Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

Despite being the clear market leader in voice assistant and driver monitoring systems within the automotive industry, Cerence's (NASDAQ: CRNC ) stock price has struggled over the past year as the business has faced weakAn individual investor primarily focused on undercovered companies, with more than 50 companies on my watchlist. My areas include technology, software, electronics and the energy transition. I have been investing my personal capital for over 7 years in a broad range of companies globally. Th ...

© 2024 Cerence Inc. Cerence Q4 FY24 Earnings Presentation Brian Krzanich, Chief Executive Officer Tony Rodriquez, Interim Chief Financial Officer November 21, 2024 Forward-Looking Statements Statements in this presentation regarding: Cerence's future performance, results and financial condition; expected growth and profitability; outlook; fiscal year 2025 framework; transformation plans and cost efficiency initiatives, including estimated net cost savings; strategy; opportunities; business, industry and mar ...

Financial Data and Key Metrics - Q4 2024 revenue was $54.8 million, exceeding the high-end guidance of $50 million, driven by $5 million in license royalty true-ups from two OEM customers [20] - Adjusted EBITDA loss of $1.9 million, significantly better than the guidance of a $13 million loss, due to higher-than-expected revenue and $6 million in cost savings from restructuring [22] - Full-year 2024 revenue was $331.5 million, with adjusted EBITDA of $80.6 million, but excluding legacy revenue, adjusted EBITDA would have been negative $6 million [25] - Free cash flow for Q4 was $4.7 million, and the company ended the quarter with $130.4 million in cash and marketable securities [24][25] Business Line Performance - Variable license revenue was $25.3 million, down 17% YoY, but up from Q3 [31] - Connected Services revenue (excluding legacy) was $12.1 million, up 12% YoY [31] - Professional Services revenue declined 6% YoY, with further reductions expected in fiscal 2025 [31][30] - Pro forma royalties were $42.2 million, flat YoY, with fixed license consumption totaling $16.9 million, up 9% YoY [33] Market and Competitive Landscape - The company shipped 10.6 million cars with Cerence technology in Q4, down 14% YoY, while global auto production declined 5% [35] - The penetration rate of global auto production for the trailing 12 months declined slightly to 52%, primarily due to weaker production volumes among top customers [34] - The company secured 28 design wins in fiscal 2024, including 10 customer wins and six program launches for generative AI solutions with automakers like Volkswagen, Renault, and BMW [9][10] Strategic Direction and Industry Competition - The company is focusing on integrating generative AI and large language models (LLMs) into its product portfolio to enhance in-car voice interaction [8][9] - Cerence launched CaLLM Edge, the first LLM running on automotive Edge, in collaboration with Microsoft, enabling advanced voice interaction even without connectivity [11][12] - The company aims to streamline operations and reduce costs, targeting $35 million to $40 million in net savings, with $16.3 million in one-time restructuring costs [26][28] Management Commentary on Operating Environment and Outlook - The company issued fiscal 2025 revenue guidance of $236 million to $247 million, with adjusted EBITDA of $15 million to $26 million and free cash flow of $20 million to $30 million [16] - Management expects a return to profitability in fiscal 2025, driven by cost reductions and strong market positioning [16][18] - The company plans to transition from broad cost-cutting to simplifying and streamlining its organization to improve speed to market [17] Other Key Information - The company has $87.5 million in convertible notes due in June 2025 and is exploring refinancing options to strengthen its balance sheet [43][44] - Gross margins for fiscal 2025 are expected to be in the range of 67% to 69%, driven by a shift toward higher-margin connected services and licenses [42] Q&A Session Summary Question: AI-related deal margins and pricing uplift - Management noted that generative AI solutions command higher unit economics, with improved margins compared to the rest of the portfolio [10][51] - While specific pricing details were not disclosed, the company highlighted strong demand and interest from customers for AI-driven products [51][52] Question: Connected Services growth and competitive position - Connected Services revenue grew 12% YoY in Q4, excluding legacy revenue, and is expected to continue growing in fiscal 2025 [56][57] - The company emphasized its strong product customization capabilities and deep automotive expertise as key differentiators in the competitive landscape [59][60] Question: Historical growth challenges and future priorities - Management attributed past growth challenges to a focus on bookings rather than product differentiation and speed to market [63] - Priorities for fiscal 2025 include execution, cost reduction, and advancing generative AI products, with potential expansion into non-automotive markets [78][80] Question: Professional Services revenue trends - Professional Services revenue was down 6% YoY, with a $5 million to $7 million headwind expected in fiscal 2025 due to reduced focus on low-potential projects [30][85] - The company noted that Professional Services revenue can be lumpy quarter-to-quarter, depending on project demand [86][87] Question: License average PPU and AI product pipeline - License average PPU increased due to higher-value components in the license mix, with generative AI rollouts contributing to the uplift [91][94] - The company plans to seamlessly transition customers between AI product generations, with backward compatibility ensuring no slowdown in AI-related launches [101][103]

Cerence (CRNC) came out with a quarterly loss of $0.07 per share versus the Zacks Consensus Estimate of a loss of $0.32. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 78.13%. A quarter ago, it was expected that this automotive artificial intelligence developer would post earnings of $0.05 per share when it actually produced earnings of $0.19, delivering a surprise of 280%.Over the last four ...

Exhibit 10.2 CERENCE INC. CHANGE OF CONTROL AND SEVERANCE AGREEMENT This Change of Control and Severance Agreement (the "Agreement") is made and entered into by and between Brian Krzanich ("Executive") and Cerence Inc., a Delaware corporation (the "Company"), effective as of the later of (i) the latest date on the signature page of this Agreement and (ii) the date Executive's employment with the Company commences (the "Ef ective Date"). RECITALS 1. The Compensation Committee (the "Committee") of the Board o ...

Cerence (CRNC) is set to release fourth-quarter fiscal 2024 results on Nov. 21.The company anticipates fourth-quarter fiscal 2024 revenues between $44 million and $50 million. The Zacks Consensus Estimate for revenues is pegged at $48.14 million, indicating a decline of 40.39% from the year-ago quarter’s reported figure. The consensus mark for loss has been steady at 32 cents per share in the past 30 days. Cerence reported earnings of 9 cents per share in the year-ago quarter. CRNC’s earnings surpassed the ...

BURLINGTON, Mass., Nov. 13, 2024 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today introduced CaLLM™ Edge, its pioneering, automotive-grade, embedded small language model (SLM). This new SLM is available within the existing Cerence solutions portfolio and will power its next-generation AI assistant platform, enabling an intelligent, seamless user experience regardless of connectivity. Developed and optimized in partnership with Microsoft, CaLLM Edge is available directly to Ce ...

Cerence (CRNC) shares have returned 19.1% in the past month, outperforming the broader Zacks Computer and Technology sector’s appreciation of 3.6% and the Zacks Computers - IT Services industry’s return of 3.4%. The outperformance can be attributed to CRNC’s good position in generative AI (GenAI), an expanding clientele, and a strong partner network. Cerence’s strong portfolio and growing global presence in the automotive industry, all supported by a solid network of partners, have been key catalysts.CRNC’s ...

BURLINGTON, Mass., Oct. 11, 2024 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC) (the "Company"), AI for a world in motion, today announced that, in connection with Brian Krzanich's recent appointment as Chief Executive Officer and President effective October 7, 2024, the Company granted Mr. Krzanich an initial equity award with a target aggregate value of $6 million, based on the average closing price of the Company's common stock over the trailing 20 trading days ending on the date of grant. Such award co ...