UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR For the transition period from __________ to __________ Commission File Number: 001-39030 CERENCE INC. (Exact name of registrant as specified in its charter) Delaware 83-4177087 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2 ...

Financial Data and Key Metrics Changes - Q1 revenue reached $138.3 million, exceeding guidance by approximately $6 million, driven by several one-time events [29] - GAAP gross margin was 81%, with GAAP net income at $23.9 million, translating to GAAP income per share of $0.53 [14] - Non-GAAP income per share was $1.12, with adjusted EBITDA at $70.4 million, representing a 50.9% margin [14][19] - Negative cash flow of about $2.8 million was reported, attributed to the timing of customer payments expected in Q2 [14] Business Line Data and Key Metrics Changes - Connected services revenue saw a slight increase due to accelerated non-cash revenue from a legacy contract, with new connected revenue up 5% quarter-over-quarter and 13% year-over-year, excluding the acceleration [15] - The license business remained strong despite a negative true-up of approximately $4.8 million due to overreported royalties [31] - Total adjusted billings increased by 4%, indicating potential future revenue growth [32] Market Data and Key Metrics Changes - The penetration of global auto production remained steady at 54%, with 12.4 million cars equipped with Cerence technology shipped in the quarter [17][30] - Monthly active users of connected services increased by 30% year-over-year, reflecting growing popularity among end users [32] Company Strategy and Development Direction - The company is focused on capitalizing on momentum from CES, aiming to secure new business and target potential win-back opportunities [8] - Partnerships with Microsoft and NVIDIA are pivotal for enhancing product offerings and accelerating the rollout of AI-based solutions [68] - The introduction of the Cerence Automotive Large Language Model (CaLLM) aims to leverage NVIDIA's capabilities for training automotive-specific models [68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration of Generative AI and large language models into products, which are expected to enhance customer value and create new revenue opportunities [4][12] - The company anticipates a ramp in new connected services in FY '24 as delayed programs go into production [15] - Future revenue guidance for Q2 is projected between $60 million to $64 million, with full fiscal year revenue expected between $355 million to $375 million [19] Other Important Information - The company showcased advancements in Generative AI at CES, receiving positive feedback from OEMs and media [7][20] - A major North American OEM extended an existing program with Cerence due to delays in a competitor's solution [4] Q&A Session Summary Question: Clarification on customer leaving with Toyota - The customer had a separate contract and was not expected to cancel, but they informed Cerence after Toyota's notification [22][48] Question: Gauging end-user satisfaction compared to alternatives - The company is focused on customer engagement and feedback from OEMs to assess satisfaction levels [25] Question: Impact of delayed production starts on revenue - Delayed production starts are expected to improve in the coming months, with some programs going live soon [39] Question: Feedback on Chat Pro from OEMs - OEM feedback has been overwhelmingly positive, with many expressing eagerness to implement the technology [60] Question: OpEx implications of focus on Generative AI - The company is sensitive to costs and does not anticipate significant increases in operational expenses due to new AI initiatives [45]

Cerence (CRNC) reported $138.34 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 65.4%. EPS of $1.12 for the same period compares to $0.36 a year ago.The reported revenue represents a surprise of +5.69% over the Zacks Consensus Estimate of $130.89 million. With the consensus EPS estimate being $0.90, the EPS surprise was +24.44%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Str ...

Cerence (CRNC) came out with quarterly earnings of $1.12 per share, beating the Zacks Consensus Estimate of $0.90 per share. This compares to earnings of $0.36 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 24.44%. A quarter ago, it was expected that this automotive artificial intelligence developer would post earnings of $0.13 per share when it actually produced earnings of $0.09, delivering a surprise of -30.77%.Over the la ...

deliver new branded experiences for end | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | intelligent reasoning Multi-seat support with barge-in capabilities and | | | | | | | all-seat microphone capture with wake-word free invocation Proactive AI, Emotion Detection, Voice Biometrics | | | | | | | New neural ASR & TTS technology stack | | | | | | | ...

Analysts on Wall Street project that Cerence (CRNC) will announce quarterly earnings of $0.90 per share in its forthcoming report, representing an increase of 150% year over year. Revenues are projected to reach $130.89 million, increasing 56.5% from the same quarter last year.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.Prior to a ...

X X | --- | --- | --- | --- | --- | |-------|-------|-------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | | | | | | | | Q4 FY23 – Business Highlights | | | | | | | | | | | | • Consistent execution leads to the fifth consecutive quarter of strong performance on revenue and profitability | | | | | | • Maintained leadership position within Auto Core at 54% | | | | | | penetration • T ...

Cerence Inc. (NASDAQ:CRNC) Q4 2023 Earnings Conference Call November 27, 2023 8:30 AM ET Company Participants Rich Yerganian - SVP, |IR Stefan Ortmanns - Director & CEO Nils Schanz - Chief Product Officer Tom Beaudoin - CFO Conference Call Participants Luke Junk - Baird Colin Langan - Wells Fargo Quinn Bolton - Needham Mark Delaney - Goldman Sachs Jeff Van Rhee - Craig-Hallum Capital Group Chris McNally - Evercore ISI Jeffrey Osborne - TD Cowen Operator Good day, and welcome to the Cerence’s Q4 2023 Earning ...

Financial Data and Key Metrics Changes - Q3 revenue was approximately $61.6 million, at the high end of guidance, driven by strength in the core business [12][32] - Non-GAAP gross margin was 66.5%, and adjusted EBITDA was $2.8 million, or 4.5% margin [12][40] - Professional services revenue decreased by 24% year-over-year and 8% quarter-over-quarter, not projected as a growth driver [14] Business Line Data and Key Metrics Changes - Core auto business penetration rose to 54%, the highest in nearly two years, indicating strong market position [7][42] - Variable license revenue dropped 16% year-over-year due to higher fixed contract consumption [41] - New connected services revenue increased by 3% year-over-year, but decreased by 3% quarter-over-quarter [41] Market Data and Key Metrics Changes - Cars produced using connected services increased by 50% year-over-year, reflecting a growing trend in connected vehicles [16] - Monthly active users rose by 29% year-over-year, indicating increased consumer adoption of technology [16] - Pro forma royalties were up 7% year-over-year and 6% quarter-over-quarter due to increased auto production [42] Company Strategy and Development Direction - The company is focused on innovation in AI for transportation, operational excellence, and securing strategic accounts for long-term growth [33][35] - The introduction of generative AI and large language models is central to enhancing product offerings and user experiences [9][38] - The company aims for double-digit revenue growth with strong EBITDA margins, emphasizing the importance of winning new business [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in visibility and ability to deliver strong Q4 results despite macroeconomic uncertainties [7][35] - The semiconductor shortage is becoming less of an issue, but rising interest rates and a slowing global economy remain concerns [7] - The company expects revenue guidance for Q4 to be between $72 million and $76 million, raising the full-year guidance midpoint to $288 million [45] Other Important Information - The company successfully restructured its debt, resulting in annual cash interest savings of approximately $8 million [34] - The balance sheet remains strong with total cash and marketable securities of approximately $116 million [13] Q&A Session Summary Question: Follow-up on billings and sales targets for FY24 - Management indicated that billings per car metrics are affected by production delays and emerging market opportunities, with guidance for FY24 to be provided in November [47] Question: Average contract duration changes - The average contract duration is influenced by deal mix and OEM production schedules, still reflecting long-term commitments [48] Question: Revenue models for large language models in cars - Management discussed potential revenue models, including licensing and subscription models, as they explore new applications and partnerships [51] Question: Performance of connected units and buyer behavior - The increase in connected units is seen as indicative of a larger trend, supported by design wins and improved service quality [57] Question: Two-wheeler contributions and design wins - The two-wheeler market is expected to grow, with several design wins contributing to future revenue [63][64] Question: IoT use cases and technology development - The company is exploring non-transportation opportunities and has developed technologies exempt from current field of use restrictions [69][70]

7 8 Business Use of Estimates Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perform ongoing credit evaluations of our customers' financial condition and limit the amount of credit extended when deemed appropriate. Two customers accounted for 12.2% and 11.5%, respectively, of our Accounts receivable, net balance at June 30, 2023. One customer accounted for 17.4% of our Accounts receivable, net balance at Septe ...