions, we generally will
incur these adjustments in connection with any future
acquisitions.
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. Restructuring expenses consist of employee
severance costs, charges for the closure of excess facilities and
other contract termination costs. Other charges include litigation
contingency reserves, costs related to the transition agreement of
our former CEO, asset impairment charges, expenses associated with
the malware incident that occurred in the third quarter of fiscal
year 2017 (the "2017 Malware Incident") and gains or losses on the
sale or disposition of certain non-strategic assets or product
lines.
Acquisition-related costs, net.
In recent years, we have completed a number of acquisitions,
which result in operating expenses, that would not otherwise have
been incurred. We provide supplementary non-GAAP financial
measures, which exclude certain transition, integration and other
acquisition-related expense items resulting from acquisitions, to
allow more accurate comparisons of the financial results to
historical operations, forward looking guidance and the financial
results of less acquisitive peer companies. We consider these types
of costs and adjustments, to a great extent, to be unpredictable
and dependent on a significant number of factors that are outside
of our control. Furthermore, we do not consider these
acquisition-related costs and adjustments to be related to the
organic continuing operations of the acquired businesses and are
generally not relevant to assessing or estimating the long-term
performance of the acquired assets. In addition, the size,
complexity and/or volume of past acquisitions, which often drives
the magnitude of acquisition related costs, may not be indicative
of the size, complexity and/or volume of future acquisitions. By
excluding acquisition-related costs and adjustments from our
non-GAAP measures, management is better able to evaluate our
ability to utilize our existing assets and estimate the long-term
value that acquired assets will generate for us. We believe that
providing a supplemental non-GAAP measure, which excludes these
items allows management and investors to consider the ongoing
operations of the business both with, and without, such
expenses.
These acquisition-related costs fall into the following
categories: (i) transition and integration costs; (ii) professional
service fees and expenses; and (iii) acquisition-related
adjustments. Although these expenses are not recurring with respect
to past acquisitions, we generally will incur these expenses in
connection with any future acquisitions. These categories are
further discussed as follows:
(i)
Transition and integration costs. Transition and integration costs
include retention payments, transitional employee costs, and
earn-out payments treated as compensation expense, as well as the
costs of integration-related activities, including services
provided by third parties.
(ii)
Professional service fees and expenses. Professional service fees
and expenses include financial advisory, legal, accounting and
other outside services incurred in connection with acquisition
activities, and disputes and regulatory matters related to acquired
entities.
(iii)
Acquisition-related adjustments. Acquisition-related adjustments
include adjustments to acquisition-related items that are required
to be marked to fair value each reporting period, such as
contingent consideration, and other items related to acquisitions
for which the measurement period has ended, such as gains or losses
on settlements of pre-acquisition contingencies.
Amortization of acquired intangible assets.
We exclude the amortization of acquired intangible assets from
non-GAAP expense and income measures. These amounts are
inconsistent in amount and frequency and are significantly impacted
by the timing and size of acquisitions. Providing a supplemental
measure which excludes these charges allows management and
investors to evaluate results "as-if" the acquired intangible
assets had been developed internally rather than acquired and,
therefore, provides a supplemental measure of performance in which
our acquired intellectual property is treated in a comparable
manner to our internally developed intellectual property. Although
we exclude amortization of acquired intangible assets from our
non-GAAP expenses, we believe that it is important for investors to
understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past
acquisitions will recur in future periods until such intangible
assets have been fully amortized. Future acquisitions may result in
the amortization of additional intangible assets.
Non-cash expenses.
We provide non-GAAP information relative to the following
non-cash expenses: (i) stock-based compensation; and (ii) non-cash
interest. These items are further discussed as follows:
(i) Stock-based
compensation. Because of varying valuation methodologies,
subjective assumptions and the variety of award types, we believe
that excluding stock-based compensation allows for more accurate
comparisons of operating results to peer companies, as well as to
times in our history when stock-based compensation was more or less
significant as a portion of overall compensation than in the
current period. We evaluate performance both with and without these
measures because compensation expense related to stock-based
compensation is typically non-cash and the options and restricted
awards granted are influenced by the Company's stock price and
other factors such as volatility that are beyond our control. The
expense related to stock-based awards is generally not controllable
in the short-term and can vary significantly based on the timing,
size and nature of awards granted. As such, we do not include such
charges in operating plans. Stock-based compensation will continue
in future periods.
(ii) Non-cash
interest. We exclude non-cash interest because we believe that
excluding this expense provides senior 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 restructuring charges, asset
impairments and other charges (credits), net, and losses from
extinguishing our convertible debt. Other items such as consulting
and professional services fees related to assessing strategic
alternatives and our transformation programs, implementation of the
new revenue recognition standard (ASC 606), and expenses associated
with the malware incident and remediation thereof are also
excluded.
Non-GAAP Operating Income
Our non-GAAP operating income includes acquisition-related
revenue adjustments but excludes non-GAAP expenses such as stock
compensation, amortization of intangible assets, restructuring and
other costs, net, acquisition-related costs, net, and certain other
expenses that result from unplanned events outside the ordinary
course of continuing operations.
Non-GAAP income tax provision.
Our non-GAAP income tax provision is determined based on our
non-GAAP pre-tax income. The tax effect of each non-GAAP
adjustment, if applicable, is computed based on the statutory tax
rate of the jurisdiction to which the adjustment relates.
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.
Contact Information
For Investors
Michael Maguire
Nuance Communications, Inc.
Tel: 781-565-4855
Email: michael.maguire@nuance.com
For Press
Nancy
Scott
Nuance Communications, Inc.
Tel: 781-565-4130
Email: nancy.scott@nuance.com
Financial Tables Follow
Nuance
Communications, Inc.
|
Condensed
Consolidated Statements of Operations
|
(in thousands, except
per share amounts)
|
Unaudited
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
$
225,304
|
|
$
232,860
|
|
$
691,295
|
|
$
678,104
|
Product and
licensing
|
|
48,722
|
|
78,184
|
|
243,501
|
|
252,299
|
Maintenance and
support
|
|
64,372
|
|
66,393
|
|
191,172
|
|
203,293
|
Total
revenues
|
|
338,398
|
|
377,437
|
|
1,125,968
|
|
1,133,696
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
119,797
|
|
138,367
|
|
388,783
|
|
409,259
|
Product and
licensing
|
|
10,672
|
|
18,693
|
|
54,166
|
|
60,471
|
Maintenance and
support
|
|
7,278
|
|
8,141
|
|
23,037
|
|
24,813
|
Amortization of
intangible assets
|
|
6,435
|
|
6,569
|
|
19,678
|
|
20,606
|
Total cost of
revenues
|
|
144,182
|
|
171,770
|
|
485,664
|
|
515,149
|
Gross
profit
|
|
194,216
|
|
205,667
|
|
640,304
|
|
618,547
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
55,237
|
|
47,074
|
|
169,699
|
|
139,698
|
Sales and
marketing
|
|
64,351
|
|
65,331
|
|
201,847
|
|
200,384
|
General and
administrative
|
|
37,665
|
|
45,834
|
|
114,355
|
|
129,157
|
Amortization of
intangible assets
|
|
11,845
|
|
13,364
|
|
36,215
|
|
41,030
|
Acquisition-related
costs, net
|
|
758
|
|
788
|
|
3,605
|
|
5,440
|
Restructuring and
other charges, net
|
|
1,920
|
|
1,947
|
|
14,932
|
|
26,446
|
Total operating
expenses
|
|
171,776
|
|
174,338
|
|
540,653
|
|
542,155
|
Income from
operations
|
|
22,440
|
|
31,329
|
|
99,651
|
|
76,392
|
Other expenses,
net
|
|
(22,438)
|
|
(21,296)
|
|
(79,912)
|
|
(79,466)
|
Income (loss) before
income taxes
|
|
2
|
|
10,033
|
|
19,739
|
|
(3,074)
|
(Benefit) provision
for income taxes
|
|
(16,660)
|
|
10,720
|
|
(31,794)
|
|
12,129
|
Net income (loss)
from continuing operations
|
|
16,662
|
|
(687)
|
|
51,533
|
|
(15,203)
|
Net income (loss)
from discontinued operations
|
|
—
|
|
9,946
|
|
(6,192)
|
|
120,884
|
Net
income
|
|
16,662
|
|
9,259
|
|
45,341
|
|
105,681
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share - basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.06
|
|
$
—
|
|
$
0.18
|
|
$
(0.05)
|
Discontinued
operations
|
|
—
|
|
0.03
|
|
(0.02)
|
|
0.42
|
Total net income per
basic common share
|
|
$
0.06
|
|
$
0.03
|
|
$
0.16
|
|
$
0.37
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share - diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.06
|
|
$
—
|
|
$
0.18
|
|
$
(0.05)
|
Discontinued
operations
|
|
—
|
|
0.03
|
|
(0.02)
|
|
0.42
|
Total net income per
diluted common share
|
|
$
0.06
|
|
$
0.03
|
|
$
0.16
|
|
$
0.37
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
281,281
|
|
285,942
|
|
282,674
|
|
285,064
|
Diluted
|
|
287,852
|
|
285,942
|
|
288,096
|
|
285,064
|
Nuance
Communications, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
June 30,
2020
|
|
September 30,
2019
|
|
|
Unaudited
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
240,555
|
|
$
560,961
|
|
Marketable
securities
|
69,283
|
|
186,555
|
|
Accounts receivable,
net
|
215,272
|
|
240,673
|
|
Prepaid expenses and
other current assets
|
145,831
|
|
175,166
|
|
Current assets of
discontinued operations
|
—
|
|
91,858
|
|
Total current
assets
|
670,941
|
|
1,255,213
|
|
|
|
|
|
Marketable
securities
|
2,986
|
|
17,287
|
Land, building and
equipment, net
|
133,755
|
|
121,203
|
Goodwill
|
2,129,736
|
|
2,127,896
|
Intangible assets,
net
|
235,703
|
|
291,371
|
Right-of-use
assets
|
107,553
|
|
—
|
Other
assets
|
265,412
|
|
316,215
|
Long-term assets of
discontinued operations
|
—
|
|
1,236,608
|
|
Total
assets
|
$
3,546,086
|
|
$
5,365,793
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
—
|
|
1,142,870
|
|
Contingent and
deferred acquisition payments
|
16,083
|
|
17,470
|
|
Accounts
payable
|
65,511
|
|
90,826
|
|
Accrued expenses and
other current liabilities
|
179,844
|
|
249,570
|
|
Deferred
revenue
|
261,406
|
|
214,223
|
|
Current liabilities
of discontinued operations
|
—
|
|
130,117
|
|
Total current
liabilities
|
522,844
|
|
1,845,076
|
|
|
|
|
|
Long-term
debt
|
1,524,825
|
|
793,536
|
Deferred revenue, net
of current portion
|
105,632
|
|
133,783
|
Deferred tax
liability
|
61,306
|
|
54,216
|
Operating lease
liabilities
|
105,333
|
|
—
|
Other
liabilities
|
75,817
|
|
79,378
|
Long-term liabilities
of discontinued operations
|
—
|
|
286,654
|
|
Total
liabilities
|
2,395,757
|
|
3,192,643
|
|
|
|
|
|
Stockholders'
equity
|
1,150,329
|
|
2,173,150
|
|
Total liabilities and
stockholders' equity
|
$
3,546,086
|
|
$
5,365,793
|
Nuance
Communications, Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
Unaudited
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
$
16,662
|
|
$
(687)
|
|
$
51,533
|
|
$
(15,203)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
8,840
|
|
10,749
|
|
27,990
|
|
37,117
|
|
Amortization
|
18,280
|
|
19,933
|
|
55,893
|
|
61,636
|
|
Stock-based
compensation
|
33,135
|
|
30,181
|
|
98,030
|
|
84,476
|
|
Non-cash interest
expense
|
11,951
|
|
12,325
|
|
37,269
|
|
37,011
|
|
Deferred tax
(benefit) provision
|
(22,867)
|
|
6,516
|
|
(55,626)
|
|
(5,126)
|
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
18,656
|
|
910
|
|
Other
|
1,329
|
|
(1,456)
|
|
2,905
|
|
(651)
|
|
Changes in operating
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
6,330
|
|
(7,455)
|
|
26,264
|
|
12,318
|
|
Prepaid expenses and
other assets
|
(1,328)
|
|
(62)
|
|
5,030
|
|
(14,760)
|
|
Accounts
payable
|
(9,649)
|
|
5,685
|
|
(15,868)
|
|
8,269
|
|
Accrued expenses and
other liabilities
|
(23,076)
|
|
9,928
|
|
(84,762)
|
|
2,847
|
|
Deferred
revenue
|
(7,325)
|
|
(12,503)
|
|
19,706
|
|
16,448
|
|
Net cash provided by
operating activities - continuing operations
|
32,282
|
|
73,154
|
|
187,020
|
|
225,292
|
|
Net cash provided by
(used in) operating activities - discontinued operations
|
—
|
|
20,484
|
|
(13,307)
|
|
71,902
|
|
Net cash provided by
operating activities
|
32,282
|
|
93,638
|
|
173,713
|
|
297,194
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(14,363)
|
|
(8,809)
|
|
(45,550)
|
|
(32,243)
|
|
Proceeds from
disposition of a business, net of transaction fees
|
—
|
|
2,998
|
|
—
|
|
407,043
|
|
Purchases of
marketable securities and other investments
|
(9,096)
|
|
(137,167)
|
|
(157,976)
|
|
(256,332)
|
|
Proceeds from sales
and maturities of marketable securities and other
investments
|
65,597
|
|
145,253
|
|
290,584
|
|
262,914
|
|
Other
|
42
|
|
(549)
|
|
1,374
|
|
(3,102)
|
|
Net cash provided by
investing activities
|
42,180
|
|
1,726
|
|
88,432
|
|
378,280
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Repurchase and
redemption of debt
|
—
|
|
—
|
|
(513,642)
|
|
(300,000)
|
|
Net distribution from
Cerence upon the spin-off
|
—
|
|
—
|
|
139,090
|
|
—
|
|
Payments for
repurchase of common stock
|
—
|
|
(29,614)
|
|
(169,218)
|
|
(120,935)
|
|
Proceeds from
issuance of common stock from employee stock plans
|
—
|
|
—
|
|
7,204
|
|
8,643
|
|
Proceeds from the
revolving credit facility
|
—
|
|
—
|
|
230,000
|
|
—
|
|
Repayment of the
revolving credit facility
|
(230,000)
|
|
—
|
|
(230,000)
|
|
—
|
|
Payments for taxes
related to net share settlement of equity awards
|
(3,480)
|
|
(4,371)
|
|
(39,968)
|
|
(42,562)
|
|
Other financing
activities
|
(6)
|
|
(232)
|
|
(2,840)
|
|
(1,442)
|
|
Net cash used in
financing activities
|
(233,486)
|
|
(34,217)
|
|
(579,374)
|
|
(456,296)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
1,672
|
|
454
|
|
(3,177)
|
|
1,236
|
|
Net (decrease)
increase in cash and cash equivalents
|
(157,352)
|
|
61,601
|
|
(320,406)
|
|
220,414
|
|
Cash and cash
equivalents at beginning of period
|
397,907
|
|
474,776
|
|
560,961
|
|
315,963
|
|
Cash and cash
equivalents at end of period
|
$
240,555
|
|
$
536,377
|
|
$
240,555
|
|
$
536,377
|
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information
|
GAAP to Non-GAAP
Reconciliations
|
(in
thousands)
|
Unaudited
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
GAAP
revenues
|
|
$
338,398
|
|
$
377,437
|
|
$
1,125,968
|
|
$
1,133,696
|
Acquisition-related
revenue adjustments: hosting and professional services
|
|
—
|
|
128
|
|
301
|
|
397
|
Acquisition-related
revenue adjustments: product and licensing
|
|
—
|
|
491
|
|
—
|
|
658
|
Acquisition-related
revenue adjustments: maintenance and support
|
|
—
|
|
6
|
|
—
|
|
262
|
Non-GAAP
revenues
|
|
$
338,398
|
|
$
378,062
|
|
$
1,126,269
|
|
$
1,135,013
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenues
|
|
$
144,182
|
|
$
171,770
|
|
$
485,664
|
|
$
515,149
|
Cost of revenues from
amortization of intangible assets
|
|
(6,435)
|
|
(6,569)
|
|
(19,678)
|
|
(20,606)
|
Cost of revenues
adjustments: hosting and professional services (1)
|
|
(6,205)
|
|
(6,958)
|
|
(18,250)
|
|
(18,646)
|
Cost of revenues
adjustments: product and licensing (1)
|
|
(124)
|
|
(197)
|
|
(383)
|
|
(593)
|
Cost of revenues
adjustments: maintenance and support (1)
|
|
(360)
|
|
(583)
|
|
(1,206)
|
|
(730)
|
Cost of revenues
adjustments: other
|
|
(1)
|
|
(28)
|
|
(1)
|
|
(474)
|
Non-GAAP cost of
revenues
|
|
$
131,057
|
|
$
157,435
|
|
$
446,146
|
|
$
474,100
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
$
194,216
|
|
$
205,667
|
|
$
640,304
|
|
$
618,547
|
Gross profit
adjustments
|
|
$
13,125
|
|
$
14,961
|
|
$
39,819
|
|
$
42,367
|
Non-GAAP gross
profit
|
|
$
207,341
|
|
$
220,628
|
|
$
680,123
|
|
$
660,914
|
|
|
|
|
|
|
|
|
|
GAAP income from
operations
|
|
$
22,440
|
|
$
31,329
|
|
$
99,651
|
|
$
76,392
|
Gross profit
adjustments
|
|
13,125
|
|
14,961
|
|
39,819
|
|
42,367
|
Research and
development (1)
|
|
8,720
|
|
5,662
|
|
26,106
|
|
15,568
|
Sales and marketing
(1)
|
|
8,003
|
|
6,775
|
|
23,022
|
|
21,643
|
General and
administrative (1)
|
|
9,723
|
|
10,006
|
|
29,063
|
|
27,296
|
Acquisition-related
costs, net
|
|
758
|
|
788
|
|
3,605
|
|
5,440
|
Amortization of
intangible assets
|
|
11,845
|
|
13,364
|
|
36,215
|
|
41,030
|
Restructuring and
other charges, net
|
|
1,920
|
|
1,947
|
|
14,932
|
|
26,446
|
Other
|
|
1,866
|
|
6,960
|
|
648
|
|
12,640
|
Non-GAAP income
from operations
|
|
$
78,400
|
|
$
91,792
|
|
$
273,061
|
|
$
268,822
|
|
|
|
|
|
|
|
|
|
GAAP income (loss)
before income taxes
|
|
$
2
|
|
$
10,033
|
|
$
19,739
|
|
$
(3,074)
|
Gross profit
adjustments
|
|
13,125
|
|
14,961
|
|
39,819
|
|
42,367
|
Research and
development (1)
|
|
8,720
|
|
5,662
|
|
26,106
|
|
15,568
|
Sales and marketing
(1)
|
|
8,003
|
|
6,775
|
|
23,022
|
|
21,643
|
General and
administrative (1)
|
|
9,723
|
|
10,006
|
|
29,063
|
|
27,296
|
Acquisition-related
costs, net
|
|
758
|
|
788
|
|
3,605
|
|
5,440
|
Amortization of
intangible assets
|
|
11,845
|
|
13,364
|
|
36,215
|
|
41,030
|
Restructuring and
other charges, net
|
|
1,920
|
|
1,947
|
|
14,932
|
|
26,446
|
Non-cash interest
expense
|
|
11,951
|
|
12,325
|
|
37,269
|
|
37,011
|
Loss on
extinguishment of debt
|
|
—
|
|
—
|
|
18,656
|
|
910
|
Other
|
|
472
|
|
4,917
|
|
(1,237)
|
|
11,296
|
Non-GAAP income
before income taxes
|
|
$
66,519
|
|
$
80,778
|
|
$
247,189
|
|
$
225,933
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information
|
GAAP to Non-GAAP
Reconciliations, continued
|
(in thousands, except
per share amounts)
|
Unaudited
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
GAAP (benefit)
provision for income taxes
|
|
$
(16,660)
|
|
$
10,720
|
|
$
(31,794)
|
|
$
12,129
|
Income tax effect of
non-GAAP adjustments
|
|
14,671
|
|
18,606
|
|
45,490
|
|
72,982
|
Removal of valuation
allowance and other items
|
|
2,709
|
|
(5,379)
|
|
36,716
|
|
(26,607)
|
Removal of discrete
items
|
|
14,815
|
|
(342)
|
|
7,562
|
|
911
|
Non-GAAP provision
for income taxes
|
|
$
15,535
|
|
$
23,605
|
|
$
57,974
|
|
$
59,415
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) from continuing operations
|
|
$
16,662
|
|
$
(687)
|
|
$
51,533
|
|
$
(15,203)
|
Acquisition-related
adjustment - revenues (2)
|
|
—
|
|
626
|
|
301
|
|
1,318
|
Acquisition-related
costs, net
|
|
758
|
|
788
|
|
3,605
|
|
5,440
|
Cost of revenue from
amortization of intangible assets
|
|
6,435
|
|
6,569
|
|
19,678
|
|
20,606
|
Amortization of
intangible assets
|
|
11,845
|
|
13,364
|
|
36,215
|
|
41,030
|
Restructuring and
other charges, net
|
|
1,920
|
|
1,947
|
|
14,932
|
|
26,446
|
Stock-based
compensation (1)
|
|
33,135
|
|
30,181
|
|
98,030
|
|
84,476
|
Non-cash interest
expense
|
|
11,951
|
|
12,325
|
|
37,269
|
|
37,011
|
Loss on
extinguishment of debt
|
|
—
|
|
—
|
|
18,656
|
|
910
|
Adjustment to income
tax expense
|
|
(32,195)
|
|
(12,885)
|
|
(89,768)
|
|
(47,286)
|
Other
|
|
473
|
|
4,945
|
|
(1,236)
|
|
11,770
|
Non-GAAP net
income
|
|
$
50,984
|
|
$
57,173
|
|
$
189,215
|
|
$
166,518
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
net income per share
|
|
$
0.18
|
|
$
0.20
|
|
$
0.66
|
|
$
0.58
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
287,852
|
|
288,648
|
|
288,096
|
|
288,153
|
|
|
|
|
|
|
|
|
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations,
continued
|
(in
thousands)
|
Unaudited
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(1) Stock-based
compensation
|
|
|
|
|
|
|
|
|
Cost of hosting and
professional services
|
$
6,205
|
|
$
6,958
|
|
$
18,250
|
|
$
18,646
|
|
Cost of product and
licensing
|
124
|
|
197
|
|
383
|
|
593
|
|
Cost of maintenance
and support
|
360
|
|
583
|
|
1,206
|
|
730
|
|
Research and
development
|
8,720
|
|
5,662
|
|
26,106
|
|
15,568
|
|
Sales and
marketing
|
8,003
|
|
6,775
|
|
23,022
|
|
21,643
|
|
General and
administrative
|
9,723
|
|
10,006
|
|
29,063
|
|
27,296
|
|
Total
|
$
33,135
|
|
$
30,181
|
|
$
98,030
|
|
$
84,476
|
|
|
|
|
|
|
|
|
|
|
(2)
Acquisition-related revenue
|
|
|
|
|
|
|
|
|
Acquisition-related
revenue adjustments
|
$
—
|
|
$
625
|
|
$
301
|
|
$
1,317
|
|
Total
|
$
—
|
|
$
625
|
|
$
301
|
|
$
1,317
|
|
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SOURCE Nuance Communications, Inc.