Nuance Accelerates Exit of its Non-Core Subscriber Revenue Services (SRS) Business
21 June 2019 - 8:30PM
Nuance Communications, Inc. (NASDAQ: NUAN), today announced it has
accelerated the exit of its non-core Subscription Revenue Services
(SRS) business, which provides services to mobile consumers in
emerging markets, primarily Brazil and India. The Company has
completed the sale of its Brazil SRS operations and has signed a
definitive agreement for the sale of its India SRS operations. The
latter is expected to close in July of 2019. The terms of both
deals were not disclosed.
“In our ongoing effort to drive transformation and
simplification, we continue to execute on our strategic initiatives
announced at the beginning of our fiscal year,” said Mark Benjamin,
Chief Executive Officer of Nuance. “These transactions are a great
outcome for everyone as they enable us to exit this non-core
business faster than a wind-down, while ensuring continuous support
and services for our customers. We remain sharply focused on
cloud-based, intelligence-driven solutions, capable of sustainable
long-term revenue and earnings growth.”
Although the transactions do not have a significant impact on
our business, Nuance has updated its Q3 and full-year 2019 revenue
and EPS guidance in the tables below. All other guidance metrics
remain unchanged from previous guidance.
Q3 2019 Guidance Key Metrics (ASC605)
|
PRIOR |
|
IMPACT OF SALE |
|
REVISED |
|
|
|
|
|
|
|
|
|
|
($
in millions except earnings per share) |
Q3 2019 Guidance (ASC 605) |
|
Q3 2019 Guidance (ASC 605) |
|
Q3 2019 Guidance (ASC 605) |
GAAP Revenue |
$451.0 |
to |
$465.0 |
|
($4.0) |
|
$447.0 |
to |
$461.0 |
Non-GAAP Revenue |
$453.0 |
to |
$467.0 |
|
($4.0) |
|
$449.0 |
to |
$463.0 |
GAAP Diluted EPS |
$0.01 |
to |
$0.05 |
|
($0.01) |
|
$0.00 |
to |
$0.04 |
Non-GAAP Diluted
EPS |
$0.27 |
to |
$0.30 |
|
($0.01) |
|
$0.26 |
to |
$0.29 |
2019 Guidance Key Metrics
(ASC605)
|
PRIOR |
|
IMPACT OF SALE |
|
REVISED |
|
|
|
|
|
|
|
|
|
|
($
in millions except earnings per share) |
FY19 ASC 605 Guidance |
|
FY19 ASC 605 Guidance |
|
FY19 ASC 605 Guidance |
GAAP Revenue |
$1,845.0 |
to |
$1,877.0 |
|
($8.0) |
|
$1,837.0 |
to |
$1,869.0 |
Non-GAAP Revenue |
$1,852.0 |
to |
$1,884.0 |
|
($8.0) |
|
$1,844.0 |
to |
$1,876.0 |
GAAP Diluted EPS |
$0.05 |
to |
$0.14 |
|
($0.01) |
|
$0.04 |
to |
$0.13 |
Non-GAAP Diluted
EPS |
$1.13 |
to |
$1.21 |
|
($0.01) |
|
$1.12 |
to |
$1.20 |
2019 Guidance Key Metrics
(ASC606)
|
PRIOR |
|
IMPACT OF SALE |
|
REVISED |
|
|
|
|
|
|
|
|
|
|
($
in millions except earnings per share) |
FY19 ASC 606 Guidance |
|
FY19 ASC 606 Guidance |
|
FY19 ASC 606 Guidance |
GAAP Revenue |
$1,792.0 |
to |
$1,844.0 |
|
($8.0) |
|
$1,784.0 |
to |
$1,836.0 |
Non-GAAP Revenue |
$1,797.0 |
to |
$1,849.0 |
|
($8.0) |
|
$1,789.0 |
to |
$1,841.0 |
GAAP Diluted EPS |
($0.13) |
to |
$0.06 |
|
($0.01) |
|
($0.14) |
to |
$0.05 |
Non-GAAP Diluted
EPS |
$0.99 |
to |
$1.14 |
|
($0.01) |
|
$0.98 |
to |
$1.13 |
2019 Segment Revenue Guidance
(ASC605)
|
PRIOR |
|
IMPACT OF SALE |
|
REVISED |
|
|
|
|
|
|
|
|
Current 2019 Segment Revenue Guidance (in $
millions) |
Low |
High |
|
|
|
Low |
High |
Healthcare |
$981.0 |
$995.0 |
|
- |
|
$981.0 |
$995.0 |
Enterprise |
$503.0 |
$511.0 |
|
- |
|
$503.0 |
$511.0 |
Automotive |
$306.0 |
$312.0 |
|
- |
|
$306.0 |
$312.0 |
Strategic |
$1,790.0 |
$1,818.0 |
|
- |
|
$1,790.0 |
$1,818.0 |
Organic Growth |
2% |
4% |
|
- |
|
2% |
4% |
Other * |
$62.0 |
$66.0 |
|
($8.0) |
|
$54.0 |
$58.0 |
Current Total
Nuance Guidance |
$1,852.0 |
$1,884.0 |
|
-$8.0 |
|
$1,844.0 |
$1,876.0 |
Organic Growth |
-1% |
1% |
|
- |
|
-1% |
1% |
Note: *SRS is included in Other, along
with Voicemail-to-Text and Devices.
Nuance Communications, Inc. |
Reconciliation of Supplemental Financial Information |
GAAP and non-GAAP Revenue and Net Income per Share Guidance |
(in thousands, except per share amounts) |
Unaudited |
|
|
|
|
|
Three months ended |
|
June 30, 2019 |
|
Low |
|
High |
|
|
|
|
GAAP
revenue |
$ |
447,000 |
|
|
$ |
461,000 |
|
Acquisition-related adjustment - revenue |
|
2,000 |
|
|
|
2,000 |
|
Non-GAAP
revenue |
$ |
449,000 |
|
|
$ |
463,000 |
|
|
|
|
|
|
|
|
|
GAAP net income per
share |
$ |
0.00 |
|
|
$ |
0.04 |
|
Acquisition-related adjustment - revenue |
|
0.01 |
|
|
|
0.01 |
|
Acquisition-related costs, net |
|
0.01 |
|
|
|
0.01 |
|
Cost of revenue from amortization of intangible assets |
|
0.03 |
|
|
|
0.03 |
|
Amortization of intangible assets |
|
0.06 |
|
|
|
0.06 |
|
Non-cash stock-based compensation |
|
0.13 |
|
|
|
0.13 |
|
Non-cash interest expense |
|
0.04 |
|
|
|
0.04 |
|
Adjustment to income tax expense |
|
(0.08 |
) |
|
|
(0.09 |
) |
Restructuring and other charges, net |
|
0.06 |
|
|
|
0.06 |
|
Other |
|
0.00 |
|
|
|
0.00 |
|
Non-GAAP net income
per share |
$ |
0.26 |
|
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
Shares used in computing GAAP
and non-GAAP net income per share: |
|
|
|
|
|
|
|
Weighted average common shares: basic |
|
287,000 |
|
|
|
287,000 |
|
Weighted average common shares: diluted |
|
290,000 |
|
|
|
290,000 |
|
|
Nuance Communications, Inc. |
|
Reconciliation of Supplemental Financial Information |
|
GAAP and non-GAAP Revenue and Net Income per Share Guidance |
|
(in thousands, except per share amounts) |
|
Unaudited |
|
|
|
|
|
|
|
ASC 605 |
|
ASC 606 |
|
|
Twelve months ended |
|
Twelve months ended |
|
|
September 30, 2019 |
|
September 30, 2019 |
|
|
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
GAAP
revenue |
$ |
1,837,000 |
|
|
$ |
1,869,000 |
|
|
$ |
1,784,000 |
|
|
$ |
1,836,000 |
|
|
Acquisition-related adjustment - revenue |
|
7,000 |
|
|
|
7,000 |
|
|
|
5,000 |
|
|
|
5,000 |
|
|
Non-GAAP
revenue |
$ |
1,844,000 |
|
|
$ |
1,876,000 |
|
|
$ |
1,789,000 |
|
|
$ |
1,841,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per
share |
$ |
0.04 |
|
|
$ |
0.13 |
|
|
$ |
(0.14 |
) |
|
$ |
0.05 |
|
|
Acquisition-related adjustment - revenue |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
Acquisition-related costs, net |
|
0.03 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
Cost of revenue from amortization of intangible assets |
|
0.13 |
|
|
|
0.13 |
|
|
|
0.13 |
|
|
|
0.13 |
|
|
Amortization of intangible assets |
|
0.23 |
|
|
|
0.23 |
|
|
|
0.23 |
|
|
|
0.23 |
|
|
Non-cash stock-based compensation |
|
0.49 |
|
|
|
0.49 |
|
|
|
0.49 |
|
|
|
0.49 |
|
|
Non-cash interest expense |
|
0.17 |
|
|
|
0.17 |
|
|
|
0.17 |
|
|
|
0.17 |
|
|
Adjustment to income tax expense |
|
(0.29 |
) |
|
|
(0.30 |
) |
|
|
(0.25 |
) |
|
|
(0.29 |
) |
|
Restructuring and other charges, net |
|
0.27 |
|
|
|
0.27 |
|
|
|
0.27 |
|
|
|
0.27 |
|
|
Other |
|
0.03 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
Non-GAAP net income
per share |
$ |
1.12 |
|
|
$ |
1.20 |
|
|
$ |
0.98 |
|
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing GAAP and non-GAAP net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares: basic |
|
287,000 |
|
|
|
287,000 |
|
|
|
287,000 |
|
|
|
287,000 |
|
|
Weighted average common shares: diluted |
|
291,000 |
|
|
|
291,000 |
|
|
|
291,000 |
|
|
|
291,000 |
|
|
|
About Nuance Communications, Inc.
Nuance Communications, Inc. (NASDAQ: NUAN) is the pioneer and
leader in conversational AI innovations that bring intelligence to
everyday work and life. The company delivers solutions that
understand, analyze and respond to human language to increase
productivity and amplify human intelligence. With decades of domain
and artificial intelligence expertise, Nuance works with thousands
of organizations – in global industries that include healthcare,
telecommunications, automotive, financial services, and retail – to
create stronger relationships and better experiences for their
customers and workforce. For more information, please visit
www.nuance.com.
Trademark reference: Nuance and the Nuance logo are registered
trademarks or trademarks of Nuance Communications, Inc. or its
affiliates in the United States and/or other countries. All other
trademarks referenced herein are the property of their respective
owners.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding future performance and our
management’s future expectations, beliefs, goals, plans or
prospects constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any
statements that are not statements of historical fact (including
statements containing the words “believes,” “plans,” “anticipates,”
“expects,” "intends" or “estimates” or similar expressions) should
also be considered to be forward-looking statements. There are a
number of important factors that could cause actual results or
events to differ materially from those indicated by such
forward-looking statements, including but not limited to: the
ability to effect the separation and spin-off of our Auto business;
our ability to successfully wind-down certain products or business
lines; fluctuations in demand for our existing and future products;
fluctuations in the mix of products and services sold in specific
periods; further unanticipated costs resulting from the FY17
malware incident including potential costs associated with
governmental investigations that may result from the incident; our
ability to control and successfully manage our expenses and cash
position; our ability to develop and execute in a timely manner our
productivity and cost initiatives; the effects of competition,
including pricing pressure, and changing business models in the
markets and industries we serve; changes to economic conditions in
the United States and internationally; the imposition of tariffs or
other trade measures particularly between the United States and
China; potential future impairment charges related to our
reorganized business reporting units; fluctuating currency rates;
possible quality issues in our products and technologies; our
ability to successfully integrate operations and employees of
acquired businesses; the ability to realize anticipated synergies
from acquired businesses; and to cut stranded costs related to
divested businesses; and the other factors described in our most
recent Form 10-K, Form 10-Q and other filings with the Securities
and Exchange Commission. We disclaim any obligation to update any
forward-looking statements as a result of developments occurring
after the date of this document.
Discussion of non-GAAP Financial Measures
We believe that providing the non-GAAP ("Generally Accepted
Accounting Principles") information to investors, in addition to
the GAAP presentation, allows investors to view the financial
results in the way management views the operating results. We
further believe that providing this information allows investors to
not only better understand our financial performance, but more
importantly, to evaluate the efficacy of the methodology and
information used by management to evaluate and measure such
performance. The non-GAAP information included in this press
release should not be considered superior to, or a substitute for,
financial statements prepared in accordance with GAAP.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
the business, for making operating decisions and for forecasting
and planning for future periods. Our annual financial plan is
prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual
financial plan is approved by our board of directors. Continuous
budgeting and forecasting for revenue and expenses are conducted on
a consistent non-GAAP basis (in addition to GAAP) and actual
results on a non-GAAP basis are assessed against the non-GAAP
annual financial plan. The board of directors and management
utilize these non-GAAP measures and results (in addition to the
GAAP results) to determine our allocation of resources. In
addition, and as a consequence of the importance of these measures
in managing the business, we use non-GAAP measures and results in
the evaluation process to establish management’s compensation. For
example, our annual bonus program payments are based upon the
achievement of consolidated non-GAAP revenue and consolidated
non-GAAP earnings per share financial targets. We consider the use
of non-GAAP revenue helpful in understanding the performance of our
business, as it excludes the purchase accounting impact on acquired
deferred revenue and other acquisition- related adjustments to
revenue. We also consider the use of non-GAAP earnings per share
helpful in assessing the organic performance of the continuing
operations of our business. By organic performance we mean
performance as if we had owned an acquired business in the same
period a year ago. By constant currency organic performance, we
mean performance excluding the effect of current foreign currency
rate fluctuations. By continuing operations, we mean the ongoing
results of the business excluding certain unplanned costs. While
our management uses these non-GAAP financial measures as a tool to
enhance their understanding of certain aspects of our financial
performance, our management does not consider these measures to be
a substitute for, or superior to, the information provided by GAAP
financial statements.
Consistent with this approach, we believe that disclosing
non-GAAP financial measures to the readers of our financial
statements provides such readers with useful supplemental data
that, while not a substitute for GAAP financial statements, allows
for greater transparency in the review of our financial and
operational performance.
Contact Information
For PressRichard MackNuance Communications,
Inc.Tel: 781-565-5000Email: richard.mack@nuance.com
For InvestorsTracy Krumme Nuance
Communications, Inc. Tel: 781-565-4334 Email:
tracy.krumme@nuance.com
Nuance Communications (NASDAQ:NUAN)
Historical Stock Chart
From Apr 2024 to May 2024
Nuance Communications (NASDAQ:NUAN)
Historical Stock Chart
From May 2023 to May 2024