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Cerence (NasdaqGS:CRNC) Q4 2025 Earnings Call November 19, 2025 05:00 PM ET Company ParticipantsTony Rodriquez - CFOKate Hickman - VP of Investor RelationsBrian Krzanich - CEOConference Call ParticipantsJeff Van Rhee - Equity Research AnalystNone - AnalystOperatorToday, and thank you for standing by. Welcome to the Cerence fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask ...

Cerence (NasdaqGS:CRNC) Q4 2025 Earnings Call November 19, 2025 05:00 PM ET Company ParticipantsWilliam Daley - Managing Director of Public SectorTony Rodriquez - CFOKate Hickman - VP of Investor RelationsBrian Krzanich - CEOConference Call ParticipantsJeff Van Rhee - Equity Research AnalystOperatorToday, and thank you for standing by. Welcome to the Cerence fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a ...

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]

Core Viewpoint - Disney reported a mixed fourth quarter with adjusted earnings per share of $1.11, exceeding estimates, but revenue fell short of expectations. The company has increased its share repurchase target to $7 billion for the next fiscal year, leading to downward pressure on shares [1]. Streaming Business Performance - The streaming segment saw significant growth, with earnings rising to $352 million, a 39% increase, indicating a successful transition from traditional linear TV to streaming [2]. - Disney Plus and Hulu added 12.5 million subscribers, with the Disney Plus app gaining an additional 3.8 million subscribers, surpassing analyst expectations [3]. Advertising and Subscriber Trends - Approximately 37% of new subscribers are from ad-supported tiers, reflecting a broader trend where advertisers are increasingly focusing on streaming services to reach audiences [5]. Revenue Streams and Business Segments - The experiences segment, including cruises, is showing resilience, with an uptick in bookings for Q1 of the next year, although the linear network segment experienced a 16% year-over-year decline [10]. - Disney's ability to leverage its intellectual property (IP) across various business segments, including theatrical releases and video game licenses, positions the company favorably in the market [13]. Global Expansion Opportunities - Disney is considering launching ESPN in Asia, which could tap into global audiences, particularly in the sports sector, representing a potential growth area for the company [14].

Summary of Conference Call Notes Industry Overview - The report focuses on the **SMID (small-mid cap) Internet/Media sector in China** and reflects recent secular changes in the industry [2][4]. Key Companies and Ratings - **Damai**: Maintained an Overweight (OW) rating; price target raised from HK$0.58 to HK$1.20, reflecting a 107% increase [3][15]. - **37 Interactive Entertainment (37IE)**: Maintained OW rating; price target increased from RMB 23.00 to RMB 25.90, a 13% rise [4][15]. - **Maoyan**: Downgraded from OW to Equal-weight (EW); price target adjusted from HK$7.50 to HK$8.00, a 7% increase [6][15]. - **JOYY**: Maintained EW rating; price target raised from US$40.00 to US$62.00, a 55% increase [4][15]. - **IQIYI**: Maintained EW rating; price target increased from US$2.10 to US$2.30, a 10% rise [4][15]. - **Focus Media**: Preferred over Weibo due to expected growth from self-help initiatives [6]. Core Insights - **IP Derivatives Demand**: There is a growing demand for IP derivatives in China, with Damai positioned to benefit from its domestic sub-licensing business [3]. - **Long Video and Live-Streaming**: These sectors are entering a more favorable policy environment, with valuations currently below historical levels. Price targets for JOYY and HUYA have been lifted due to improving trends [4]. - **Gaming Sector**: Smaller game companies are experiencing a re-rating due to successful new titles, leading to raised earnings forecasts for 2025/26 [5]. - **Film Industry Challenges**: Film companies may face difficulties in re-rating due to muted industry growth and weaker visibility for fundamentals, leading to downgrades for Maoyan and others [6]. Additional Insights - **Branding Advertising**: The branding advertising industry is not expected to recover immediately, but Focus Media is seen as a better investment compared to Weibo due to its strategic initiatives [6]. - **Valuation Adjustments**: The report includes various valuation adjustments for companies based on earnings revisions and shifts to sum-of-the-parts (SOTP) valuation methods [15]. Market Performance - The report provides a detailed analysis of stock price performance over different time frames, indicating significant variances in performance among the companies covered [12]. Conclusion - The SMID Internet/Media sector in China is undergoing significant changes, with varying growth prospects across different segments. Companies like Damai and 37IE are favored for their growth potential, while challenges remain for the film industry and certain live-streaming platforms.

Core Insights - Fingerprint Cards AB (FPC) has entered into a commercialization and licensing agreement with PixArt Imaging Inc., marking its third IP monetization transaction in 11 months [1] - FPC will receive an upfront payment of USD 2.0 million (approximately SEK 19 million) and will retain rights to royalties on derivative products developed by PixArt [1][2] - The agreement is expected to strengthen FPC's balance sheet and support capital allocation towards core authentication platforms and high-growth initiatives [2][3] Financial Implications - The upfront payment of USD 2.0 million will be received in the fourth quarter of 2025, providing immediate value from prior investments [1][2] - The potential for recurring royalty income from PixArt's use of licensed technology is anticipated to enhance financial flexibility [2][3] Strategic Alignment - The partnership with PixArt aligns with FPC's strategy to monetize existing IP assets and explore collaboration in areas such as smart home, automotive, and wearables [3] - The cash infusion from this agreement will enable FPC to accelerate investments in new revenue streams, reinforcing its leadership in secure authentication [3] Company Overview - Fingerprint Cards AB (FPC) is a global leader in biometrics, providing solutions that enable secure and convenient authentications across various devices and platforms [5] - The company aims to drive the transition to a passwordless world through its cloud-based identity management platforms, supporting multiple biometric modalities [5]

Core Viewpoint - Alpha Modus Holdings Inc. has reached a settlement in its patent infringement lawsuit against Walgreen Co., reflecting the company's commitment to protecting its intellectual property while fostering positive relationships in the retail and technology sectors [1][2]. Company Overview - Alpha Modus Holdings Inc. (NASDAQ: AMOD) specializes in AI-powered retail technology, offering patented technologies, intelligent kiosks, and consumer engagement tools aimed at enhancing the retail experience [3]. - The company is actively pursuing a broader IP monetization strategy, which includes resolving multiple enforcement actions and seeking licensing and litigation opportunities related to its patented technologies [2]. Legal Context - The lawsuit, Alpha Modus, Corp. v. Walgreen Co., was filed in the United States District Court for the Eastern District of Texas and involved claims related to specific U.S. patents [1]. - The terms of the settlement are confidential, and the lawsuit will be dismissed with prejudice, indicating a final resolution [2].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China IP Retailers & Toy** industry, highlighting companies such as **Pop Mart**, **Bloks**, and **Miniso** [3][7][5]. Core Insights and Arguments 1. **IP Cycle Duration**: - Popular IPs typically have a cycle of **2-3 years**. However, IPs with ongoing serialization or content generation can extend their popularity beyond **5 years** [8][18]. - Examples include **Bandai's Gundam**, which has shown a **14% CAGR** from 2020 to 2025 due to diversified monetization strategies [18][8]. 2. **Sustainability of IP Companies**: - Companies that manage a diverse IP portfolio can stabilize earnings volatility. Key drivers for sustainable growth include content creation, IP portfolio expansion, monetization capabilities, and customer engagement [9][10]. 3. **Total Addressable Market (TAM)**: - Pop Mart's sales in 2024 are projected at **US$1.8 billion**, with potential growth to **US$4.6 billion** in 2025. Comparatively, established brands like **Sanrio** and **Lego** have higher sales figures, indicating significant growth potential for Pop Mart [10][14]. 4. **Share Price Reactions**: - Historical analysis shows that share prices of IP companies react differently based on their growth stages. High-frequency data trends often influence share prices more than earnings revisions during high growth phases [11][13]. 5. **Scenario Analysis for Pop Mart**: - In a blue sky scenario, Pop Mart could achieve a **GMV of Rmb129 billion (US$18 billion)** and reported sales of **Rmb81 billion (US$11 billion)** long-term, significantly higher than current estimates [4][14]. Additional Important Insights - **Market Dynamics**: The rise of short-form video platforms and a weaker content cycle are seen as tailwinds for non-content-based IPs, enhancing their competitiveness [35][36]. - **Consumer Engagement**: Continuous engagement through serialization and diversified product offerings is crucial for extending the lifecycle of IPs [34][32]. - **Celebrity Endorsements**: External factors such as celebrity endorsements and media presence play a significant role in driving IP popularity [32][9]. Conclusion - The **China IP Retailers & Toy** sector presents robust growth opportunities, particularly for companies like Pop Mart, which are positioned to leverage their IP portfolios effectively. The sustainability of growth will depend on their ability to manage cycles, expand their market presence, and engage consumers continuously.

Core Insights - iQIYI has unveiled over 400 new titles and strategic initiatives at the 2025 iQIYI World Conference, emphasizing its commitment to a "long + short" content strategy, diverse IP monetization, and technological innovation [1][9] Content Strategy - The company is entering a two-year transformation to scale both long- and short-form content, with a new slate for 2025-2026 that includes over 400 titles across various genres [3][4] - iQIYI's long-form strategy will feature five signature drama brands, focusing on serialized dramas with a mix of genres, including adaptations of popular crime novels [5] - On the short-form side, iQIYI is enhancing its mini-drama strategy with initiatives aimed at increasing genre diversity and artistic standards [6] IP Monetization - iQIYI is advancing its IP monetization strategy through a content-driven e-commerce platform that integrates its IP portfolio with livestreaming and short-form videos [8][10] - The company is also launching two flagship theme parks to extend its premium IPs into immersive offline experiences [10] Technological Innovation - iQIYI is integrating AI technologies to enhance viewer experience and improve content production efficiency, including features that allow users to jump between scenes and personalized recommendations [11][12] - The company is leveraging AI in its Screenplay Workshop to support creators in plot evaluation and narrative refinement, alongside an upgraded production suite for improved efficiency [13]