Delivers Strong Net New Bookings and Non-GAAP EPS, and Record
Cash Flow from Operations
Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its second quarter fiscal 2016, ended March
31, 2016.
In the second quarter of fiscal 2016, Nuance reported GAAP
revenue of $478.7 million, compared to $475.1 million a year ago.
Nuance reported non-GAAP revenue of $487.4 million, which includes
$8.7 million of revenue lost to accounting treatment in conjunction
with acquisitions, and compared to $488.1 million in the second
quarter of fiscal 2015. In the second quarter of 2016, total
non-GAAP recurring revenue was $345.8 million and represented 71%
of total non-GAAP revenue, compared to $315.6 million and 65% a
year ago. In the second quarter of fiscal 2016, Nuance reported net
new bookings of $313.7 million, up 3% from $304.7 million a year
ago.
In the second quarter of fiscal 2016, Nuance recognized GAAP net
loss of $(7.0) million, or $(0.02) per share, compared to GAAP net
loss of $(14.1) million, or $(0.04) per share, in the second
quarter of fiscal 2015. Nuance reported non-GAAP net income of
$115.0 million, or $0.38 per diluted share, up from non-GAAP net
income of $98.9 million, or $0.30 per diluted share, in the second
quarter of fiscal 2015. Nuance’s second quarter fiscal 2016
non-GAAP operating margin was 28.4%, up from 25.9% in the second
quarter of fiscal 2015. Nuance reported record cash flow from
operations of $159.9 million in the second quarter of fiscal 2016,
up 33% from $119.9 million in the second quarter of fiscal
2015.
“In the second quarter, Nuance delivered strong bookings,
non-GAAP EPS, and cash flow from operations,” said Dan Tempesta,
Nuance’s CFO. “Overall, we are pleased with the company’s
performance through the first half of fiscal 2016. Our first half
results are further evidence of continued improvement across all
major financial metrics as we evolve toward recurring revenue
models, execute our transformation program, and position the
company for increased revenue growth.”
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.
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.
Nuance will host an investor conference call today that will
begin at 5:00 p.m. ET and will include only brief comments followed
by questions and answers. 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 800-230-1059
or 612-234-9960 at least five minutes prior to the call and
referencing code 392170. 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 392170.
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.
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 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.
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. Constant currency
for net new bookings is calculated using current period net new
bookings denominated in currencies other than United States
dollars, converted into United States dollars using the average
exchange rate for those currencies from the prior year period
rather than the actual exchange rate in effect during the current
period.
Definitions of Non-GAAP Organic Revenue GrowthOrganic
revenue growth is calculated by comparing current period non-GAAP
revenue to non-GAAP revenue from the corresponding prior-year
period. For purposes of this calculation, prior period non-GAAP
revenue is adjusted to include revenue from companies acquired by
Nuance as if we had owned the acquired businesses in all periods
presented. Non-GAAP organic revenue growth on a constant currency
basis is calculated using current period non-GAAP revenue for
entities reporting in currencies other than United States dollars,
excluding United States dollar denominated transactions recorded in
those entities, converted into United States dollars using the
average exchange rates from the prior year period rather than the
actual exchange rates in effect during the current period.
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 but
not limited to: fluctuations in demand for our existing and future
products; changes to economic conditions in the United States and
internationally; fluctuating currency rates, our ability to control
and successfully manage our expenses and cash position; our ability
to execute our formal transformation program to reduce costs and
optimize processes; the effects of competition, including pricing
pressure; possible quality issues 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, 2015 and our
quarterly reports, and other 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
considered superior to, or a substitute for, financial statements
prepared in accordance with GAAP.
Discussion of Non-GAAP Financial MeasuresWe utilize a
number of different financial measures, both Generally Accepted
Accounting Principles (“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 and
six months ended March 31, 2016 and 2015, 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
and Quantim for the three and six months ended March 31, 2016 that
we would have recognized but for the purchase accounting treatment
of these 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.
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 fall into 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
and costs for extending 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 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) 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 result
from unplanned events 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. These events are unplanned and arise outside of the
ordinary course of continuing operations. These items include
losses from extinguishing our convertible debt and adjustments from
changes in fair value of share-based instruments relating to
issuing our common stock with security price guarantees payable in
cash. Other items such as consulting and professional services fees
related to assessing strategic alternatives and our transformation
program, and 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.
Nuance Communications, Inc.Condensed Consolidated Statements
of Operations(in thousands, except per share amounts)Unaudited
Three months endedMarch 31, Six
months endedMarch 31,
2016
2015
2016
2015
Revenues: Product and licensing $ 158,622 $ 174,451 $
337,672 $ 344,139 Professional services and hosting 240,196 224,504
467,331 450,674 Maintenance and support 79,915
76,104 159,845 154,265 Total
revenues 478,733 475,059 964,848
949,078
Cost of revenues:
Product and licensing 20,823 23,252 44,235 47,222 Professional
services and hosting 154,712 150,701 307,971 307,574 Maintenance
and support 13,626 13,392 26,922 27,389 Amortization of intangible
assets 16,339 15,631 31,970
30,762 Total cost of revenues 205,500
202,976 411,098 412,947
Gross profit 273,233 272,083
553,750 536,131
Operating expenses: Research and development 67,226 73,723
137,751 155,149 Sales and marketing 92,837 93,249 193,427 204,499
General and administrative 45,940 47,115 86,441 99,237 Amortization
of intangible assets 26,448 25,328 53,481 52,155
Acquisition-related cost, net 1,225 6,523 3,705 11,279
Restructuring and other charges, net 6,652
(333 ) 14,540 1,895 Total operating
expenses 240,328 245,605 489,345
524,214 Income from operations 32,905
26,478 64,405 11,917 Other expense, net (30,706 )
(29,517 ) (66,504 ) (59,637 ) Income
(loss) before income taxes 2,199 (3,039 ) (2,099 ) (47,720 )
Provision for income taxes 9,245 11,059
17,012 16,873 Net loss $ (7,046
) $ (14,098 ) $ (19,111 ) $ (64,593 )
Net loss per
share: Basic $ (0.02 ) $ (0.04 ) $ (0.06 ) $ (0.20 ) Diluted $
(0.02 ) $ (0.04 ) $ (0.06 ) $ (0.20 )
Weighted average
common shares outstanding: Basic 298,021
322,879 303,050 322,331 Diluted
298,021 322,879 303,050
322,331
Nuance Communications, Inc.Condensed
Consolidated Balance Sheets(in thousands)Unaudited
ASSETS March 31, 2016 September 30, 2015
Current assets: Cash and cash equivalents $ 250,690 $
479,449 Marketable securities 59,345 57,237 Accounts receivable,
net 365,996 373,162 Prepaid expenses and other current assets
91,542 76,777 Total current assets 767,573 986,625
Marketable securities 30,782 32,099 Land, building and
equipment, net 189,414 186,007 Goodwill 3,394,751 3,378,334
Intangible assets, net 719,744 796,285 Other assets 154,372
148,301 Total assets $ 5,256,636 $ 5,527,651
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Short-term related party note payable $ 125,000 $ -
Current portion of long-term debt - 4,834 Contingent and deferred
acquisition payments 19,428 15,651 Accounts payable and accrued
expenses 248,950 281,190 Deferred revenue 378,731
324,709 Total current liabilities 772,109 626,384 Long-term
portion of debt 2,131,572 2,118,821 Deferred revenue, net of
current portion 369,768 343,452 Other liabilities 188,609
173,742 Total liabilities 3,462,058 3,262,399
Stockholders' equity 1,794,578 2,265,252 Total
liabilities and stockholders' equity $ 5,256,636 $ 5,527,651
Nuance Communications,
Inc.Consolidated Statements of Cash Flows(in thousands)Unaudited
Three months endedMarch 31, Six months endedMarch 31,
2016
2015
2016
2015
Cash flows from operating activities: Net loss $
(7,046 ) $ (14,098 ) $ (19,111 ) $ (64,593 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 57,551 56,847 115,826 114,020
Stock-based compensation 38,163 30,917 80,511 78,271 Non-cash
interest expense 12,579 7,539 21,215 14,918 Deferred tax provision
4,089 4,499 3,738 6,386 Loss on extinguishment of debt - - 4,851 -
Other (528 ) 1,609 (135 ) 1,427 Changes in operating assets and
liabilities, net of effects from acquisitions: Accounts receivable
26,004 9,745 22,110 16,988 Prepaid expenses and other assets 3,332
1,445 (16,765 ) (13,213 ) Accounts payable 8,637 4,428 2,697 1,869
Accrued expenses and other liabilities 7,029 (13,791 ) 7,334
(50,017 ) Deferred revenue 10,112 30,806
78,792 109,575 Net cash provided
by operating activities 159,922 119,946
301,063 215,631
Cash flows from
investing activities: Capital expenditures (11,680 ) (13,821 )
(32,235 ) (30,758 ) Payments for business and technology
acquisitions, net of cash acquired (26,725 ) (23,760 ) (27,399 )
(31,891 ) Purchases of marketable securities and other investments
(15,687 ) (27,883 ) (32,757 ) (91,348 ) Proceeds from sales and
maturities of marketable securities and other investments
18,553 13,788 32,681
23,165 Net cash used in investing activities (35,539
) (51,676 ) (59,710 ) (130,832 )
Cash flows
from financing activities: Payments of debt - (1,209 ) (511,844
) (2,418 ) Proceeds from issuance of convertible debt, net of
issuance costs (848 ) - 663,757 - Payments for repurchase of common
stock (384,758 ) (109,838 ) (574,338 ) (109,838 ) Payments for
settlement of other share-based derivatives - - - (340 ) Net
payments on other long-term liabilities (233 ) (831 ) (1,084 )
(1,526 ) Proceeds from issuance of common stock from employee stock
plans 8,404 8,972 8,440 9,149 Cash used to net share settle
employee equity awards (4,802 ) (4,299 )
(56,973 ) (46,953 ) Net cash used in financing activities
(382,237 ) (107,205 ) (472,042 )
(151,926 ) Effects of exchange rate changes on cash and cash
equivalents 1,891 (4,257 ) 1,930
(5,453 ) Net decrease in cash and cash equivalents (255,963
) (43,192 ) (228,759 ) (72,580 ) Cash and cash equivalents at
beginning of period 506,653 517,842
479,449 547,230 Cash and cash
equivalents at end of period $ 250,690 $ 474,650 $
250,690 $ 474,650
Nuance Communications, Inc.Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations(in
thousands, except per share amounts)Unaudited
Three months endedMarch 31, Six months endedMarch 31,
2016
2015
2016
2015
GAAP revenues $ 478,733 $ 475,059 $ 964,848 $ 949,078
Acquisition-related revenue adjustments: product and licensing
5,715 9,139 11,708 19,755 Acquisition-related revenue adjustments:
professional services and hosting 2,835 3,350 5,363 7,146
Acquisition-related revenue adjustments: maintenance and support
130 515 364 1,114
Non-GAAP revenues $ 487,413 $ 488,063 $
982,283 $ 977,093
GAAP cost of revenues
$ 205,500 $ 202,976 $ 411,098 $ 412,947 Cost of revenues from
amortization of intangible assets (16,339 ) (15,631 ) (31,970 )
(30,762 ) Cost of revenues adjustments: product and licensing (1,2)
(122 ) 505 (244 ) 824 Cost of revenues adjustments: professional
services and hosting (1,2) (7,548 ) (4,414 ) (15,139 ) (11,722 )
Cost of revenues adjustments: maintenance and support (1,2)
(923 ) (631 ) (1,991 ) (1,574 )
Non-GAAP
cost of revenues $ 180,568 $ 182,805 $ 361,754
$ 369,713
GAAP gross profit $ 273,233 $
272,083 $ 553,750 $ 536,131 Gross profit adjustments 33,612
33,175 66,779 71,249
Non-GAAP gross profit $ 306,845 $ 305,258
$ 620,529 $ 607,380
GAAP income from
operations $ 32,905 $ 26,478 $ 64,405 $ 11,917 Gross profit
adjustments 33,612 33,175 66,779 71,249 Research and development
(1) 7,967 6,668 17,900 17,177 Sales and marketing (1) 10,460 7,882
23,297 20,416 General and administrative (1) 10,934 10,911 21,565
26,569 Amortization of intangible assets 26,448 25,328 53,481
52,155 Costs associated with IP collaboration agreements 2,000
2,938 4,000 5,876 Acquisition-related costs, net 1,225 6,523 3,705
11,279 Restructuring and other charges, net 6,652 (333 ) 14,540
1,895 Other 6,025 7,003 9,875
15,835
Non-GAAP income from operations
$ 138,228 $ 126,573 $ 279,547 $ 234,368
GAAP provision for income taxes $ 9,245 $ 11,059 $
17,012 $ 16,873 Non-cash taxes (4,065 ) (5,332 )
(5,677 ) (7,491 )
Non-GAAP provision for income
taxes $ 5,180 $ 5,727 $ 11,335 $ 9,382
GAAP net loss $ (7,046 ) $ (14,098 ) $ (19,111
) $ (64,593 ) Acquisition-related adjustment - revenues (2) 8,680
13,004 17,435 28,015 Acquisition-related adjustment - cost of
revenues (2) (209 ) (916 ) (375 ) (1,637 ) Acquisition-related
costs, net 1,225 6,523 3,705 11,279 Cost of revenue from
amortization of intangible assets 16,339 15,631 31,970 30,762
Amortization of intangible assets 26,448 25,328 53,481 52,155
Restructuring and other charges, net 6,652 (333 ) 14,540 1,895
Non-cash stock-based compensation (1) 38,163 30,917 80,511 78,271
Non-cash interest expense 12,579 7,539 21,215 14,918 Non-cash
income taxes 4,065 5,332 5,677 7,491 Costs associated with IP
collaboration agreements 2,000 2,938 4,000 5,876 Change in fair
value of share-based instruments (61 ) (23 ) (61 ) 538 Loss on
extinguishment of debt - - 4,851 - Other 6,176
7,105 10,186 15,938
Non-GAAP
net income $ 115,011 $ 98,947 $ 228,024 $
180,908
Non-GAAP diluted net income per share
$ 0.38 $ 0.30 $ 0.74 $ 0.55
Diluted weighted average common shares outstanding
301,253 324,869 307,889
326,582 Nuance
Communications, Inc.Supplemental Financial Information - GAAP to
Non-GAAP Reconciliations, continued(in thousands)Unaudited
Three months endedMarch 31, Six months endedMarch 31,
2016
2015
2016
2015
(1) Non-cash stock-based compensation Cost of
product and licensing $ 122 $ 96 $ 244 $ 183 Cost of professional
services and hosting 7,757 4,729 15,514 12,352 Cost of maintenance
and support 923 631 1,991 1,574 Research and development 7,967
6,668 17,900 17,177 Sales and marketing 10,460 7,882 23,297 20,416
General and administrative 10,934 10,911
21,565 26,569 Total $ 38,163
$ 30,917 $ 80,511 $ 78,271
(2) Acquisition-related revenue and cost of revenue
Revenues $ 8,680 $ 13,004 $ 17,435 $ 28,015 Cost of product and
licensing - (601 ) - (1,007 ) Cost of professional services and
hosting (209 ) (315 ) (375 ) (630 )
Total $ 8,471 $ 12,088 $ 17,060 $ 26,378
Nuance Communications, Inc.Supplemental
Financial Information – GAAP to Non-GAAP Reconciliations,
continued(in millions)Unaudited
Perpetual Product
and Licensing Revenue
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenue $ 584.1 $ 578.1 $ 496.6 $ 117.0 $
121.3 $ 108.1 $ 115.9 $ 462.1 $ 115.2 $ 88.0 Adjustment 73.9
45.7 21.7 2.2 4.6 3.6
2.4 13.0 2.0 2.2 Non-GAAP
Revenue $ 658.0 $ 623.8 $ 518.3 $ 119.2 $ 125.9 $ 111.7
$ 118.3 $ 475.2 $ 117.2 $ 90.2
Recurring Product
and Licensing Revenue
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenue $ 156.6 $ 175.6 $ 214.4 $ 52.7 $
53.2 $ 54.7 $ 73.5 $ 234.1 $ 63.9 $ 70.6 Adjustment -
24.4 15.6 8.4 4.6 3.5
3.6 20.1 4.0 3.5 Non-GAAP Revenue $
156.6 $ 200.0 $ 230.0 $ 61.1 $ 57.8 $ 58.2 $ 76.9 $
254.0 $ 67.9 $ 74.1
Professional
Services Revenue
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenue $ 183.1 $ 208.1 $ 220.7 $ 54.8 $
51.2 $ 51.2 $ 52.9 $ 210.0 $ 49.7 $ 55.6 Adjustment 0.7
17.9 7.5 0.4 0.4 0.4
0.3 1.5 0.3 0.4 Non-GAAP Revenue
$ 183.8 $ 226.0 $ 228.2 $ 55.2 $ 51.6 $ 51.6 $ 53.2 $
211.5 $ 50.0 $ 55.9
Hosting
Revenue
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenue $ 490.9 $ 624.3 $ 690.2 $ 171.4 $
173.3 $ 183.1 $ 181.7 $ 709.5 $ 177.4 $ 184.6 Adjustment 5.3
9.3 15.6 3.4 2.9 2.8
2.4 11.5 2.3 2.5 Non-GAAP
Revenue $ 496.2 $ 633.6 $ 705.8 $ 174.8 $ 176.2 $ 185.9
$ 184.2 $ 721.2 $ 179.7 $ 187.1
Maintenance and
Support Revenue
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenue $ 236.8 $ 269.2 $ 301.6 $ 78.2 $
76.1 $ 80.9 $ 80.2 $ 315.4 $ 79.9 $ 79.9 Adjustment 6.7
5.1 3.2 0.6 0.5 0.4
0.3 1.8 0.2 0.1 Non-GAAP Revenue
$ 243.5 $ 274.3 $ 304.8 $ 78.8 $ 76.6 $ 81.3 $ 80.6 $
317.1 $ 80.2 $ 80.0
Total Recurring
Revenues
FY2012 FY2013 FY2014
Q12015 Q22015 Q32015
Q42015 FY2015 Q12016
Q22016 GAAP Revenues $ 896.7 $ 1,087.4 $ 1,228.4 $
308.9 $ 307.5 $ 323.6 $ 340.5 $ 1,280.5 $ 326.1 $ 339.6 Adjustment
12.2 40.2 34.9 12.7 8.1
6.8 6.5 34.1 6.4 6.2
Non-GAAP Revenues $ 908.8 $ 1,127.6 $ 1,263.3 $ 321.7 $ 315.6
$ 330.4 $ 347.0 $ 1,314.7 $ 332.5 $ 345.8
Schedules may not add due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160510006798/en/
Nuance Communications, Inc.For InvestorsRichard Mack,
781-565-5000richard.mack@nuance.comorFor PressRebecca
Paquette, 781-565-5000rebecca.paquette@nuance.com
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