Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Group 1: Earnings Performance - Cerence reported quarterly earnings of $0.06 per share, exceeding the Zacks Consensus Estimate of a loss of $0.66 per share, representing an earnings surprise of +109.09% [1] - The company posted revenues of $60.64 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 10.02%, compared to year-ago revenues of $54.81 million [2] Group 2: Stock Performance and Outlook - Cerence shares have declined approximately 0.4% since the beginning of the year, while the S&P 500 has gained 12.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $58.65 million, and for the current fiscal year, it is $0.85 on revenues of $260.72 million [7] Group 3: Industry Context - The Computers - IT Services industry, to which Cerence belongs, is currently in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported revenue of $60.6 million, exceeding the guidance range of $53-$58 million [17] - Adjusted EBITDA for Q4 was $8.3 million, significantly above the guidance range of $2-$6 million [21] - Full fiscal year 2025 revenue reached $251.8 million, reflecting broad-based strength across the business [18] - Free cash flow for Q4 was $9.7 million, marking the sixth consecutive quarter of positive free cash flow [22] - The company reduced total debt by $87.5 million during fiscal 2025, ending the year with $87 million in cash and marketable securities [22] Business Line Data and Key Metrics Changes - Variable license revenue for Q4 was $31.6 million, up 25% year-over-year, driven by strong customer utilization [18] - Connected services revenue for Q4 was $14.2 million, up 17% year-over-year, indicating continued expansion of the connected install base [18] - Professional services revenue for Q4 was $14.2 million, down 18% year-over-year, as the company streamlined custom projects [19] Market Data and Key Metrics Changes - The number of connected cars shipped increased by 14% on a trailing 12-month basis, indicating strong momentum in vehicle connectivity [23] - 52% of worldwide auto production included Cerence technology, consistent with historical penetration levels [23] Company Strategy and Development Direction - The company is focused on three key priorities for fiscal year 2026: driving top-line growth, advancing the XUI platform, and maintaining cost diligence [28] - The company aims to monetize its intellectual property and has ongoing legal actions against several companies, including Apple and Sony [7][8] - The company plans to showcase innovations at CES in Las Vegas, including new AI agents for vehicle services [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's foundation for long-term sustainable growth in fiscal 2026 and beyond [5] - The company expects fiscal year 2026 revenue to be in the range of $300 million to $320 million, representing a 23% year-over-year increase at the midpoint [15] - Adjusted EBITDA for fiscal year 2026 is anticipated to be between $50 million and $70 million [25] Other Important Information - The company resolved a lawsuit with Samsung, resulting in a one-time payment of $49.5 million, which will be recognized as revenue in Q1 [7][34] - The company initiated a restructuring plan to reduce operating expenses and position itself for profitable growth [13] Q&A Session Summary Question: Clarification on IP monetization and legal expenses - The $49.5 million payment from Samsung will flow through as revenue, with anticipated legal costs of approximately $24 million [34][38] Question: Interest in XUI and proof of concepts - The company is currently engaged in about half a dozen POCs with different OEMs for the XUI platform [40] Question: Connected services revenue and accounting practices - The connected services revenue is recognized over the life of the contract, with no unusual accounting practices applied in the current quarter [42][44] Question: Non-automotive opportunities - The company ranks kiosk implementations and phone answering chat services as top non-automotive opportunities [48][50] Question: Core business growth breakdown - The expected 8% growth in the core business is attributed to increased billings and amortization of previous billings [53] Question: Competitive landscape update - The competitive landscape remains stable, with a focus on large language model-based technologies and existing competitors like Google and Amazon [56]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported revenue of $60.6 million and adjusted EBITDA of $8.3 million, exceeding guidance [5][17] - Full fiscal year revenue reached $251.8 million, with adjusted EBITDA of $48.1 million, and free cash flow grew almost threefold year-over-year to $46.8 million [6][21] - The price per unit (PPU) increased to $5.05 for the trailing 12-month period, up 12% from the previous year [6][24] Business Line Data and Key Metrics Changes - Variable license revenue for Q4 was $31.6 million, up 25% year-over-year, while connected service revenue was $14.2 million, up 17% year-over-year [18][19] - Professional services revenue for Q4 was $14.2 million, down 18% year-over-year, reflecting a shift towards standardized offerings [19][20] - Total license revenue for the full year grew 13%, despite a decrease in fixed license contracts [18] Market Data and Key Metrics Changes - The company shipped approximately 11.7 million units in Q4, an increase from 10.6 million in the prior year [22][23] - The number of connected cars shipped grew by 14% on a trailing 12-month basis, with 52% of worldwide auto production including Cerence technology [23] Company Strategy and Development Direction - The company is focused on three key priorities for fiscal year 2026: driving top-line growth, advancing the XUI platform, and maintaining cost diligence [28] - The strategy includes expanding partnerships with Microsoft and NVIDIA, and continuing IP monetization efforts [12][15] - The company anticipates fiscal year 2026 revenue in the range of $300 million to $320 million, marking a 23% year-over-year increase at the midpoint [15][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's foundation for long-term sustainable growth, with expectations for continued strong performance in fiscal 2026 [4][15] - The competitive landscape remains stable, with increasing competition from large language model-based technologies [58] Other Important Information - The company resolved a lawsuit with Samsung, resulting in a one-time payment of $49.5 million, which is expected to contribute to future revenue [7][34] - A restructuring plan was initiated to reduce operating expenses and position the company for profitable growth [13][14] Q&A Session Summary Question: Clarification on IP monetization and legal expenses - The $49.5 million payment from Samsung will flow through as revenue, with anticipated legal costs of approximately $24 million [34][38] Question: Interest in XUI and proof of concepts - The company is currently engaged in about half a dozen proof of concepts with various OEMs for the XUI platform [40] Question: Connected revenue and accounting practices - Revenue from connected services is recognized over the life of the contract, with no unusual accounting practices affecting the current quarter [42][44] Question: Non-automotive opportunities - Key non-automotive opportunities include kiosk implementations and a phone answering chat service targeting dealerships [48][50] Question: Breakdown of expected growth in core business - The anticipated 8% growth in core technology is driven by increased billings and amortization of deferred revenue [54] Question: Update on competitive landscape - The competitive landscape remains consistent, with major players like Google and Amazon continuing to drive competition through AI technologies [58]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported revenue of $60.6 million and adjusted EBITDA of $8.3 million, exceeding guidance [5][16] - Full fiscal year revenue reached $251.8 million, with adjusted EBITDA of $48.1 million, and free cash flow grew almost threefold year-over-year to $46.8 million [5][20] - The price per unit (PPU) increased to $5.05 for the trailing 12-month period, up 12% from the previous year [5][23] Business Line Data and Key Metrics Changes - Variable license revenue for Q4 was $31.6 million, up 25% year-over-year, while connected service revenue was $14.2 million, up 17% year-over-year [17][18] - Professional services revenue for Q4 was $14.2 million, down 18% year-over-year, reflecting a focus on higher gross margins [18][19] - Total license revenue for the full year grew 13%, despite lower fixed license contracts [17] Market Data and Key Metrics Changes - The company shipped approximately 11.7 million units in Q4, an increase from 10.6 million in the prior year [21] - The number of connected cars shipped grew by 14% on a trailing 12-month basis, with 52% of worldwide auto production including Cerence technology [22] - Adjusted total billings were $236 million, an increase of 8.4% year-over-year [22] Company Strategy and Development Direction - The company aims to monetize its intellectual property and protect it against infringers, with ongoing actions against major companies [6][7] - A multi-year roadmap for IP monetization is in place, expected to support non-automotive business growth [8][12] - The company is focused on advancing its AI roadmap, growing its business with new and existing customers, and continuing transformation and cost management initiatives [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundation for long-term sustainable growth in fiscal 2026 and beyond, with expected revenue in the range of $300 million to $320 million [15][24] - The anticipated growth reflects an 8% increase in the core technology business and a focus on increasing adoption of Cerence XUI [15][24] - Management highlighted the importance of maintaining cost diligence while driving top-line growth [26] Other Important Information - The company resolved a lawsuit with Samsung, resulting in a one-time payment of $49.5 million, which is expected to contribute to revenue in Q1 [6][27] - A restructuring plan was initiated to reduce operating expenses and position the company for profitable growth [12][13] Q&A Session Summary Question: Clarification on IP monetization and legal expenses - Management confirmed that the $49.5 million payment from Samsung will flow through as revenue, with anticipated legal costs of approximately $24 million [27][28] Question: Interest in XUI and proof of concepts - Management noted ongoing POCs with about half a dozen OEMs, indicating increased interest in the XUI platform [28][29] Question: Connected revenue and accounting practices - Management clarified that connected revenue is recognized over the life of the contract, with no unusual accounting practices affecting the current quarter [29][30] Question: Non-automotive opportunities - Management identified kiosk implementations and a phone answering chat service as key non-automotive opportunities [32][33] Question: Core business growth breakdown - Management explained that the expected 8% growth in core technology is driven by increased billings and amortization of deferred revenue [34][35] Question: Competitive landscape update - Management indicated that the competitive landscape remains stable, with a focus on large language models and agentic AI driving competition [36]

Q4 FY25 Financial Performance - Total revenue increased to $60.6 million, exceeding the guidance of $53 million to $58 million[5] - Gross margin improved to 72.6%, surpassing the guidance of 68% to 69%[5] - Adjusted EBITDA reached $8.3 million, exceeding the guidance of $2 million to $6 million[5] - Cash provided by operating activities was $12.8 million[5] - Cash balance and marketable securities stood at $87.5 million[5] Revenue Breakdown - Total license revenue was $32.3 million, with variable license revenue at $31.6 million and fixed license revenue at $0.7 million[7] - Connected services revenue reached $14.2 million[7] - Professional services revenue amounted to $14.2 million[7] Operational Metrics - Adjusted Total Billings TTM reached $236 million, an increase of 8.4% compared to the same period last year[12] - Cerence technology was present in 52% of worldwide auto production (TTM)[12] - The number of Cerence connected cars shipped increased by 14% (TTM)[12] - The connected attach rate increased to 32.5% versus 28.8% a year ago[12] - Average PPU on a TTM basis was $5.05, up from $4.50 a year ago[12] FY26 Guidance - Revenue is projected to be between $300 million and $320 million[13] - Gross margin is expected to be between 79% and 80%[13] - Adjusted EBITDA is forecasted to be between $50 million and $70 million[13] - Cash provided by operating activities is estimated to be between $61 million and $67 million[13] - Free cash flow is projected to be between $56 million and $66 million[13]

Core Insights - Cerence, Inc. reported fourth-quarter earnings that exceeded both revenue and earnings estimates, leading to a significant increase in stock price [1][2] - The company raised its first-quarter revenue guidance substantially above analyst expectations [4] Financial Performance - Cerence reported a quarterly loss of $0.24 per share, outperforming the analyst estimate of a loss of $0.45 [2] - Quarterly revenue was $60.63 million, surpassing the consensus estimate of $55.25 million [2] Future Outlook - The company anticipates first-quarter revenue between $110 million and $120 million, significantly higher than the analyst estimate of $61.46 million [4] - However, Cerence lowered its fiscal 2026 revenue outlook to a range of $300 million to $320 million, compared to the previous estimate of $246.38 million [5] Stock Performance - Following the earnings report, Cerence's stock price increased by 28.66%, reaching $10.19 in extended trading [5]

Financial Performance - Q4 revenue reached $60.6 million, exceeding the high end of guidance, with FY25 revenue totaling $251.8 million[3] - Adjusted EBITDA for Q4 was $8.3 million, while FY25 adjusted EBITDA was $48.1 million[5] - Free cash flow for Q4 was $9.7 million, contributing to a total of $46.8 million for FY25, nearly three times the previous year[3] - The company projects FY26 revenue guidance of $300 million to $320 million, reflecting a 23% year-over-year increase at the midpoint[3] - The company anticipates first fiscal quarter revenue between $110 million and $120 million, including a $49.5 million patent license payment[8] - GAAP revenue for Q4 2025 was $60.639 million, up from $54.805 million in Q4 2024, representing a growth of 3.1%[51] - The company reported GAAP net cash provided by operating activities of $12.752 million for Q4 2025, compared to $6.115 million in Q4 2024[51] Profitability Metrics - Gross margin for Q4 was 72.6%, compared to 63.7% in Q4 FY24[5] - GAAP gross profit increased to $43.995 million in Q4 2025, compared to $34.895 million in Q4 2024, resulting in a gross margin of 72.6%[51] - Adjusted EBITDA for the twelve months ended September 30, 2025, was $48.064 million, down from $80.616 million in the previous year[51] - The net loss for the twelve months ended September 30, 2025, was $18.714 million, a significant improvement from a net loss of $588.078 million in 2024[49] - The company anticipates GAAP net income for FY2026 to range from a loss of $8.117 million to a profit of $11.883 million[53] Cash Flow and Assets - Net cash provided by operating activities for FY25 was $61.2 million, significantly up from $17.2 million in FY24[5] - Cash and cash equivalents at the end of the period were $84.017 million, down from $121.485 million at the end of September 30, 2024[46] - Total current assets decreased to $190.757 million as of September 30, 2025, from $265.509 million in 2024, reflecting a decline of about 28.2%[46] - Free cash flow for FY2026 is expected to be between $55.5 million and $65.5 million[53] Operational Metrics - The core technology business is expected to grow by 8% in FY26, excluding professional services[2] - The percentage of worldwide auto production utilizing Cerence technology reached 52% over the trailing twelve months[7] - The number of Cerence connected cars shipped increased by 14% year-over-year[7] - The number of Cerence enabled cars shipped on a TTM basis was over 525 million, showcasing the company's strong market presence[37] - Research and development expenses for the three months ended September 30, 2025, were $26.403 million, slightly up from $25.227 million in the same period of 2024[41] Liabilities and Shareholder Equity - The total liabilities decreased to $479.915 million as of September 30, 2025, compared to $561.261 million in 2024, indicating a reduction of approximately 14.5%[46] - The weighted-average common shares outstanding for the three months ended September 30, 2025, were 43.339 million, compared to 41.866 million in the same period of 2024[41] - Capital expenditures for FY2026 are projected to be between $(5.5) million and $(1.5) million[53]

Core Insights - Cerence Inc. reported strong financial results for Q4 and fiscal year 2025, with Q4 revenue of $60.6 million and FY25 revenue of $251.8 million, both exceeding guidance [3][5] - The company anticipates FY26 revenue guidance of $300 million to $320 million, reflecting a 23% year-over-year increase at the midpoint [3][5] - Cerence's CEO highlighted significant progress in technology milestones and customer interest in the Cerence xUI platform, with the first xUI-powered cars expected to launch in 2026 [3][5] Financial Performance - Q4 GAAP revenue was $60.6 million, up from $54.8 million in Q4 2024, while FY25 GAAP revenue was $251.8 million, down from $331.5 million in FY24 [4][33] - GAAP gross margin improved to 72.6% in Q4 2025 from 63.7% in Q4 2024, and for FY25, it was 72.7% compared to 73.7% in FY24 [4][33] - The company reported a net loss of $13.4 million for Q4 2025, an improvement from a loss of $20.4 million in Q4 2024, and a net loss of $18.7 million for FY25 compared to a loss of $588.1 million in FY24 [4][33] Cash Flow and Guidance - Q4 free cash flow was $9.7 million, nearly double the $4.7 million in Q4 2024, while FY25 free cash flow reached $46.8 million, up from $12.2 million in FY24 [5][33] - For Q1 FY26, revenue is expected to be between $110 million and $120 million, with gross margins projected between 85% and 86% [9][10] - FY26 adjusted EBITDA is expected to range from $50 million to $70 million, with net cash provided by operating activities projected between $61 million and $67 million [10][9] Key Performance Indicators - Cerence's technology was present in 52% of worldwide auto production over the trailing twelve months [7] - The number of Cerence connected cars shipped increased by 14% year-over-year [7] - Adjusted total billings grew by 8% year-over-year [7] Company Overview - Cerence Inc. is a leader in AI-powered user experiences in the automotive sector, with over 525 million cars shipped with its technology [28] - The company focuses on creating safer and more connected journeys for drivers and passengers through innovative AI solutions [28]

Core Viewpoint - Cerence Inc. is set to announce its fourth quarter financial results for the period ending September 30, 2025, on November 19, 2025, at 4:05 PM Eastern Time [1] Group 1: Financial Results Announcement - The financial results will be discussed in a live conference call and webcast on the same day at 5:00 PM Eastern Time [2] - Interested investors and analysts can register for the audio conference call and access the webcast at investors.cerence.com [2] Group 2: Company Overview - Cerence Inc. is a global leader in creating AI-powered user experiences in the automotive and transportation sectors [3] - The company has shipped over 525 million cars equipped with its technology, partnering with leading automakers and technology firms [3] - Cerence is headquartered in Burlington, Massachusetts, and has a global presence dedicated to advancing AI innovation [3]