BURLINGTON, Mass., Nov. 18, 2020 /PRNewswire/ -- Nuance
Communications, Inc. (NASDAQ: NUAN) today announced financial
results for its fourth quarter and fiscal year ended September 30, 2020:
- GAAP revenue of $352.9 million
and GAAP earnings per diluted share of $(0.08).
- Non-GAAP revenue of $352.9
million and non-GAAP earnings per diluted share of
$0.18.
"We are very pleased with the strong end to our fiscal year, as
we delivered revenue and EPS at the high end of our guidance
range," said Mark Benjamin, Chief
Executive Officer at Nuance. "We continued to execute on our
strategic initiatives, accelerating our cloud transition in
Healthcare and focusing on our AI-first approach in Enterprise. In
Healthcare, we drove solid growth in our cloud offerings, ending
the year at $386 million in
cloud-based ARR, up 29% for the full year. In particular, we
benefited from strong performance in Dragon Medical Cloud, which
grew 38% compared to 2019, as well as growth in our PowerScribe One
and CDE One offerings, as we continue to transition our customer
base to the cloud. Enterprise revenue increased 4% compared to
2019, marking our fifth consecutive year of organic growth. This
growth was driven by strength in our Intelligent Engagement
offerings."
Mr. Benjamin concluded, "In a separate release today, as part of
our ongoing effort to align our portfolio with key strategic growth
areas, we announced the planned sale of our medical transcription
and electronic health record (EHR) Go-Live services to Assured
Healthcare Partners and Aeries Technology Group. With this sale, we
will reach an important milestone in our journey towards a more
focused strategy of advancing our Conversational AI, natural
language understanding and ambient clinical intelligence solutions.
This crucial step in our portfolio rationalization efforts places
Nuance in a strong position to achieve levels of organic growth not
seen in many years, and I look forward to continuing on this path
in the quarters to come."
Q4 2020 Performance Summary
Q4 2020 results for continuing operations include:
- Revenue of $352.9 million,
compared to $387.6 million in the
same period last year.
- Non-GAAP revenue of $352.9
million, compared to $387.8
million in the same period last year.
- GAAP operating income of $12.9
million, compared to $30.8
million in the same period last year.
- Non-GAAP operating income of $76.3
million, compared to $94.1
million in the same period last year.
- GAAP operating margin of 3.7%, compared to 7.9% in the same
period last year.
- Non-GAAP operating margin of 21.6%, compared to 24.3% in the
same period last year.
- GAAP net loss of $22.8 million,
compared to a net income of $3.0
million in the same period last year.
- Non-GAAP net income of $54.2
million, compared to $65.9
million in the same period last year.
- GAAP EPS of $(0.08), compared to
$0.01 in the same period last
year.
- Non-GAAP EPS of $0.18, compared
to $0.23 in the same period last
year.
- Operating cash flows from continuing operations was
$80.9 million, compared to
$79.3 million in the same period last
year.
Capital Allocation
We remain committed to our balanced capital allocation approach.
While we did not engage in any share buyback or debt retirement
activity during the fourth quarter, during the fiscal year we
repurchased $169 million of common
stock and retired $470 million of
debt principal value, all of which took place in the first half of
the year. 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 $372
million, slightly above our target minimum cash balance
range.
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/. We will also be providing
an update to our mid-term outlook on our earnings call today
(details below).
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 here, or by dialing 1-888-317-6003 (US and
Canada) or 1-412-317-6061
(international) and referencing code 5887867.
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 a technology pioneer with
market leadership in conversational AI and ambient intelligence. A
full-service partner trusted by 90 percent of US hospitals and 85
percent of the Fortune 100 companies worldwide, Nuance creates
intuitive solutions that amplify people's ability to help
others.
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 September 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
September 30,
|
|
Twelve Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
$
234,749
|
|
$
235,539
|
|
$
926,044
|
|
$
913,643
|
Product and
licensing
|
|
52,626
|
|
86,394
|
|
296,127
|
|
338,693
|
Maintenance and
support
|
|
65,556
|
|
65,642
|
|
256,728
|
|
268,935
|
Total
revenues
|
|
352,931
|
|
387,575
|
|
1,478,899
|
|
1,521,271
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
129,362
|
|
142,160
|
|
518,145
|
|
551,419
|
Product and
licensing
|
|
7,829
|
|
10,809
|
|
61,995
|
|
71,280
|
Maintenance and
support
|
|
7,952
|
|
8,556
|
|
30,989
|
|
33,369
|
Amortization of
intangible assets
|
|
8,132
|
|
6,810
|
|
27,810
|
|
27,416
|
Total cost of
revenues
|
|
153,275
|
|
168,335
|
|
638,939
|
|
683,484
|
Gross
profit
|
|
199,656
|
|
219,240
|
|
839,960
|
|
837,787
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
56,535
|
|
52,935
|
|
226,234
|
|
192,633
|
Sales and
marketing
|
|
71,477
|
|
73,647
|
|
273,324
|
|
274,031
|
General and
administrative
|
|
41,998
|
|
43,481
|
|
156,353
|
|
172,638
|
Amortization of
intangible assets
|
|
14,682
|
|
13,176
|
|
50,897
|
|
54,206
|
Acquisition-related
costs, net
|
|
(721)
|
|
2,525
|
|
2,884
|
|
7,965
|
Restructuring and
other charges, net
|
|
2,748
|
|
2,701
|
|
17,680
|
|
29,147
|
Total operating
expenses
|
|
186,719
|
|
188,465
|
|
727,372
|
|
730,620
|
Income from
operations
|
|
12,937
|
|
30,775
|
|
112,588
|
|
107,167
|
Other expenses,
net
|
|
(22,646)
|
|
(27,794)
|
|
(102,558)
|
|
(107,260)
|
(Loss) income before
income taxes
|
|
(9,709)
|
|
2,981
|
|
10,030
|
|
(93)
|
Provision (benefit)
for income taxes
|
|
13,042
|
|
(24)
|
|
(18,752)
|
|
12,105
|
Net (loss) income
from continuing operations
|
|
(22,751)
|
|
3,005
|
|
28,782
|
|
(12,198)
|
Net (loss) income
from discontinued operations
|
|
(1,194)
|
|
105,124
|
|
(7,386)
|
|
226,008
|
Net (loss)
income
|
|
$
(23,945)
|
|
$
108,129
|
|
$
21,396
|
|
$
213,810
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share - basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.08)
|
|
$
0.01
|
|
$
0.10
|
|
$
(0.04)
|
Discontinued
operations
|
|
—
|
|
0.37
|
|
(0.02)
|
|
0.79
|
Total net (loss)
income per basic common share
|
|
$
(0.08)
|
|
$
0.38
|
|
$
0.08
|
|
$
0.75
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share - diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.08)
|
|
$
0.01
|
|
$
0.10
|
|
$
(0.04)
|
Discontinued
operations
|
|
—
|
|
0.36
|
|
(0.03)
|
|
0.79
|
Total net (loss)
income per diluted common share
|
|
$
(0.08)
|
|
$
0.37
|
|
$
0.07
|
|
$
0.75
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
282,556
|
|
285,754
|
|
282,644
|
|
286,347
|
Diluted
|
|
282,556
|
|
291,598
|
|
291,994
|
|
286,347
|
Nuance
Communications, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
September 30,
2020
|
|
September 30,
2019
|
|
|
Unaudited
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
301,233
|
|
$
560,961
|
|
Marketable
securities
|
71,114
|
|
186,555
|
|
Accounts receivable,
net
|
200,576
|
|
240,673
|
|
Prepaid expenses and
other current assets
|
163,062
|
|
175,166
|
|
Current assets of
discontinued operations
|
—
|
|
91,858
|
|
Total current
assets
|
735,985
|
|
1,255,213
|
|
|
|
|
|
Marketable
securities
|
—
|
|
17,287
|
Land, building and
equipment, net
|
143,428
|
|
121,203
|
Goodwill
|
2,133,712
|
|
2,127,896
|
Intangible assets,
net
|
213,484
|
|
291,371
|
Right-of-use
assets
|
110,276
|
|
—
|
Other
assets
|
256,447
|
|
316,215
|
Long-term assets of
discontinued operations
|
—
|
|
1,236,608
|
|
Total
assets
|
$
3,593,332
|
|
$
5,365,793
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
432,209
|
|
$
1,142,870
|
|
Contingent and
deferred acquisition payments
|
4,224
|
|
17,470
|
|
Accounts
payable
|
75,122
|
|
90,826
|
|
Accrued expenses and
other current liabilities
|
213,264
|
|
249,570
|
|
Deferred
revenue
|
261,323
|
|
214,223
|
|
Current liabilities
of discontinued operations
|
—
|
|
130,117
|
|
Total current
liabilities
|
986,142
|
|
1,845,076
|
|
|
|
|
|
Long-term
debt
|
1,104,464
|
|
793,536
|
Deferred revenue, net
of current portion
|
104,309
|
|
133,783
|
Deferred tax
liability
|
70,116
|
|
54,216
|
Operating lease
liabilities
|
107,621
|
|
—
|
Other
liabilities
|
76,747
|
|
79,378
|
Long-term liabilities
of discontinued operations
|
—
|
|
286,654
|
|
Total
liabilities
|
2,449,399
|
|
3,192,643
|
|
|
|
|
|
Stockholders'
equity
|
1,143,933
|
|
2,173,150
|
|
Total liabilities and
stockholders' equity
|
$
3,593,332
|
|
$
5,365,793
|
Nuance
Communications, Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net (loss) income
from continuing operations
|
$
(22,751)
|
|
$
3,005
|
|
$
28,782
|
|
$
(12,198)
|
|
Adjustments to
reconcile net (loss) income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
9,782
|
|
10,300
|
|
37,772
|
|
47,417
|
|
Amortization
|
22,814
|
|
19,986
|
|
78,707
|
|
81,622
|
|
Stock-based
compensation
|
35,264
|
|
34,779
|
|
133,294
|
|
119,255
|
|
Non-cash interest
expense
|
12,171
|
|
12,477
|
|
49,440
|
|
49,488
|
|
Deferred tax
provision (benefit)
|
15,689
|
|
(7,311)
|
|
(39,937)
|
|
(12,437)
|
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
18,656
|
|
910
|
|
Other
|
(169)
|
|
5,113
|
|
2,736
|
|
4,462
|
|
Changes in operating
assets and liabilities, excluding
effects of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
15,811
|
|
(8,952)
|
|
42,075
|
|
3,366
|
|
Prepaid expenses and
other assets
|
(12,289)
|
|
(6,303)
|
|
(7,259)
|
|
(21,063)
|
|
Accounts
payable
|
7,695
|
|
3,853
|
|
(8,173)
|
|
12,122
|
|
Accrued expenses and
other liabilities
|
686
|
|
24,568
|
|
(84,076)
|
|
27,415
|
|
Deferred
revenue
|
(3,852)
|
|
(12,221)
|
|
15,854
|
|
4,227
|
|
Net cash provided by
operating activities - continuing
operations
|
80,851
|
|
79,294
|
|
267,871
|
|
304,586
|
|
Net cash provided by
(used in) operating activities -
discontinued operations
|
—
|
|
24,869
|
|
(13,307)
|
|
96,771
|
|
Net cash provided by
operating activities
|
80,851
|
|
104,163
|
|
254,564
|
|
401,357
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(15,747)
|
|
(11,942)
|
|
(61,297)
|
|
(44,185)
|
|
Proceeds from
disposition of a business, net of
transaction fees
|
150
|
|
—
|
|
150
|
|
407,043
|
|
Purchases of
marketable securities and other
investments
|
(22,029)
|
|
(92,793)
|
|
(180,005)
|
|
(349,125)
|
|
Proceeds from sales
and maturities of marketable
securities and other investments
|
23,150
|
|
40,257
|
|
313,734
|
|
303,171
|
|
Payments for business
and asset acquisitions, net of
cash acquired
|
(1,000)
|
|
(17,771)
|
|
(1,000)
|
|
(20,873)
|
|
Other
|
(227)
|
|
—
|
|
1,147
|
|
—
|
|
Net cash (used in)
provided by investing activities
|
(15,703)
|
|
(82,249)
|
|
72,729
|
|
296,031
|
|
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
|
—
|
|
(6,003)
|
|
(169,217)
|
|
(126,938)
|
|
Proceeds from
issuance of common stock from
employee stock plans
|
7,636
|
|
7,954
|
|
14,840
|
|
16,597
|
|
Proceeds from the
revolving credit facility
|
—
|
|
—
|
|
230,000
|
|
—
|
|
Repayment of the
revolving credit facility
|
—
|
|
—
|
|
(230,000)
|
|
—
|
|
Payments for taxes
related to net share settlement of
equity awards
|
(14,088)
|
|
(6,866)
|
|
(54,056)
|
|
(49,428)
|
|
Proceeds from sale of
noncontrolling interests in a
subsidiary
|
—
|
|
9,863
|
|
—
|
|
9,863
|
|
Other financing
activities
|
(381)
|
|
(689)
|
|
(3,222)
|
|
(2,131)
|
|
Net cash (used in)
provided by financing activities
|
(6,833)
|
|
4,259
|
|
(586,207)
|
|
(452,037)
|
|
Effects of exchange
rate changes on cash and cash
equivalents
|
2,363
|
|
(1,589)
|
|
(814)
|
|
(353)
|
|
Net increase
(decrease) in cash and cash equivalents
|
60,678
|
|
24,584
|
|
(259,728)
|
|
244,998
|
|
Cash and cash
equivalents at beginning of period
|
240,555
|
|
536,377
|
|
560,961
|
|
315,963
|
|
Cash and cash
equivalents at end of period
|
$
301,233
|
|
$
560,961
|
|
$
301,233
|
|
$
560,961
|
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information
|
GAAP to Non-GAAP
Reconciliations
|
(in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
GAAP
revenues
|
|
$
352,931
|
|
$
387,575
|
|
$
1,478,899
|
|
$
1,521,271
|
Acquisition-related
revenue adjustments: hosting and
professional services
|
|
—
|
|
134
|
|
301
|
|
531
|
Acquisition-related
revenue adjustments: product and
licensing
|
|
—
|
|
2
|
|
—
|
|
660
|
Acquisition-related
revenue adjustments: maintenance
and support
|
|
—
|
|
83
|
|
—
|
|
345
|
Non-GAAP
revenues
|
|
$
352,931
|
|
$
387,794
|
|
$
1,479,200
|
|
$
1,522,807
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenues
|
|
$
153,275
|
|
$
168,335
|
|
$
638,939
|
|
$
683,484
|
Cost of revenues from
amortization of intangible
assets
|
|
(8,132)
|
|
(6,810)
|
|
(27,810)
|
|
(27,416)
|
Cost of revenues
adjustments: hosting and
professional services (1)
|
|
(6,637)
|
|
(8,001)
|
|
(24,887)
|
|
(26,647)
|
Cost of revenues
adjustments: product and licensing
(1)
|
|
(127)
|
|
(262)
|
|
(510)
|
|
(855)
|
Cost of revenues
adjustments: maintenance and
support (1)
|
|
(457)
|
|
(584)
|
|
(1,663)
|
|
(1,314)
|
Cost of revenues
adjustments: other
|
|
—
|
|
96
|
|
(1)
|
|
(378)
|
Non-GAAP cost of
revenues
|
|
$
137,922
|
|
$
152,774
|
|
$
584,068
|
|
$
626,874
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
$
199,656
|
|
$
219,240
|
|
$
839,960
|
|
$
837,787
|
Gross profit
adjustments
|
|
15,353
|
|
15,780
|
|
55,172
|
|
58,146
|
Non-GAAP gross
profit
|
|
$
215,009
|
|
$
235,020
|
|
$
895,132
|
|
$
895,933
|
|
|
|
|
|
|
|
|
|
GAAP income from
operations
|
|
$
12,937
|
|
$
30,775
|
|
$
112,588
|
|
$
107,167
|
Gross profit
adjustments
|
|
15,353
|
|
15,780
|
|
55,172
|
|
58,146
|
Research and
development (1)
|
|
8,796
|
|
6,940
|
|
34,902
|
|
22,508
|
Sales and marketing
(1)
|
|
9,018
|
|
8,751
|
|
32,040
|
|
30,394
|
General and
administrative (1)
|
|
10,229
|
|
10,241
|
|
39,292
|
|
37,537
|
Acquisition-related
costs, net
|
|
(721)
|
|
2,525
|
|
2,884
|
|
7,965
|
Amortization of
intangible assets
|
|
14,682
|
|
13,176
|
|
50,897
|
|
54,206
|
Restructuring and
other charges, net
|
|
2,748
|
|
2,701
|
|
17,680
|
|
29,147
|
Other
|
|
3,291
|
|
3,243
|
|
3,939
|
|
15,883
|
Non-GAAP income
from operations
|
|
$
76,333
|
|
$
94,132
|
|
$
349,394
|
|
$
362,953
|
|
|
|
|
|
|
|
|
|
GAAP (loss) income
before income taxes
|
|
$
(9,709)
|
|
$
2,981
|
|
$
10,030
|
|
$
(93)
|
Gross profit
adjustments
|
|
15,353
|
|
15,780
|
|
55,172
|
|
58,146
|
Research and
development (1)
|
|
8,796
|
|
6,940
|
|
34,902
|
|
22,508
|
Sales and marketing
(1)
|
|
9,018
|
|
8,751
|
|
32,040
|
|
30,394
|
General and
administrative (1)
|
|
10,229
|
|
10,241
|
|
39,292
|
|
37,537
|
Acquisition-related
costs, net
|
|
(721)
|
|
2,525
|
|
2,884
|
|
7,965
|
Amortization of
intangible assets
|
|
14,682
|
|
13,176
|
|
50,897
|
|
54,206
|
Restructuring and
other charges, net
|
|
2,748
|
|
2,701
|
|
17,680
|
|
29,147
|
Non-cash interest
expense
|
|
12,171
|
|
12,477
|
|
49,440
|
|
49,488
|
Loss on
extinguishment of debt
|
|
—
|
|
—
|
|
18,656
|
|
910
|
Other
|
|
3,186
|
|
7,860
|
|
1,949
|
|
19,156
|
Non-GAAP income
before income taxes
|
|
$
65,753
|
|
$
83,432
|
|
$
312,942
|
|
$
309,364
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information
|
GAAP to Non-GAAP
Reconciliations, continued
|
(in thousands, except
per share amounts)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
GAAP provision
(benefit) for income taxes
|
|
$
13,042
|
|
$
(24)
|
|
$
(18,752)
|
|
$
12,105
|
Income tax effect of
non-GAAP adjustments
|
|
13,262
|
|
190,352
|
|
58,752
|
|
263,334
|
Removal of valuation
allowance and other items
|
|
(9,865)
|
|
(193,925)
|
|
26,851
|
|
(220,532)
|
Removal of discrete
items
|
|
(4,844)
|
|
21,091
|
|
2,718
|
|
22,002
|
Non-GAAP provision
for income taxes
|
|
$
11,595
|
|
$
17,494
|
|
$
69,569
|
|
$
76,909
|
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income from continuing operations
|
|
$
(22,751)
|
|
$
3,005
|
|
$
28,782
|
|
$
(12,198)
|
Acquisition-related
adjustment - revenues (2)
|
|
—
|
|
219
|
|
301
|
|
1,536
|
Acquisition-related
costs, net
|
|
(721)
|
|
2,525
|
|
2,884
|
|
7,965
|
Cost of revenue from
amortization of intangible assets
|
|
8,132
|
|
6,810
|
|
27,810
|
|
27,416
|
Amortization of
intangible assets
|
|
14,682
|
|
13,176
|
|
50,897
|
|
54,206
|
Restructuring and
other charges, net
|
|
2,748
|
|
2,701
|
|
17,680
|
|
29,147
|
Stock-based
compensation (1)
|
|
35,264
|
|
34,779
|
|
133,294
|
|
119,255
|
Non-cash interest
expense
|
|
12,171
|
|
12,477
|
|
49,440
|
|
49,488
|
Loss on
extinguishment of debt
|
|
—
|
|
—
|
|
18,656
|
|
910
|
Adjustment to income
tax expense
|
|
1,447
|
|
(17,518)
|
|
(88,321)
|
|
(64,804)
|
Other
|
|
3,186
|
|
7,764
|
|
1,950
|
|
19,534
|
Non-GAAP net
income
|
|
$
54,158
|
|
$
65,938
|
|
$
243,373
|
|
$
232,455
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
net income per share
|
|
$
0.18
|
|
$
0.23
|
|
$
0.83
|
|
$
0.80
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares
outstanding
|
|
303,689
|
|
291,598
|
|
291,994
|
|
290,125
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations,
continued
|
(in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(1) Stock-based
compensation
|
|
|
|
|
|
|
|
|
Cost of hosting and
professional services
|
$
6,637
|
|
$
8,001
|
|
$
24,887
|
|
$
26,647
|
|
Cost of product and
licensing
|
127
|
|
262
|
|
510
|
|
855
|
|
Cost of maintenance
and support
|
457
|
|
584
|
|
1,663
|
|
1,314
|
|
Research and
development
|
8,796
|
|
6,940
|
|
34,902
|
|
22,508
|
|
Sales and
marketing
|
9,018
|
|
8,751
|
|
32,040
|
|
30,394
|
|
General and
administrative
|
10,229
|
|
10,241
|
|
39,292
|
|
37,537
|
|
Total
|
$
35,264
|
|
$
34,779
|
|
$
133,294
|
|
$
119,255
|
|
|
|
|
|
|
|
|
|
|
(2)
Acquisition-related revenue
|
|
|
|
|
|
|
|
|
Acquisition-related
revenue adjustments
|
$
—
|
|
$
219
|
|
$
301
|
|
$
1,536
|
|
Total
|
$
—
|
|
$
219
|
|
$
301
|
|
$
1,536
|
|
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SOURCE Nuance Communications, Inc.