Revenue and EPS Exceed Targets as Company Sustains Growth in
Recurring Revenue, Operating Cash Flow and Deferred Revenue
Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its first quarter fiscal 2015, ended December
31, 2014.
In the first quarter of fiscal 2015, Nuance reported GAAP
revenue of $474.0 million, up 0.9% from $470.0 million in the first
quarter of fiscal 2014. Nuance reported non-GAAP revenue of $489.0
million, which includes $15.0 million of revenue lost to accounting
treatment in conjunction with acquisitions, compared to $490.1
million in the first quarter of fiscal 2014. In the first quarter
of fiscal 2015, Nuance reported net new bookings of $303.8 million,
compared to $321.5 million in the first quarter of fiscal 2014.
In the first quarter of fiscal 2015, Nuance recognized GAAP net
loss of $(50.5) million, or $(0.16) per share, compared to GAAP net
loss of $(55.4) million, or $(0.18) per share, in the first quarter
of fiscal 2014. In the first quarter of fiscal 2015, Nuance
reported non-GAAP net income of $82.0 million, or $0.25 per diluted
share, up from non-GAAP net income of $76.6 million, or $0.24 per
diluted share, in the first quarter of fiscal 2014. Nuance’s first
quarter fiscal 2015 non-GAAP operating margin was 22.0%, up from
21.6% in the first quarter of fiscal 2014. Nuance reported cash
flow from operations of $95.7 million in the first quarter of
fiscal 2015, up 22.4% from $78.2 million in the first quarter of
fiscal 2014. Nuance ended the first quarter of fiscal 2015 with
$621.1 million in total deferred revenue, up 28.2% from $484.3
million at the end of the first quarter of fiscal 2014. Nuance
ended the first quarter of fiscal 2015 with $606.1 million in cash,
cash equivalents and marketable securities.
Please refer to the “Discussion of Non-GAAP Financial Measures”
and to the “GAAP to Non-GAAP Reconciliations,” included elsewhere
in this release, for more information regarding the company’s use
of non-GAAP measures.
“First quarter revenue and EPS exceeded our targets. First
quarter recurring revenues represented 66% of total revenue, up 3
percentage points from last year’s first quarter, while we continue
to transition our revenue model toward more stable, predictable
recurring revenue streams. Our recurring revenues continue to
benefit the business as we sustained growth in deferred revenue and
operating cash flow and delivered our second consecutive quarter of
year-over-year improvement in EPS and operating margin,” said Tom
Beaudoin, Nuance CFO.
Highlights from the Quarter
- Healthcare – For Nuance’s healthcare
solutions, first quarter fiscal 2015 non-GAAP revenue was $231.0
million. Key customers in the quarter included Catholic Health
Systems, Centura Health, Children’s Hospital of Orange County,
Hamad Medical Center, Maine Medical, OA Centers for Orthopaedics,
Universal Health Services, University of Florida Shands Hospital,
University of South Alabama, University of Texas MD Anderson Cancer
Center, US Veteran’s Administration, and Vidant Health.
- Mobile & Consumer – For Nuance’s
mobile and consumer solutions, first quarter fiscal 2015 non-GAAP
revenue was $107.3 million. Key customers and OEM design wins in
the quarter included BMW, Bosch, ChuangZu, DoCoMo, Ford, Fujitsu,
Harman, Honda, Huawei, LG, Mahindra, Mitac, Motorola, Optus,
Panasonic, Peugeot, Pioneer, Renault, Samsung, Subaru, Thales,
Vivo, and ZTE.
- Enterprise – For Nuance’s enterprise
solutions, first quarter fiscal 2015 non-GAAP revenue was $90.6
million. Key customers in the quarter included Barclays, Citigroup,
Delta Airlines, Deutsche Telekom, Ford, Jetstar, Metro PCS, Moshi
Moshi, PayPal, Scotia Bank, SK Telecom, Telecom Italia, Vodafone,
and Westpac Bank.
- Imaging – For Nuance’s document imaging
solutions, first quarter fiscal 2015 non-GAAP revenue was $60.1
million. Key customers in the quarter included City of Denver,
Connolly, DLA Piper, Hyland, Stikeman Elliott, Swiss Post, Telecom
Italia, US Department of Veteran’s Affairs, and ZKB Zurcher
Kantonal Bank.
Conference Call and Prepared RemarksNuance is providing a
copy of prepared remarks in combination with its press release.
These remarks are offered to provide shareholders and analysts with
additional time and detail for analyzing results in advance of the
company’s quarterly conference call. The remarks will be available
at http://www.nuance.com/earnings-results/ in conjunction with the
press release.
As previously scheduled, the conference call will begin today,
February 5, 2015 at 5:00 pm EST and will include only brief
comments followed by questions and answers. The prepared remarks
will not be read on the call. To access the live broadcast, please
visit the Investor Relations section of Nuance’s website at
www.nuance.com. The call can also be heard by dialing (800)
288-8975 or (612) 288-0329 at least five minutes prior to the call
and referencing code 352003. A replay will be available within 24
hours of the announcement by dialing (800) 475-6701 or (320)
365-3844 and using the access code 352003.
About Nuance Communications, Inc.Nuance Communications,
Inc. (NASDAQ: NUAN) is a leading provider of voice and language
solutions for businesses and consumers around the world. Its
technologies, applications and services make the user experience
more compelling by transforming the way people interact with
devices and systems. Every day, millions of users and thousands of
businesses experience Nuance’s proven applications. For more
information, please visit www.nuance.com.
Trademark reference: Nuance, the Nuance logo, Dragon Medical and
eScription 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.
Definitions of Bookings and Net New BookingsBookings
represent the estimated gross revenue value of transactions at the
time of contract execution, except for maintenance and support
offerings. For fixed price contracts, the bookings value represents
the gross total contract value. For contracts where revenue is
based on transaction volume, the bookings value represents the
contract price multiplied by the estimated future transaction
volume during the contract term, whether or not such transaction
volumes are guaranteed under a minimum commitment clause. Actual
results could be different than our initial estimates. The
maintenance and support bookings value represents the amounts
billed in the period the customer is invoiced. Because of the
inherent estimates required to determine bookings and the fact that
the actual resultant revenue may differ from our initial bookings
estimates, we consider bookings one indicator of potential future
revenue and not as an arithmetic measure of backlog.
Net new bookings represents the estimated revenue value at the
time of contract execution from new contractual arrangements or the
estimated revenue value incremental to the portion of value that
will be renewed under pre-existing arrangements.
Safe Harbor and Forward-Looking StatementsStatements 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,” 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:
fluctuations in demand for our existing and future products;
economic conditions in the United States and internationally; our
ability to control and successfully manage our expenses and cash
position; the effects of competition, including pricing pressure;
possible defects in our products and technologies; our ability to
successfully integrate operations and employees of acquired
businesses; the conversion rate of bookings into revenue; the
ability to realize anticipated synergies from acquired businesses;
and the other factors described in our annual report on Form 10-K
for the fiscal year ended September 30, 2014 and our quarterly
reports filed 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.
The information included in this press release should not be
viewed as a substitute for full GAAP financial statements.
Discussion of Non-GAAP Financial MeasuresWe 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 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 revenue and earnings per share.
Consistent with this approach, we believe that disclosing non-GAAP
revenue and non-GAAP earnings per share to the readers of our
financial statements provides such readers with useful supplemental
data that, while not a substitute for GAAP revenue and earnings per
share, allows for greater transparency in the review of our
financial and operational performance. In assessing the overall
health of the business during the three months ended December 31,
2014 and 2013, and, in particular, in evaluating our revenue and
earnings per share, our management has either included or excluded
items in six general categories, each of which is described
below.
Acquisition-Related Revenue and Cost of Revenue.We provide
supplementary non-GAAP financial measures of revenue, which include
revenue related to acquisitions, primarily from Notable Solutions,
Quantim and Equitrac for the three months ended December 31, 2014
that would otherwise have been recognized but for the purchase
accounting treatment of these transactions. Non-GAAP revenue also
includes revenue that we would have otherwise 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.
Acquisition-Related Costs, Net.In recent years, we have
completed a number of acquisitions, which result in operating
expenses which would not otherwise have been incurred. We provide
supplementary non-GAAP financial measures, which exclude certain
transition, integration and other acquisition-related expense items
resulting from acquisitions, to allow more accurate comparisons of
the financial results to historical operations, forward-looking
guidance and the financial results of less acquisitive peer
companies. We consider these types of costs and adjustments, to a
great extent, to be unpredictable and dependent on a significant
number of factors that are outside of our control. Furthermore, we
do not consider these acquisition-related costs and adjustments to
be related to the organic continuing operations of the acquired
businesses and are generally not relevant to assessing or
estimating the long-term performance of the acquired assets. In
addition, the size, complexity and/or volume of past acquisitions,
which often drives the magnitude of acquisition-related costs, may
not be indicative of the size, complexity and/or volume of future
acquisitions. By excluding acquisition-related costs and
adjustments from our non-GAAP measures, management is better able
to evaluate our ability to utilize our existing assets and estimate
the long-term value that acquired assets will generate for us. We
believe that providing a supplemental non-GAAP measure which
excludes these items allows management and investors to consider
the ongoing operations of the business both with, and without, such
expenses.
These acquisition-related costs are included in the following
categories: (i) transition and integration costs; (ii) professional
service fees; 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,
earn-out payments treated as compensation expense, as well as the
costs of integration-related services, including services provided
by third parties.
(ii) Professional service fees. Professional service fees
include third party costs related to the acquisition, and legal and
other professional service fees associated with 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.
Costs Associated with IP Collaboration Agreement.In order to
gain access to a third party's extensive speech recognition
technology and natural language and semantic processing technology,
we have entered into IP collaboration agreements, with terms
ranging between five and six years. Depending on the agreement,
some or all intellectual property derived from these collaborations
will be jointly owned by the two parties. For the majority of the
developed intellectual property, we will have sole rights to
commercialize such intellectual property for periods ranging
between two to six years, depending on the agreement. For non-GAAP
purposes, we consider these long-term contracts and the resulting
acquisitions of intellectual property from this third-party over
the agreements’ terms to be an investing activity, outside of our
normal, organic, continuing operating activities, and are therefore
presenting this supplemental information to show the results
excluding these expenses. We do not exclude from our non-GAAP
results the corresponding revenue, if any, generated from these
collaboration efforts. Although our bonus program and other
performance-based incentives for executives are based on the
non-GAAP results that exclude these costs, certain engineering
senior management are responsible for execution and results of the
collaboration agreement and have incentives based on those results.
Costs associated with the research and development portion of the
agreements have been excluded from research and development expense
while costs for the extension of the marketing exclusivity period
are excluded from sales and marketing expense.
Non-Cash Expenses.We provide non-GAAP information relative to
the following non-cash expenses: (i) stock-based compensation; (ii)
certain accrued interest; and (iii) certain accrued income taxes.
These items are further discussed as follows:
(i) Stock-based compensation. Because of varying available
valuation methodologies, subjective assumptions and the variety of
award types, we believe that the exclusion of 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) and (iii) Certain accrued interest and income taxes. We
also exclude certain accrued interest and certain accrued income
taxes because we believe that excluding these non-cash expenses
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. These non-cash expenses will
continue in future periods.
Other Expenses.We exclude certain other expenses that are the
result of unplanned events to measure operating performance and
current and future liquidity both with and without these expenses;
and therefore, 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. These events are unplanned and arose
outside of the ordinary course of continuing operations. These
items also include adjustments from changes in fair value of
share-based instruments relating to the issuance of our common
stock with security price guarantees payable in cash. Other items
such as consulting and professional services fees related to
assessing strategic alternatives, gains or losses on
non-controlling strategic equity interests are also excluded.
We believe that providing the non-GAAP 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 to not only better understand our financial performance,
but more importantly, to evaluate the efficacy of the methodology
and information used by management to evaluate and measure such
performance.
Financial Tables Follow
Nuance Communications,
Inc.Condensed Consolidated Statements of Operations(in thousands,
except per share amounts)Unaudited Three months ended
December 31, 2014 2013
Revenues: Product and licensing $ 169,688 $ 178,437
Professional services and hosting 226,170 218,135 Maintenance and
support 78,161 73,408 Total revenues
474,019 469,980
Cost of
revenues: Product and licensing 23,970 25,438 Professional
services and hosting 157,243 154,580 Maintenance and support 14,041
12,608 Amortization of intangible assets 15,131
15,194 Total cost of revenues 210,385
207,820 Gross profit 263,634
262,160
Operating expenses: Research
and development 82,567 80,470 Sales and marketing 111,250 118,906
General and administrative 50,567 44,476 Amortization of intangible
assets 26,827 27,472 Acquisition-related cost, net 4,756 2,798
Restructuring and other charges, net 2,228
3,837 Total operating expenses 278,195
277,959 Loss from operations (14,561 ) (15,799 )
Other expense, net (30,120 ) (36,636 ) Loss before
income taxes (44,681 ) (52,435 ) Provision for income taxes
5,814 2,978 Net loss $ (50,495 ) $ (55,413 )
Net loss per share: Basic $ (0.16 ) $ (0.18 ) Diluted
$ (0.16 ) $ (0.18 )
Weighted average common shares
outstanding: Basic 321,751 314,818
Diluted 321,751 314,818
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets (in thousands) Unaudited
ASSETS
December 31, 2014
September 30, 2014
Current assets:
Cash and cash equivalents
$ 517,842 $ 547,230
Marketable securities
61,327 40,974
Accounts receivable, net
416,249 428,266
Prepaid expenses and other current
assets
159,449 148,030
Total current assets
1,154,867 1,164,500 Marketable securities 26,977 - Land,
building and equipment, net 191,350 191,411 Goodwill 3,390,709
3,410,893 Intangible assets, net 871,556 915,483 Other assets
150,719 137,997
Total assets
$ 5,786,178 $ 5,820,284
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities:
Current portion of long-term debt
$ 4,834 $ 4,834
Contingent and deferred acquisition
payments
8,397 35,911
Accounts payable and accrued expenses
246,548 303,039
Deferred revenue
342,488 298,225
Total current liabilities
602,267 642,009 Long-term debt 2,132,507 2,127,392 Deferred
revenue, net of current portion 278,616 249,879 Other liabilities
216,563 219,012
Total liabilities
3,229,953 3,238,292 Stockholders' equity
2,556,225 2,581,992
Total liabilities and stockholders'
equity
$ 5,786,178 $ 5,820,284
Nuance Communications, Inc.Consolidated Statements of Cash
Flows(in thousands)Unaudited Three months ended December 31,
2014 2013
Cash flows from operating
activities: Net loss $ (50,495 ) $ (55,413 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 57,173 55,109 Stock-based
compensation 47,354 47,239 Non-cash interest expense 7,379 9,661
Deferred tax provision (benefit) 1,887 (1,612 ) Other (182 ) (6,150
) Changes in operating assets and liabilities, net of effects from
acquisitions: Accounts receivable 7,243 (6,532 ) Prepaid expenses
and other assets (14,658 ) (11,095 ) Accounts payable (2,559 )
(28,032 ) Accrued expenses and other liabilities (36,226 ) 7,452
Deferred revenue 78,769 67,529 Net cash
provided by operating activities 95,685 78,156
Cash flows from investing activities: Capital
expenditures (16,937 ) (14,166 ) Payments for business and
technology acquisitions, net of cash acquired (8,132 ) (99,496 )
Purchases of marketable securities and other investments (63,465 )
(5,063 ) Proceeds from sales and maturities of marketable
securities and other investments 9,377 13,372
Net cash used in investing activities (79,157 )
(105,353 )
Cash flows from financing activities:
Payments of debt (1,209 ) (1,307 ) Payments for repurchases of
common stock - (18,000 ) Payments for settlement of share-based
derivatives (340 ) (1,032 ) Payments of other long-term liabilities
(695 ) (904 ) Proceeds from issuance of common stock from employee
stock plans 177 1,188 Cash used to net share settle employee equity
awards (42,654 ) (26,506 ) Net cash used in financing
activities (44,721 ) (46,561 ) Effects of exchange
rate changes on cash and cash equivalents (1,195 )
296 Net decrease in cash and cash equivalents (29,388 )
(73,462 ) Cash and cash equivalents at beginning of period
547,230 808,118 Cash and cash equivalents at
end of period $ 517,842 $ 734,656
Nuance Communications, Inc.Supplemental Financial Information -
GAAP to Non-GAAP Reconciliations(in thousands, except per share
amounts)Unaudited Three months ended
December 31, 2014 2013
GAAP revenue $ 474,019 $ 469,980 Acquisition-related
revenue adjustments: product and licensing 10,616 11,489
Acquisition-related revenue adjustments: professional services and
hosting 3,796 7,659 Acquisition-related revenue adjustments:
maintenance and support 599 917
Non-GAAP revenue $ 489,030 $ 490,045
GAAP cost of revenue $ 210,385 $ 207,820 Cost of revenue
from amortization of intangible assets (15,131 ) (15,194 ) Cost of
revenue adjustments: product and licensing (1,2) 319 654 Cost of
revenue adjustments: professional services and hosting (1,2) (7,308
) (6,305 ) Cost of revenue adjustments: maintenance and support
(1,2) (943 ) (784 )
Non-GAAP cost of revenue $
187,322 $ 186,191
GAAP gross profit $
263,634 $ 262,160 Gross profit adjustments 38,074
41,694
Non-GAAP gross profit $ 301,708
$ 303,854
GAAP loss from operations $ (14,561
) $ (15,799 ) Gross profit adjustments 38,074 41,694 Research and
development (1) 10,509 10,288 Sales and marketing (1) 12,534 15,244
General and administrative (1) 15,658 14,039 Amortization of
intangible assets 26,827 27,472 Costs associated with IP
collaboration agreements 2,938 4,937 Acquisition-related costs, net
4,756 2,798 Restructuring and other charges, net 2,228 3,837 Other
8,833 1,132
Non-GAAP income from
operations $ 107,796 $ 105,642
GAAP
provision for income taxes $ 5,814 $ 2,978 Non-cash taxes
(2,159 ) 1,677
Non-GAAP provision for
income taxes $ 3,655 $ 4,655
GAAP net
loss $ (50,495 ) $ (55,413 ) Acquisition-related adjustment -
revenue (2) 15,011 20,065 Acquisition-related adjustment - cost of
revenue (2) (721 ) (1,233 ) Acquisition-related costs, net 4,756
2,798 Cost of revenue from amortization of intangible assets 15,131
15,194 Amortization of intangible assets 26,827 27,472
Restructuring and other charges, net 2,228 3,837 Non-cash
stock-based compensation (1) 47,354 47,239 Non-cash interest
expense 7,379 9,661 Non-cash income taxes 2,159 (1,677 ) Costs
associated with IP collaboration agreements 2,938 4,937 Change in
fair value of share-based instruments 561 4,150 Other 8,833
(383 )
Non-GAAP net income $ 81,961 $
76,647
Non-GAAP diluted net income per share $
0.25 $ 0.24
Diluted weighted average common
shares outstanding 328,688 317,462
Nuance Communications, Inc.
Supplemental Financial Information - GAAP
to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three months ended December 31, 2014
2013
(1) Non-Cash
Stock-Based Compensation
Cost of product and licensing $ 87 $ 265 Cost of professional
services and hosting 7,623 6,619 Cost of maintenance and support
943 784 Research and development 10,509 10,288 Sales and marketing
12,534 15,244 General and administrative 15,658
14,039 Total $ 47,354 $ 47,239
(2)
Acquisition-Related Revenue and Cost of Revenue
Revenue $ 15,011 $ 20,065 Cost of product and licensing (406 ) (919
) Cost of professional services and hosting (315 )
(314 ) Total $ 14,290 $ 18,832
Nuance
Communications, Inc.Supplemental Financial Information – GAAP to
Non-GAAP Reconciliations, continued(in millions)Unaudited
Total
Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 470.0 $ 475.7 $ 475.5 $ 502.3
$
1,923.5
$ 474.0 Adjustment $ 20.1 $ 14.3 $ 11.3 $ 17.9 $ 63.6 $ 15.0
Non-GAAP Revenue $ 490.1 $ 490.0 $ 486.8 $ 520.3
$
1,987.1
$ 489.0
Healthcare
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 221.6 $ 232.5 $ 236.2 $ 235.1 $ 925.4 $
227.9 Adjustment $ 5.7 $ 4.5 $ 3.9 $ 3.2 $ 17.3 $ 3.1 Non-GAAP
Revenue $ 227.3 $ 237.0 $ 240.1 $ 238.3 $ 942.7 $ 231.0
Mobile &
Consumer
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 109.7 $ 104.5 $ 104.9 $ 112.3 $ 431.3 $
105.5 Adjustment $ 2.8 $ 2.8 $ 2.1 $ 2.0 $ 9.7 $ 1.8 Non-GAAP
Revenue $ 112.5 $ 107.3 $ 107.0 $ 114.4 $ 441.0 $ 107.3
Enterprise
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 89.4 $ 87.8 $ 85.7 $ 96.9 $ 359.8 $ 89.8
Adjustment $ 2.6 $ 1.9 $ 1.6 $ 1.2 $ 7.3 $ 0.9 Non-GAAP Revenue $
92.0 $ 89.7 $ 87.3 $ 98.1 $ 367.1 $ 90.6
Imaging
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 49.3 $ 50.9 $ 48.8 $ 58.0 $ 207.0 $ 50.8
Adjustment $ 9.0 $ 5.1 $ 3.7 $ 11.5 $ 29.3 $ 9.2 Non-GAAP Revenue $
58.3 $ 56.0 $ 52.4 $ 69.5 $ 236.3 $ 60.1 Schedules may not
add due to rounding.
Nuance Communications, Inc.Supplemental
Financial Information – GAAP to Non-GAAP Reconciliations,
continued(in millions)Unaudited
Perpetual Product
and Licensing Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 123.3 $ 121.1 $ 116.7 $ 135.5 $ 496.6 $
117.0 Adjustment $ 7.8 $ 4.3 $ 2.9 $ 6.7 $ 21.7 $ 2.2 Non-GAAP
Revenue $ 131.1 $ 125.4 $ 119.6 $ 142.2 $ 518.3 $ 119.2
Recurring Product
and Licensing Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 55.2 $ 53.7 $ 51.5 $ 54.0 $ 214.4 $ 52.7
Adjustment $ 3.7 $ 3.0 $ 2.7 $ 6.2 $ 15.6 $ 8.4 Non-GAAP Revenue $
58.9 $ 56.7 $ 54.2 $ 60.2 $ 230.0 $ 61.1
Professional
Services Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 50.8 $ 55.4 $ 56.3 $ 58.3 $ 220.7 $ 54.8
Adjustment $ 3.4 $ 2.3 $ 1.5 $ 0.3 $ 7.5 $ 0.4 Non-GAAP Revenue $
54.2 $ 57.7 $ 57.8 $ 58.6 $ 228.2 $ 55.2
Hosting
Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 167.3 $ 172.2 $ 175.4 $ 175.3 $ 690.2 $
171.4 Adjustment $ 4.3 $ 3.9 $ 3.4 $ 4.0 $ 15.6 $ 3.4 Non-GAAP
Revenue $ 171.6 $ 176.1 $ 178.8 $ 179.3 $ 705.8 $ 174.8
Maintenance and
Support Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 73.4 $ 73.3 $ 75.6 $ 79.2 $ 301.6 $ 78.2
Adjustment $ 0.9 $ 0.8 $ 0.8 $ 0.7 $ 3.2 $ 0.6 Non-GAAP Revenue $
74.3 $ 74.1 $ 76.4 $ 80.0 $ 304.8 $ 78.8
Total Recurring
Revenue
Q1 Q2 Q3 Q4 FY Q1
2014 2014 2014 2014 2014
2015 GAAP Revenue $ 300.5 $ 305.7 $ 307.3 $ 314.8
$
1,228.4
$ 308.9 Adjustment $ 9.2 $ 8.0 $ 7.0 $ 10.9 $ 34.9 $ 12.7 Non-GAAP
Revenue $ 309.6 $ 313.7 $ 314.3 $ 325.7
$
1,263.3
$ 321.7 Schedules may not add due to rounding.
Nuance Communications, Inc.For InvestorsKevin Faulkner,
408-992-6100kevin.faulkner@nuance.comorFor PressRichard
Mack, 781-565-5000richard.mack@nuance.com
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