Reports Non-GAAP Revenue and EPS above Guidance, Record Cash
Flow and Fifth Consecutive Quarter of Improvement in Key Financial
Metrics
Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its fiscal 2015 and fourth quarter, ended
September 30, 2015.
Fiscal Fourth Quarter PerformanceIn the fourth quarter of
fiscal 2015, Nuance reported GAAP revenue of $504.1 million, up
from $502.3 million a year ago. Nuance reported non-GAAP revenue of
$513.3 million, which includes $9.2 million of revenue lost to
accounting treatment in conjunction with acquisitions, compared to
$520.3 million in the fourth quarter of fiscal 2014. Fourth quarter
2015 revenue was negatively affected by currency fluctuations as
well. If fourth quarter 2014 currency rates were applied to fourth
quarter 2015 non-GAAP revenue, Nuance would have achieved
approximately 1% organic non-GAAP revenue growth for the quarter.
In the fourth quarter of 2015, total recurring revenue was $347.0
million and represented 68% of total non-GAAP revenue, compared to
$325.7 million and 63% a year ago. In the fourth quarter of fiscal
2015, Nuance reported net new bookings of $357.4 million, up 8.7%
from $328.8 million a year ago. If fourth quarter 2014 currency
rates were applied to Nuance’s fourth quarter 2015, net new
bookings would have been up 12% from a year ago.
In the fourth quarter of fiscal 2015, Nuance recognized GAAP net
loss of $(11.0) million, or $(0.04) per share, compared to GAAP net
loss of $(1.5) million, or $(0.00) per share, in the fourth quarter
of fiscal 2014. Nuance reported non-GAAP net income of $129.6
million, or $0.41 per diluted share, up from non-GAAP net income of
$107.6 million, or $0.33 per diluted share, in the fourth quarter
of fiscal 2014. Nuance’s fourth quarter fiscal 2015 non-GAAP
operating margin was 30.2%, up from 25.9% in the fourth quarter of
fiscal 2014. Nuance reported cash flow from operations of $151.6
million in the fourth quarter of fiscal 2015, up 58.0% from $95.9
million in the fourth quarter of fiscal 2014.
“Nuance delivered a strong finish to its fiscal year, reporting
revenue, EPS, cash flow from operations, margins and net new
bookings that all exceeded our expectations,” said Dan Tempesta,
Nuance’s CFO. “We made substantial progress on our company-wide
transformation project, and continued to prioritize resources and
focus toward our most significant market opportunities. We expect
to continue our improvements in financial performance and lead the
company to improved growth in 2016 and beyond.”
Fiscal Year 2015 PerformanceIn fiscal 2015, Nuance
reported GAAP revenue of $1,931.1 million, up from $1,923.5 million
in fiscal 2014. Nuance reported non-GAAP revenue of $1,979.1
million, which includes $47.9 million of revenue lost to accounting
treatment in conjunction with acquisitions. Fiscal 2015 non-GAAP
revenue declined slightly from non-GAAP revenue of $1,987.1 million
in fiscal 2014. Fiscal 2015 revenue was negatively affected by
currency fluctuations. If fiscal 2014 currency rates were applied
to Nuance’s fiscal 2015 non-GAAP revenue, Nuance would have
achieved approximately 1% organic non-GAAP revenue growth for the
year. In fiscal 2015, total recurring revenue was $1,314.7 million
and represented 66% of total non-GAAP revenue, compared to $1,263.3
million and 64% in fiscal 2014. In fiscal 2015, Nuance reported net
new bookings of $1,450.4 million, up 3.6% from $1,400.6 million in
fiscal 2014. If fiscal year 2014 currency rates were applied to
Nuance’s fiscal year 2015, net new bookings would have been up 6%
from a year ago.
In fiscal 2015, Nuance recognized GAAP net loss of $(115.0)
million, or $(0.36) per share, compared to GAAP net loss of
$(150.3) million, or $(0.47) per share, in fiscal 2014. In fiscal
2015, Nuance reported non-GAAP net income of $411.6 million, or
$1.27 per diluted share, compared to $360.1 million, or $1.12 per
diluted share, in fiscal 2014. Nuance’s fiscal 2015 non-GAAP
operating margin was 26.2%, compared to 23.7% in fiscal 2014.
Nuance reported cash flow from operations of $487.6 million in
fiscal 2015, compared to $358.1 million in fiscal 2014. Nuance
ended fiscal 2015 with total deferred revenue of $668.2 million, up
21.9% compared to $548.1 million a year ago. Nuance ended fiscal
2015 with $568.8 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.
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. EDT 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 800-230-1085
or 612-288-0329 at least five minutes prior to the call and
referencing code 372344. 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 372344.
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.
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 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, 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 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
twelve months ended September 30, 2015 and 2014, 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 twelve months ended
September 30, 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 include losses from the extinguishment of our convertible
debt and 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 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 ended Twelve months ended September 30,
September 30, 2015 2014 2015 2014
Revenues: Product
and licensing $ 189,345 $ 189,508 $ 696,290 $ 710,988 Professional
services and hosting 234,552 233,557 919,479 910,916 Maintenance
and support 80,222 79,249
315,367 301,547 Total revenues 504,119
502,314 1,931,136
1,923,451
Cost of revenues: Product and
licensing 23,341 22,952 91,839 97,550 Professional services and
hosting 157,692 157,644 619,880 633,248 Maintenance and support
13,363 14,020 54,514 52,553 Amortization of intangible assets
17,108 15,447 63,646
60,989 Total cost of revenues 211,504
210,063 829,879 844,340
Gross profit 292,615 292,251
1,101,257 1,079,111
Operating
expenses: Research and development 73,939 86,355 310,332
338,543 Sales and marketing 107,093 107,575 410,882 424,544 General
and administrative 45,178 52,773 182,456 184,663 Amortization of
intangible assets 26,104 27,733 104,630 109,063 Acquisition-related
cost, net 677 5,508 14,379 24,218 Restructuring and other charges,
net 10,966 2,265 23,669
19,443 Total operating expenses 263,957
282,209 1,046,348 1,100,474
Income (loss) from operations 28,658 10,042 54,909
(21,363 ) Other expense, net (28,553 ) (32,506
) (135,381 ) (133,657 ) Income (loss) before
income taxes 105 (22,464 ) (80,472 ) (155,020 ) Provision
(benefit) for income taxes 11,132 (21,008 )
34,538 (4,677 ) Net loss $ (11,027 ) $
(1,456 ) $ (115,010 ) $ (150,343 )
Net loss per
share: Basic $ (0.04 ) $ (0.00 ) $ (0.36 ) $ (0.47 ) Diluted $
(0.04 ) $ (0.00 ) $ (0.36 ) $ (0.47 )
Weighted average
common shares outstanding: Basic 309,281
318,725 317,028 316,936 Diluted
309,281 318,725 317,028
316,936
Nuance Communications, Inc. Condensed Consolidated Balance Sheets
(in thousands) Unaudited
ASSETS September 30,
2015 September 30, 2014 Current assets: Cash and cash
equivalents $ 479,449 $ 547,230 Marketable securities 57,237 40,974
Accounts receivable, net 373,162 428,266 Prepaid expenses and other
current assets 134,086 148,030 Total current assets
1,043,934 1,164,500 Marketable securities 32,099 - Land,
building and equipment, net 186,007 191,411 Goodwill 3,378,334
3,410,893 Intangible assets, net 796,285 915,483 Other assets
148,686 137,997 Total assets $ 5,585,345 $ 5,820,284
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current portion of long-term debt $ 4,834 $ 4,834
Contingent and deferred acquisition payments 15,651 35,911 Accounts
payable and accrued expenses 281,190 303,039 Deferred revenue
324,709 298,225 Total current liabilities 626,384
642,009 Long-term portion of debt 2,118,821 2,127,392
Deferred revenue, net of current portion 343,452 249,879 Other
liabilities 231,436 219,012 Total liabilities
3,320,093 3,238,292 Stockholders' equity
2,265,252 2,581,992 Total liabilities and stockholders'
equity $ 5,585,345 $ 5,820,284
Nuance Communications, Inc.
Consolidated Statements of Cash Flows (in thousands) Unaudited
Three months ended Twelve months ended September 30, September 30,
2015 2014 2015 2014
Cash flows from operating
activities: Net loss $ (11,027 ) $ (1,456 ) $ (115,010 ) $
(150,343 ) Adjustments to reconcile net loss to net cash provided
by operating activities: Depreciation and amortization 58,753
56,496 230,645 221,776 Stock-based compensation 56,804 45,423
176,776 192,964 Non-cash interest expense 7,300 8,532 29,378 36,719
Deferred tax provision (benefit) 9,161 (24,523 ) 16,690 (22,172 )
Loss on extinguishment of debt - - 17,714 - Other 4,203 (3,432 )
9,843 (7,726 ) Changes in operating assets and liabilities, net of
effects from acquisitions: Accounts receivable (9,333 ) (34,796 )
41,657 (39,502 ) Prepaid expenses and other assets 10,778 9,057
(3,931 ) (396 ) Accounts payable 11,429 (3,614 ) (3,218 ) (28,617 )
Accrued expenses and other liabilities (4,952 ) 9,983 (48,118 )
13,617 Deferred revenue 18,491 34,264
135,151 141,827 Net cash provided by
operating activities 151,607 95,934
487,577 358,147
Cash flows from
investing activities: Capital expenditures (9,880 ) (18,928 )
(58,039 ) (60,287 ) Payments for business and technology
acquisitions, net of cash acquired (1,244 ) (116,817 ) (83,278 )
(253,000 ) Purchases of marketable securities and other investments
(33,932 ) (43,026 ) (148,697 ) (62,639 ) Proceeds from sales and
maturities of marketable securities and other investments
34,386 32,124 83,867
64,975 Net cash used in investing activities (10,670
) (146,647 ) (206,147 ) (310,951 )
Cash
flows from financing activities: Payments of debt (1,208 )
(251,183 ) (261,051 ) (255,038 ) Proceeds from long-term debt, net
of issuance costs (2,988 ) - 253,224 - Payments for repurchase of
common stock (60,076 ) - (298,279 ) (26,483 ) Payments on other
long-term liabilities (620 ) (674 ) (3,003 ) (2,890 ) Payments for
settlement of share-based derivatives, net - - (340 ) (5,286 )
Proceeds from issuance of common stock from employee stock plans
13,441 9,127 25,776 22,652 Cash used to net share settle employee
equity awards (4,287 ) (4,803 ) (57,560 )
(40,121 ) Net cash used in financing activities
(55,738 ) (247,533 ) (341,233 ) (307,166 )
Effects of exchange rate changes on cash and cash equivalents
(2,866 ) (1,460 ) (7,978 ) (918 ) Net
increase (decrease) in cash and cash equivalents 82,333 (299,706 )
(67,781 ) (260,888 ) Cash and cash equivalents at beginning of
period 397,116 846,936 547,230
808,118 Cash and cash equivalents at end of
period $ 479,449 $ 547,230 $ 479,449 $ 547,230
Nuance Communications, Inc. Supplemental Financial
Information - GAAP to Non-GAAP Reconciliations (in thousands,
except per share amounts) Unaudited Three months ended Twelve
months ended September 30, September 30, 2015 2014 2015 2014
GAAP revenue $ 504,119 $ 502,314 $ 1,931,136 $ 1,923,451
Acquisition-related revenue adjustments: product and licensing
6,026 12,914 32,923 37,298 Acquisition-related revenue adjustments:
professional services and hosting 2,843 4,346 13,142 23,117
Acquisition-related revenue adjustments: maintenance and support
332 679 1,868
3,219
Non-GAAP revenue $ 513,320 $ 520,253
$ 1,979,069 $ 1,987,085
GAAP cost of
revenue $ 211,504 $ 210,063 $ 829,879 $ 844,340 Cost of revenue
from amortization of intangible assets (17,108 ) (15,447 ) (63,646
) (60,989 ) Cost of revenue adjustments: product and licensing
(1,2) 140 939 1,021 2,171 Cost of revenue adjustments: professional
services and hosting (1,2) (10,494 ) (7,402 ) (29,735 ) (30,804 )
Cost of revenue adjustments: maintenance and support (1,2)
(1,413 ) (946 ) (3,989 ) (3,426 )
Non-GAAP
cost of revenue $ 182,629 $ 187,207 $ 733,530
$ 751,292
GAAP gross profit $ 292,615 $
292,251 $ 1,101,257 $ 1,079,111 Gross profit adjustments
38,076 40,795 144,282
156,682
Non-GAAP gross profit $ 330,691 $
333,046 $ 1,245,539 $ 1,235,793
GAAP
income (loss) from operations $ 28,658 $ 10,042 $ 54,909 $
(21,363 ) Gross profit adjustments 38,076 40,795 144,282 156,682
Research and development (1) 12,651 10,436 39,038 44,139 Sales and
marketing (1) 18,134 14,338 50,310 53,448 General and
administrative (1) 13,638 12,462 51,955 59,164 Amortization of
intangible assets 26,104 27,733 104,630 109,063 Costs associated
with IP collaboration agreements 2,000 4,937 10,500 19,748
Acquisition-related costs, net 677 5,508 14,379 24,218
Restructuring and other charges, net 10,966 2,265 23,669 19,443
Other 4,342 6,124 24,933
7,185
Non-GAAP income from operations $
155,246 $ 134,640 $ 518,605 $ 471,727
GAAP provision (benefit) for income taxes $ 11,132 $
(21,008 ) $ 34,538 $ (4,677 ) Non-cash taxes (6,621 )
24,853 (15,199 ) 22,172
Non-GAAP
provision for income taxes $ 4,511 $ 3,845 $
19,339 $ 17,495
GAAP net loss $ (11,027
) $ (1,456 ) $ (115,010 ) $ (150,343 ) Acquisition-related
adjustment - revenue (2) 9,201 17,939 47,933 63,634
Acquisition-related adjustment - cost of revenue (2) (614 ) (778 )
(2,770 ) (4,154 ) Acquisition-related costs, net 677 5,508 14,379
24,218 Cost of revenue from amortization of intangible assets
17,108 15,447 63,646 60,989 Amortization of intangible assets
26,104 27,733 104,630 109,063 Restructuring and other charges, net
10,966 2,265 23,669 19,443
Non-cash stock-based compensation (1) 56,804 45,423 176,776 192,964
Non-cash interest expense 7,300 8,532 29,378 36,719 Non-cash income
taxes 6,621 (24,853 ) 15,199 (22,172 ) Costs associated with IP
collaboration agreements 2,000 4,937 10,500 19,748 Change in fair
value of share-based instruments - 787 204 4,358 Loss on
extinguishment of debt - - 17,714 - Other 4,507
6,124 25,362 5,670
Non-GAAP net income $ 129,647 $ 107,608 $
411,610 $ 360,137
Non-GAAP diluted net
income per share $ 0.41 $ 0.33 $ 1.27 $
1.12
Diluted weighted average common shares
outstanding 317,443 327,062
323,940 322,816
Nuance Communications, Inc. Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations, continued
(in thousands) Unaudited Three months ended Twelve months
ended September 30, September 30, 2015 2014 2015 2014
(1) Non-Cash
Stock-Based Compensation
Cost of product and licensing $ 185 $ (476 ) $ 516 $ 724 Cost of
professional services and hosting 10,783 7,717 30,968 32,063 Cost
of maintenance and support 1,413 946 3,989 3,426 Research and
development 12,651 10,436 39,038 44,139 Sales and marketing 18,134
14,338 50,310 53,448 General and administrative 13,638
12,462 51,955 59,164
Total $ 56,804 $ 45,423 $ 176,776 $
192,964
(2)
Acquisition-Related Revenue and Cost of Revenue
Revenue $ 9,201 $ 17,939 $ 47,933 $ 63,634 Cost of product and
licensing (325 ) (463 ) (1,537 ) (2,895 ) Cost of professional
services and hosting (289 ) (315 ) (1,233 )
(1,259 ) Total $ 8,587 $ 17,161 $ 45,163
$ 59,480
Nuance Communications,
Inc. Supplemental Financial Information – GAAP to Non-GAAP
Reconciliations, continued (in millions) Unaudited
Perpetual Product
and Licensing Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $584.1 $578.1 $123.3 $121.1
$116.7 $135.5 $496.6 $117.0 $121.3 $108.1 $115.9 $462.1 Adjustment
$73.9 $45.7 $7.8 $4.3 $2.9 $6.7 $21.7 $2.2 $4.6 $3.6 $2.4 $13.0
Non-GAAP Revenue $658.0 $623.8 $131.1 $125.4 $119.6 $142.2 $518.3
$119.2 $125.9 $111.7 $118.3 $475.2
Recurring Product
and Licensing Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $156.6 $175.6 $55.2 $53.7
$51.5 $54.0 $214.4 $52.7 $53.2 $54.7 $73.5 $234.1 Adjustment $0.0
$24.4 $3.7 $3.0 $2.7 $6.2 $15.6 $8.4 $4.6 $3.5 $3.6 $20.1 Non-GAAP
Revenue $156.6 $200.0 $58.9 $56.7 $54.2 $60.2 $230.0 $61.1 $57.8
$58.2 $76.9 $254.0
Professional
Services Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $183.1 $208.1 $50.8 $55.4
$56.3 $58.3 $220.7 $54.8 $51.2 $51.2 $52.9 $210.0 Adjustment $0.7
$17.9 $3.4 $2.3 $1.5 $0.3 $7.5 $0.4 $0.4 $0.4 $0.3 $1.5 Non-GAAP
Revenue $183.8 $226.0 $54.2 $57.7 $57.8 $58.6 $228.2 $55.2 $51.6
$51.6 $53.2 $211.5
Hosting
Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $490.9 $624.3 $167.3 $172.2
$175.4 $175.3 $690.2 $171.4 $173.3 $183.1 $181.7 $709.5 Adjustment
$5.3 $9.3 $4.3 $3.9 $3.4 $4.0 $15.6 $3.4 $2.9 $2.8 $2.4 $11.5
Non-GAAP Revenue $496.2 $633.6 $171.6 $176.1 $178.8 $179.3 $705.8
$174.8 $176.2 $185.9 $184.2 $721.2
Maintenance and
Support Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $236.8 $269.2 $73.4 $73.3
$75.6 $79.2 $301.6 $78.2 $76.1 $80.9 $80.2 $315.4 Adjustment $6.7
$5.1 $0.9 $0.8 $0.8 $0.7 $3.2 $0.6 $0.5 $0.4 $0.3 $1.8 Non-GAAP
Revenue $243.5 $274.3 $74.3 $74.1 $76.4 $80.0 $304.8 $78.8 $76.6
$81.3 $80.6 $317.1
Total Recurring
Revenue
FY FY Q1 Q2 Q3 Q4
FY Q1 Q2 Q3 Q4 FY
2012 2013 2014 2014 2014
2014 2014 2015 2015 2015
2015 2015 GAAP Revenue $896.7 $1,087.4 $300.5 $305.7
$307.3 $314.8 $1,228.4 $308.9 $307.5 $323.6 $340.5 $1,280.5
Adjustment $12.2 $40.2 $9.2 $8.0 $7.0 $10.9 $34.9 $12.7 $8.1 $6.8
$6.5 $34.1 Non-GAAP Revenue $908.8 $1,127.6 $309.6 $313.7 $314.3
$325.7 $1,263.3 $321.7 $315.6 $330.4 $347.0 $1,314.7
Schedules may not add due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151116006418/en/
For Press and InvestorsNuance Communications, Inc.Richard
Mack, 781-565-5000richard.mack@nuance.com
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