CRNC Beats Q4 Earnings Estimates: Will FY25 Outlook Drag Shares Down?

Financial Performance - The company reported a loss of 7 cents per share in Q4 FY2024, surpassing the Zacks Consensus Estimate by 78.13% [1] - Revenues were $55 million, beating the Zacks Consensus Estimate by 13.85$220.7 million, reflecting a 1% increase year-over-year [5] - Adjusted EBITDA loss was $1.9 million against adjusted EBITDA of$16.6 million reported in the year-ago quarter [10] - Operating loss was $4 million against operating income of$14.4 million reported in the year-ago quarter [11] Revenue Breakdown - License revenues (46.2% of revenues) of $25.3 million beat the Zacks Consensus Estimate by 28.64$12.1 million beat the Zacks Consensus Estimate by 11.1% but declined 36.9% year-over-year [4] - Professional Services (31.7% of revenues) of $17.4 million missed the Zacks Consensus Estimate by 1.10$969 million, indicating strong long-term visibility [6] Cost and Expenses - Non-GAAP gross margin contracted 790 basis points year-over-year to 64.9% from 72.9% [8] - Research and development expenses declined 28.2% year-over-year to $25.2 million [8] - General and administrative expenses increased 15.2$13.2 million [8] - Sales and marketing expenses declined 17.5% year-over-year to $4.8 million [9] - Total operating expenses dropped 17.5$43.24 million [10] Cash Flow and Balance Sheet - Cash, cash equivalents, and marketable securities were $126.9 million as of Sept. 30, 2024, compared with$120.9 million as of June 30, 2024 [12] - Long-term debt, net of discounts and issuance costs, amounted to $194.8 million as of Sept. 30, 2024 [13] - Cash provided by operating activities came in at$6.1 million, down from $12.9 million reported in the prior quarter [13] - Free cash flow was$4.6 million compared with $12.078 million reported in the previous quarter [14] Guidance - For Q1 FY2025, the company expects revenues between$47 million and $50 million, including a$1 million headwind [15] - Adjusted EBITDA is projected to be in the range of negative $9 million to negative$6 million for Q1 FY2025 [16] - Non-GAAP earnings loss for Q1 FY2025 is projected to be between 32 and 25 cents per share [16] - For FY2025, the company expects revenues in the range of $236-$247 million [17] - Adjusted EBITDA is forecasted to be in the range of $15-$26 million for FY2025 [18] - Non-GAAP earnings are expected to be between a loss of $0.15 and a gain of$0.10 per share for FY2025 [19] Market and Industry Position - The company's penetration of global auto production for the trailing 12 months declined slightly to 52% from 53% in the previous quarter [3] - The company reported strong progress in generative AI solutions, with 10 customer wins and six program launches in FY2024, including partnerships with Volkswagen, Renault, and Audi [7] - CRNC's shares have plunged 70.3% against the Zacks Computer and Technology sector's growth of 27.6% in the year-to-date period [19]