Nuance Achieves Revenue and EPS Above Guidance Ranges;
Delivers 38% Operating Cash Flow Growth and 26% Deferred
Revenue Growth
Board Authorizes $500 Million Increase in Stock Repurchase
Plan
Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its second quarter fiscal 2015, ended March
31, 2015.
In the second quarter of fiscal 2015, Nuance reported GAAP
revenue of $475.1 million, compared to $475.7 million in the second
quarter of fiscal 2014. Nuance reported non-GAAP revenue of $488.1
million, which includes $13.0 million of revenue lost to accounting
treatment in conjunction with acquisitions, compared to $490.0
million in the second quarter of fiscal 2014. Q2 15 revenue was
negatively affected by currency fluctuations. If we applied Q2 14
currency rates to our Q2 15 revenue, Q2 15 revenue would have been
approximately $14 million higher.
In the second quarter of fiscal 2015, Nuance recognized GAAP net
loss of $(14.1) million, or $(0.04) per share, compared to GAAP net
loss of $(39.2) million, or $(0.12) per share, in the second
quarter of fiscal 2014. In the second quarter of fiscal 2015,
Nuance reported non-GAAP net income of $98.9 million, or $0.30 per
diluted share, up from non-GAAP net income of $88.3 million, or
$0.28 per diluted share, in the second quarter of fiscal 2014.
Nuance’s second quarter fiscal 2015 non-GAAP operating margin was
25.9%, up from 23.9% in the second quarter of fiscal 2014. Nuance
reported cash flow from operations of $119.9 million in the second
quarter of fiscal 2015, up 37.8% from $87.0 million in the second
quarter of fiscal 2014. Nuance ended the second quarter of fiscal
2015 with $637.8 million in total deferred revenue, up 26.3% from
$504.9 million at the end of the second quarter of fiscal 2014. In
the second quarter of fiscal 2015, Nuance reported net new bookings
of $304.7 million. Nuance ended the second quarter of fiscal 2015
with $566.9 million in cash, cash equivalents and marketable
securities.
“Nuance delivered second quarter revenue and EPS that exceeded
our guidance. Our improved EPS, operating margin and operating cash
flow reflect the results of our continuing efficiency and cost
control initiatives. We are also building shareholder value through
renewed execution under our stock repurchase plan, which we
recently increased by $500 million,” said Tom Beaudoin, Nuance
CFO.
Nuance Authorizes Additional $500 Million under Stock
Repurchase Plan
During Q2 15, Nuance repurchased 8.557 million shares of our
common stock, for a total amount of $120.3 million at an average
price per share of $14.06. During Q3 15, up to May 6, 2015, Nuance
repurchased an additional 5.300 million shares of our common stock,
for a total amount of $77.2 million. From the inception of the plan
in April 2013 through May 6, 2015, Nuance repurchased an aggregate
of 25.298 million shares of our common stock, for an aggregate
amount of $408.3 million at an average price per share of $16.14.
Following these repurchases, Nuance had $91.7 million remaining
under the original authorization. Today, Nuance announced that its
board of directors has authorized an additional $500 million under
the plan, bringing the unused authorization to a total of $591.7
million.
Stock repurchases may be made through a variety of methods,
which may include open market purchases, privately negotiated
transactions, block trades, accelerated stock repurchase
transactions, or any combination of such methods. The timing and
the amount of any purchases will be determined by the Company’s
management based on its evaluation of market conditions, capital
allocation alternatives, and other factors. The share repurchase
plan does not require the Company to acquire any specific number of
shares and may be modified, suspended, extended or terminated by
the Company at any time without prior notice. The share repurchase
plan is designed to comply with U.S. securities laws, rules and
safe harbors for purchases that do not constitute tender offers.
These restrictions can lengthen the time it may take for Nuance to
acquire its shares under this repurchase plan.
Conference Call and Prepared Remarks
Nuance 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,
May 7, 2015 at 5:00 pm EDT 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) 230-1074 or (612)
234-9960 at least five minutes prior to the call and referencing
code 358455. 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 358455.
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 Bookings
Bookings 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 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,” 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 Measures
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 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 and six months ended March 31, 2015 and 2014, 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 and six
months ended March 31, 2015 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 Six months ended
March 31, March 31, 2015 2014
2015 2014
Revenues: Product and licensing $ 174,451 $ 174,819 $
344,139 $ 353,256 Professional services and hosting 224,504 227,526
450,674 445,661 Maintenance and support 76,104
73,308 154,265 146,716 Total
revenues 475,059 475,653 949,078
945,633
Cost of revenues:
Product and licensing 23,252 25,226 47,222 50,435 Professional
services and hosting 151,021 157,437 308,264 312,017 Maintenance
and support 13,395 12,359 27,436 25,196 Amortization of intangible
assets 15,631 15,342 30,762
30,536 Total cost of revenues 203,299
210,364 413,684 418,184
Gross profit 271,760 265,289
535,394 527,449
Operating expenses: Research and development 74,776 84,581
157,343 165,051 Sales and marketing 93,254 98,280 204,504 217,186
General and administrative 45,734 43,682 96,301 88,158 Amortization
of intangible assets 25,328 26,571 52,155 54,043
Acquisition-related cost, net 6,523 6,802 11,279 9,600
Restructuring and other charges, net (333 ) 4,719
1,895 8,556 Total operating
expenses 245,282 264,635 523,477
542,594 Income (loss) from operations
26,478 654 11,917 (15,145 ) Other expense, net
(29,517 ) (33,487 ) (59,637 ) (70,123 )
Loss before income taxes (3,039 ) (32,833 ) (47,720 ) (85,268 )
Provision for income taxes 11,059 6,394
16,873 9,372 Net loss $
(14,098 ) $ (39,227 ) $ (64,593 ) $ (94,640 )
Net loss
per share: Basic $ (0.04 ) $ (0.12 ) $ (0.20 ) $ (0.30 )
Diluted $ (0.04 ) $ (0.12 ) $ (0.20 ) $ (0.30 )
Weighted
average common shares outstanding: Basic 322,879
316,593 322,331 315,696
Diluted 322,879 316,593 322,331
315,696 Nuance Communications,
Inc. Condensed Consolidated Balance Sheets (in thousands) Unaudited
ASSETS March 31, 2015 September 30,
2014 Current assets: Cash and cash equivalents $ 474,650 $
547,230 Marketable securities 63,044 40,974 Accounts receivable,
net 394,054 428,266 Prepaid expenses and other current assets
148,246 148,030 Total current assets 1,079,994
1,164,500 Marketable securities 29,228 - Land, building and
equipment, net 185,985 191,411 Goodwill 3,354,734 3,410,893
Intangible assets, net 852,561 915,483 Other assets 147,325
137,997 Total assets $ 5,649,827 $ 5,820,284
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current portion of long-term debt $ 4,834 $ 4,834
Contingent and deferred acquisition payments 8,556 35,911 Accounts
payable and accrued expenses 238,056 303,039 Deferred revenue
343,651 298,225 Total current liabilities 595,097
642,009 Long-term debt 2,137,738 2,127,392 Deferred revenue,
net of current portion 294,154 249,879 Other liabilities
221,252 219,012 Total liabilities 3,248,241
3,238,292 Stockholders' equity 2,401,586
2,581,992 Total liabilities and stockholders' equity $
5,649,827 $ 5,820,284 Nuance Communications, Inc.
Consolidated Statements of Cash Flows (in thousands) Unaudited
Three months ended Six months ended March 31,
March 31, 2015 2014 2015
2014
Cash flows from
operating activities: Net loss $ (14,098 ) $ (39,227 ) $
(64,593 ) $ (94,640 ) Adjustments to reconcile net loss to net cash
provided by operating activities: Depreciation and amortization
56,847 54,308 114,020 109,417 Stock-based compensation 30,917
44,920 78,271 92,159 Non-cash interest expense 7,539 9,782 14,918
19,443 Deferred tax provision 4,499 5,058 6,386 3,446 Other 1,609
892 1,427 (5,258 ) Changes in operating assets and liabilities, net
of effects from acquisitions: Accounts receivable 9,745 13,050
16,988 6,518 Prepaid expenses and other assets 1,445 (600 ) (13,213
) (11,695 ) Accounts payable 4,428 (4,065 ) 1,869 (32,097 ) Accrued
expenses and other liabilities (13,791 ) (17,753 ) (50,017 )
(10,301 ) Deferred revenue 30,806 20,661
109,575 88,190 Net cash provided
by operating activities 119,946 87,026
215,631 165,182
Cash flows from
investing activities: Capital expenditures (13,821 ) (10,553 )
(30,758 ) (24,719 ) Payments for business and technology
acquisitions, net of cash acquired (23,760 ) (36,041 ) (31,891 )
(135,537 ) Purchases of marketable securities and other investments
(27,883 ) (6,441 ) (91,348 ) (11,504 ) Proceeds from sales and
maturities of marketable securities and other investments
13,788 8,262 23,165
21,634 Net cash used in investing activities (51,676
) (44,773 ) (130,832 ) (150,126 )
Cash
flows from financing activities: Payments of debt (1,209 )
(1,209 ) (2,418 ) (2,516 ) Payments for repurchases of common stock
(109,838 ) (8,435 ) (109,838 ) (26,435 ) Payments for settlement of
share-based derivatives - (4,254 ) (340 ) (5,286 ) Payments of
other long-term liabilities (831 ) (615 ) (1,526 ) (1,519 )
Proceeds from issuance of common stock from employee stock plans
8,972 10,734 9,149 11,922 Cash used to net share settle employee
equity awards (4,299 ) (4,541 ) (46,953 )
(31,047 ) Net cash used in financing activities
(107,205 ) (8,320 ) (151,926 ) (54,881 )
Effects of exchange rate changes on cash and cash equivalents
(4,257 ) (287 ) (5,453 ) 9 Net
(decrease) increase in cash and cash equivalents (43,192 ) 33,646
(72,580 ) (39,816 ) Cash and cash equivalents at beginning of
period 517,842 734,656 547,230
808,118 Cash and cash equivalents at end of
period $ 474,650 $ 768,302 $ 474,650 $ 768,302
Nuance Communications, Inc. Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations (in
thousands, except per share amounts) Unaudited Three
months ended Six months ended March 31, March 31,
2015 2014 2015
2014
GAAP revenue $ 475,059 $ 475,653 $
949,078 $ 945,633 Acquisition-related revenue adjustments: product
and licensing 9,139 7,269 19,755 18,758 Acquisition-related revenue
adjustments: professional services and hosting 3,350 6,214 7,146
13,873 Acquisition-related revenue adjustments: maintenance and
support 515 837 1,114
1,754
Non-GAAP revenue $ 488,063 $
489,973 $ 977,093 $ 980,018
GAAP
cost of revenue $ 203,299 $ 210,364 $ 413,684 $ 418,184 Cost of
revenue from amortization of intangible assets (15,631 ) (15,342 )
(30,762 ) (30,536 ) Cost of revenue adjustments: product and
licensing (1,2) 505 271 824 925 Cost of revenue adjustments:
professional services and hosting (1,2) (4,414 ) (6,884 ) (11,722 )
(13,189 ) Cost of revenue adjustments: maintenance and support
(1,2) (631 ) (406 ) (1,574 ) (1,190 )
Non-GAAP cost of revenue $ 183,128 $ 188,003 $
370,450 $ 374,194
GAAP gross profit $
271,760 $ 265,289 $ 535,394 $ 527,449 Gross profit adjustments
33,175 36,681 71,249
78,375
Non-GAAP gross profit $ 304,935
$ 301,970 $ 606,643 $ 605,824
GAAP
income (loss) from operations $ 26,478 $ 654 $ 11,917 $ (15,145
) Gross profit adjustments 33,175 36,681 71,249 78,375 Research and
development (1) 6,668 10,455 17,177 20,743 Sales and marketing (1)
7,882 10,210 20,416 25,454 General and administrative (1) 10,911
15,953 26,569 29,992 Amortization of intangible assets 25,328
26,571 52,155 54,043 Costs associated with IP collaboration
agreements 2,938 4,937 5,876 9,874 Acquisition-related costs, net
6,523 6,802 11,279 9,600 Restructuring and other charges, net (333
) 4,719 1,895 8,556 Other 7,002 (71 )
15,835 1,061
Non-GAAP income from
operations $ 126,572 $ 116,911 $ 234,368 $
222,553
GAAP provision for income taxes $
11,059 $ 6,394 $ 16,873 $ 9,372 Non-cash taxes (5,332 )
(1,385 ) (7,491 ) 292
Non-GAAP
provision for income taxes $ 5,727 $ 5,009 $
9,382 $ 9,664
GAAP net loss $ (14,098 )
$ (39,227 ) $ (64,593 ) $ (94,640 ) Acquisition-related adjustment
- revenue (2) 13,004 14,320 28,015 34,385 Acquisition-related
adjustment - cost of revenue (2) (916 ) (1,283 ) (1,637 ) (2,516 )
Acquisition-related costs, net 6,523 6,802 11,279 9,600 Cost of
revenue from amortization of intangible assets 15,631 15,342 30,762
30,536 Amortization of intangible assets 25,328 26,571 52,155
54,043 Restructuring and other charges, net (333 ) 4,719 1,895
8,556 Non-cash stock-based compensation (1) 30,917 44,920 78,271
92,159 Non-cash interest expense 7,539 9,782 14,918 19,443 Non-cash
income taxes 5,332 1,385 7,491 (292 ) Costs associated with IP
collaboration agreements 2,938 4,937 5,876 9,874 Change in fair
value of share-based instruments (23 ) 72 538 4,222 Other
7,105 (71 ) 15,938 (454 )
Non-GAAP net income $ 98,947 $ 88,269 $
180,908 $ 164,916
Non-GAAP diluted net
income per share $ 0.30 $ 0.28 $ 0.55 $
0.52
Diluted weighted average common shares
outstanding 324,869 319,677
326,582 318,653 Nuance
Communications, Inc. Supplemental Financial Information - GAAP to
Non-GAAP Reconciliations, continued (in thousands) Unaudited
Three months ended Six months ended March 31, March
31, 2015 2014 2015
2014
(1) Non-Cash
Stock-Based Compensation
Cost of product and licensing $ 96 $ 697 $ 183 $ 962 Cost of
professional services and hosting 4,729 7,199 12,352 13,818 Cost of
maintenance and support 631 406 1,574 1,190 Research and
development 6,668 10,455 17,177 20,743 Sales and marketing 7,882
10,210 20,416 25,454 General and administrative 10,911
15,953 26,569 29,992
Total $ 30,917 $ 44,920 $ 78,271 $
92,159
(2)
Acquisition-Related Revenue and Cost of Revenue
Revenue $ 13,004 $ 14,320 $ 28,015 $ 34,385 Cost of product and
licensing (601 ) (968 ) (1,007 ) (1,887 ) Cost of professional
services and hosting (315 ) (315 ) (630 )
(629 ) Total $ 12,088 $ 13,037 $ 26,378
$ 31,869
For InvestorsNuance Communications, Inc.Kevin Faulkner,
408-992-6100kevin.faulkner@nuance.comorFor PressNuance
Communications, Inc.Richard Mack,
781-565-5000richard.mack@nuance.com
Nuance Communications (NASDAQ:NUAN)
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