Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its first quarter ended December 31, 2019.
Q1 2020 Performance Summary
- GAAP revenue of $418.2 million and GAAP earnings per diluted
share of $0.19.
- Non-GAAP revenue of $418.3 million and non-GAAP earnings per
diluted share of $0.27.
“We are very pleased with this strong start to our fiscal year,
as we exceeded both our revenue and EPS guidance and delivered
margins in line with our expectations,” said Mark Benjamin, Chief
Executive Officer at Nuance. “Our pivot to the cloud was
bolstered by strong Dragon Medical cloud growth and notable demand
from our new cloud solutions, including PowerScribe One and CDE
One. We delivered record revenue in our Enterprise business
and made important progress with international expansion, launching
Dragon Medical cloud in three new countries. Our performance thus
far this year enables us to re-affirm our full-year revenue and ARR
outlook, while raising our EPS guidance.”
He added, “We continue to focus on prudent capital allocation,
repurchasing 5.7 million shares of our common stock and paying down
$300 million in high yield bonds in the first quarter. We
also announced today the redemption of $47 million of high yield
debt as a further step to strengthen our capital structure, while
maintaining a strong cash balance.”
Q1 2020 Performance Summary
Q1 2020 results for continuing operations include:
- Revenue of $418.2 million, compared to $419.7 million in the
same period last year.
- Non-GAAP revenue of $418.3 million, compared to $420.0 million
in the same period last year.
- Organic revenue growth of 1% compared to the same period last
year.
- GAAP EPS of $0.19, compared to $0.05 in the same period last
year.
- Non-GAAP EPS of $0.27, compared to $0.27 in the same period
last year.
- GAAP net income of $54.9 million, compared to $13.9 million in
the same period last year.
- Non-GAAP net income of $78.6 million, compared to $78.5 million
in the same period last year.
- GAAP operating margin of 12.5%, compared to 11.1% in the same
period last year.
- Non-GAAP operating margin of 26.5%, compared to 28.5% in the
same period last year.
- Operating cash flows from continuing operations was $66.9
million, compared to $72.7 million in the same period last
year.
Capital AllocationIn the first quarter of 2020,
we repurchased approximately 5.7 million shares of common stock at
an average price of $16.24 and an additional 1.1 million shares
from January 1, 2020 through January 31, 2020. There is $316.9
million still available under our existing authorization for share
repurchases. We also paid down $300 million in high yield bonds and
today, announced plans to retire $47 million of convertible
debentures.
For a complete discussion of Nuance’s results and business
outlook, please see the Company’s Prepared Remarks document
available at http://www.nuance.com/earnings-results/.
Please refer to the “Discussion of Non-GAAP Financial Measures,”
and “GAAP to Non-GAAP Reconciliations,” included elsewhere in this
release, for more information regarding the Company’s use of
non-GAAP financial measures.
Conference Call and Prepared RemarksNuance will
host a conference call today at 5:00 p.m. ET. To participate,
please access the live webcast here, or dial (877) 273-6124 (US and
Canada) or (647) 689-5393 (international) and reference code
4753319.
Nuance will provide a copy of Prepared Remarks in combination
with its press release. These remarks are offered to provide
shareholders and analysts additional detail for analyzing the
results. The remarks will be available at
http://investors.nuance.com/ and will not be read on the
call.
About Nuance Communications, Inc.Nuance
Communications (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 people – amplifying human intelligence to
increase productivity and security. With decades of domain and AI
expertise, Nuance works with thousands of organizations globally
across healthcare, financial services, telecommunications,
government, 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
StatementsStatements 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 effects of competition, including pricing pressure,
and changing business models in the markets and industries in which
we operate; fluctuations in demand for our existing and future
products; changes to economic, political, and regulatory conditions
in the United States and internationally; our ability to attract
and retain key personnel; further unanticipated costs resulting
from our 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; potential future cybersecurity and data privacy
incidents or breaches; our ability to comply with applicable
domestic and international laws and policies; fluctuating currency
rates; possible quality issues in our products and technologies;
our ability to realize anticipated synergies from acquired
businesses, to cut stranded costs related to divested businesses,
and to capture the expected value from strategic transactions
including the spin-off of our Automotive business; 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 MeasuresWe
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 not only to 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. In assessing the overall health of the
business during the three ended December 31, 2019 and 2018, our
management has either included or excluded items in seven general
categories, each of which is described below.
Acquisition-related revenue and cost of
revenue.We provide supplementary non-GAAP financial
measures of revenue that include revenue that we would have
recognized but for the purchase accounting treatment of acquisition
transactions. Non-GAAP revenue also includes revenue that we would
have recognized had we not acquired intellectual property and other
assets from the same customer. Because GAAP accounting requires the
elimination of this revenue, GAAP results alone do not fully
capture all of our economic activities. These non-GAAP adjustments
are intended to reflect the full amount of such revenue. We include
non-GAAP revenue and cost of revenue to allow for more complete
comparisons to the financial results of historical operations,
forward-looking guidance and the financial results of peer
companies. We believe these adjustments are useful to management
and investors as a measure of the ongoing performance of the
business because, although we cannot be certain that customers will
renew their contracts, we have historically experienced high
renewal rates on maintenance and support agreements and other
customer contracts. Additionally, although acquisition-related
revenue adjustments are non-recurring with respect to past
acquisitions, we generally will incur these adjustments in
connection with any future acquisitions.
Acquisition-related costs, net.In recent years,
we have completed a number of acquisitions, which result in
operating expenses, which would not otherwise have been incurred.
We provide supplementary non-GAAP financial measures, which exclude
certain transition, integration and other acquisition-related
expense items resulting from acquisitions, to allow more accurate
comparisons of the financial results to historical operations,
forward looking guidance and the financial results of less
acquisitive peer companies. We consider these types of costs and
adjustments, to a great extent, to be unpredictable and dependent
on a significant number of factors that are outside of our control.
Furthermore, we do not consider these acquisition-related costs and
adjustments to be related to the organic continuing operations of
the acquired businesses and are generally not relevant to assessing
or estimating the long-term performance of the acquired assets. In
addition, the size, complexity and/or volume of past acquisitions,
which often drives the magnitude of acquisition related costs, may
not be indicative of the size, complexity and/or volume of future
acquisitions. By excluding acquisition-related costs and
adjustments from our non-GAAP measures, management is better able
to evaluate our ability to utilize our existing assets and estimate
the long-term value that acquired assets will generate for us. We
believe that providing a supplemental non-GAAP measure, which
excludes these items allows management and investors to consider
the ongoing operations of the business both with, and without, such
expenses.
These acquisition-related costs fall into the following
categories: (i) transition and integration costs; (ii) professional
service fees and expenses; and (iii) acquisition-related
adjustments. Although these expenses are not recurring with respect
to past acquisitions, we generally will incur these expenses in
connection with any future acquisitions. These categories are
further discussed as follows:
|
(i) |
Transition and integration costs. Transition and integration costs
include retention payments, transitional employee costs, and
earn-out payments treated as compensation expense, as well as the
costs of integration-related activities, including services
provided by third parties. |
|
(ii) |
Professional service fees and expenses. Professional service fees
and expenses include financial advisory, legal, accounting and
other outside services incurred in connection with acquisition
activities, and disputes and regulatory matters related to acquired
entities. |
|
(iii) |
Acquisition-related adjustments. Acquisition-related adjustments
include adjustments to acquisition-related items that are required
to be marked to fair value each reporting period, such as
contingent consideration, and other items related to acquisitions
for which the measurement period has ended, such as gains or losses
on settlements of pre-acquisition contingencies. |
|
|
|
Amortization of acquired intangible assets.We
exclude the amortization of acquired intangible assets from
non-GAAP expense and income measures. These amounts are
inconsistent in amount and frequency and are significantly impacted
by the timing and size of acquisitions. Providing a supplemental
measure which excludes these charges allows management and
investors to evaluate results “as-if” the acquired intangible
assets had been developed internally rather than acquired and,
therefore, provides a supplemental measure of performance in which
our acquired intellectual property is treated in a comparable
manner to our internally developed intellectual property. Although
we exclude amortization of acquired intangible assets from our
non-GAAP expenses, we believe that it is important for investors to
understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past
acquisitions will recur in future periods until such intangible
assets have been fully amortized. Future acquisitions may result in
the amortization of additional intangible assets.
Non-cash expenses.
We provide non-GAAP information relative to the
following non-cash expenses: (i) stock-based compensation; and (ii)
non-cash interest. These items are further discussed as
follows:
|
(i) |
Stock-based compensation. Because of varying valuation
methodologies, subjective assumptions and the variety of award
types, we believe that excluding stock-based compensation allows
for more accurate comparisons of operating results to peer
companies, as well as to times in our history when stock-based
compensation was more or less significant as a portion of overall
compensation than in the current period. We evaluate performance
both with and without these measures because compensation expense
related to stock-based compensation is typically non-cash and the
options and restricted awards granted are influenced by the
Company’s stock price and other factors such as volatility that are
beyond our control. The expense related to stock-based awards is
generally not controllable in the short-term and can vary
significantly based on the timing, size and nature of awards
granted. As such, we do not include such charges in operating
plans. Stock-based compensation will continue in future
periods. |
|
(ii) |
Non-cash interest. We exclude non-cash interest because we believe
that excluding this expense provides senior management, as well as
other users of the financial statements, with a valuable
perspective on the cash-based performance and health of the
business, including the current near-term projected liquidity.
Non-cash interest expense will continue in future periods. |
|
|
|
Other expenses.We exclude certain other
expenses that result from unplanned events outside the ordinary
course of continuing operations, in order to measure operating
performance and current and future liquidity both with and without
these expenses. By providing this information, we believe
management and the users of the financial statements are better
able to understand the financial results of what we consider to be
our organic, continuing operations. Included in these expenses are
items such as restructuring charges, asset impairments and other
charges (credits), net, and losses from extinguishing our
convertible debt. Other items such as consulting and professional
services fees related to assessing strategic alternatives and our
transformation programs, implementation of the new revenue
recognition standard (ASC 606), and expenses associated with the
malware incident and remediation thereof are also excluded.
Non-GAAP income tax provision.Our non-GAAP
income tax provision is determined based on our non-GAAP pre-tax
income. The tax effect of each non-GAAP adjustment, if applicable,
is computed based on the statutory tax rate of the jurisdiction to
which the adjustment relates. Additionally, as our non-GAAP
profitability is higher based on the non-GAAP adjustments, we
adjust the GAAP tax provision to remove valuation allowances and
related effects based on the higher level of reported non-GAAP
profitability. We also exclude from our non-GAAP tax provision
certain discrete tax items as they occur.
Contact Information
For Investors Tracy Krumme Nuance
Communications, Inc. Tel: 781-565-4334 Email:
tracy.krumme@nuance.com
For PressNancy ScottNuance Communications,
Inc.Tel: 781-565-4130Email: nancy.scott@nuance.com
Financial Tables Follow
|
Nuance Communications, Inc. |
Condensed Consolidated Statements of Operations |
(in thousands, except per share amounts) |
Unaudited |
|
|
|
|
|
Three Months Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
Revenues: |
|
|
|
Hosting and professional services |
$ |
230,477 |
|
|
$ |
227,717 |
|
Product and licensing |
|
125,180 |
|
|
|
115,889 |
|
Maintenance and support |
|
62,576 |
|
|
|
76,069 |
|
Total revenues |
|
418,233 |
|
|
|
419,675 |
|
|
|
|
|
Cost of revenues: |
|
|
|
Hosting and professional services |
|
135,790 |
|
|
|
136,598 |
|
Product and licensing |
|
34,178 |
|
|
|
32,405 |
|
Maintenance and support |
|
7,794 |
|
|
|
7,761 |
|
Amortization of intangible assets |
|
6,627 |
|
|
|
7,356 |
|
Total cost of revenues |
|
184,389 |
|
|
|
184,120 |
|
|
|
|
|
Gross profit |
|
233,844 |
|
|
|
235,555 |
|
|
|
|
|
Operating expenses: |
|
|
|
Research and development |
|
56,553 |
|
|
|
46,866 |
|
Sales and marketing |
|
66,472 |
|
|
|
67,370 |
|
General and administrative |
|
38,314 |
|
|
|
43,466 |
|
Amortization of intangible assets |
|
12,549 |
|
|
|
13,842 |
|
Acquisition-related costs, net |
|
1,167 |
|
|
|
2,601 |
|
Restructuring and other charges, net |
|
6,683 |
|
|
|
14,641 |
|
Total operating expenses |
|
181,738 |
|
|
|
188,786 |
|
|
|
|
|
Income from operations |
|
52,106 |
|
|
|
46,769 |
|
|
|
|
|
Other expenses, net |
|
(33,669 |
) |
|
|
(30,888 |
) |
|
|
|
|
Income before income taxes |
|
18,437 |
|
|
|
15,881 |
|
|
|
|
|
(Benefit) provision for income taxes |
|
(36,440 |
) |
|
|
2,000 |
|
|
|
|
|
Net income from continuing operations |
|
54,877 |
|
|
|
13,881 |
|
Net (loss) income from discontinued operations |
|
(6,192 |
) |
|
|
5,209 |
|
Net income |
$ |
48,685 |
|
|
$ |
19,090 |
|
|
|
|
|
Net income (loss) per common share - basic: |
|
|
|
Continuing operations |
$ |
0.19 |
|
|
$ |
0.05 |
|
Discontinued operations |
|
(0.02 |
) |
|
|
0.02 |
|
Total net income per basic common share |
$ |
0.17 |
|
|
$ |
0.07 |
|
|
|
|
|
Net income (loss) per common share - diluted: |
|
|
|
Continuing operations |
$ |
0.19 |
|
|
$ |
0.05 |
|
Discontinued operations |
|
(0.02 |
) |
|
$ |
0.02 |
|
Total net income per diluted common share |
$ |
0.17 |
|
|
$ |
0.07 |
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
Basic |
|
284,130 |
|
|
|
287,796 |
|
Diluted |
|
289,453 |
|
|
|
292,359 |
|
|
|
|
|
|
Nuance Communications, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
December 31, 2019 |
|
September 30, 2019 |
ASSETS |
Unaudited |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
301,458 |
|
$ |
560,961 |
Marketable securities |
|
201,304 |
|
|
186,555 |
Accounts receivable, net |
|
262,411 |
|
|
240,673 |
Prepaid expenses and other current assets |
|
145,062 |
|
|
175,166 |
Current assets of discontinued operations |
|
- |
|
|
91,858 |
Total current assets |
|
910,235 |
|
|
1,255,213 |
|
|
|
|
Marketable securities |
|
7,272 |
|
|
17,287 |
Land, building and equipment, net |
|
125,163 |
|
|
121,203 |
Goodwill |
|
2,132,249 |
|
|
2,127,896 |
Intangible assets, net |
|
272,859 |
|
|
291,371 |
Right-of-use assets |
|
112,167 |
|
|
- |
Other assets |
|
225,792 |
|
|
316,215 |
Long-term assets of discontinued operations |
|
- |
|
|
1,236,608 |
Total assets |
$ |
3,785,737 |
|
$ |
5,365,793 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of long-term debt |
$ |
- |
|
$ |
1,142,870 |
Contingent and deferred acquisition payments |
|
18,719 |
|
|
17,470 |
Accounts payable |
|
86,331 |
|
|
90,826 |
Accrued expenses and other current liabilities |
|
186,328 |
|
|
249,570 |
Deferred revenue |
|
242,877 |
|
|
214,223 |
Current liabilities of discontinued operations |
|
- |
|
|
130,117 |
Total current liabilities |
|
534,255 |
|
|
1,845,076 |
|
|
|
|
Long-term debt |
|
1,650,650 |
|
|
793,536 |
Deferred revenue, net of current portion |
|
131,032 |
|
|
133,783 |
Deferred tax liability |
|
62,885 |
|
|
54,216 |
Operating lease liabilities |
|
97,973 |
|
|
- |
Other liabilities |
|
68,423 |
|
|
79,378 |
Long-term liabilities of discontinued operations |
|
- |
|
|
286,654 |
Total liabilities |
|
2,545,218 |
|
|
3,192,643 |
|
|
|
|
Stockholders' equity |
|
1,240,519 |
|
|
2,173,150 |
Total liabilities and stockholders' equity |
$ |
3,785,737 |
|
$ |
5,365,793 |
|
|
|
|
|
Nuance Communications, Inc. |
Consolidated Statements of Cash Flows |
(in thousands) |
Unaudited |
|
|
Three Months Ended |
|
December 31, |
|
|
2019 |
|
|
|
2018 |
|
Cash flows from operating activities: |
|
|
|
Net income from continuing operations |
$ |
54,877 |
|
|
$ |
13,881 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
10,183 |
|
|
|
13,679 |
|
Amortization |
|
19,176 |
|
|
|
21,198 |
|
Stock-based compensation |
|
31,233 |
|
|
|
29,497 |
|
Non-cash interest expense |
|
12,744 |
|
|
|
12,298 |
|
Deferred tax (benefit) |
|
(40,288 |
) |
|
|
(2,089 |
) |
Loss on extinguishment of debt |
|
15,000 |
|
|
|
- |
|
Other |
|
(749 |
) |
|
|
312 |
|
Changes in operating assets and liabilities, excluding effects of
acquisitions: |
|
|
|
Accounts receivable |
|
(19,242 |
) |
|
|
(15,254 |
) |
Prepaid expenses and other assets |
|
30,118 |
|
|
|
(25,926 |
) |
Accounts payable |
|
(1,346 |
) |
|
|
12,503 |
|
Accrued expenses and other liabilities |
|
(71,741 |
) |
|
|
(19,317 |
) |
Deferred revenue |
|
26,895 |
|
|
|
31,881 |
|
Net cash provided by operating activities - continuing
operations |
|
66,860 |
|
|
|
72,663 |
|
Net cash (used in) provided by operating activities - discontinued
operations |
|
(13,307 |
) |
|
|
27,228 |
|
Net cash provided by operating activities |
|
53,553 |
|
|
|
99,891 |
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
|
(14,204 |
) |
|
|
(12,220 |
) |
Net contribution from Cerence upon the spin-off |
|
139,090 |
|
|
|
- |
|
Purchases of marketable securities and other investments |
|
(86,699 |
) |
|
|
(47,502 |
) |
Proceeds from sales and maturities of marketable securities and
other investments |
|
82,588 |
|
|
|
45,678 |
|
Other |
|
1,272 |
|
|
|
(1,447 |
) |
Net cash provided by (used in) investing activities |
|
122,047 |
|
|
|
(15,491 |
) |
Cash flows from financing activities: |
|
|
|
Repayment and redemption of debt |
|
(313,500 |
) |
|
|
- |
|
Payments for repurchase of common stock |
|
(92,444 |
) |
|
|
(75,156 |
) |
Payments for taxes related to net share settlement of equity
awards |
|
(29,958 |
) |
|
|
(31,651 |
) |
Other financing activities |
|
(725 |
) |
|
|
(696 |
) |
Net cash used in financing activities |
|
(436,627 |
) |
|
|
(107,503 |
) |
Effects of exchange rate changes on cash and cash equivalents |
|
1,524 |
|
|
|
391 |
|
Net decrease in cash and cash equivalents |
|
(259,503 |
) |
|
|
(22,712 |
) |
Cash and cash equivalents at beginning of period |
|
560,961 |
|
|
|
315,963 |
|
Cash and cash equivalents at end of period |
$ |
301,458 |
|
|
$ |
293,251 |
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations |
(in thousands) |
Unaudited |
|
|
|
Three Months Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
GAAP revenues |
$ |
418,233 |
|
|
$ |
419,675 |
|
Acquisition-related revenue adjustments: professional services and
hosting |
|
89 |
|
|
|
141 |
|
Acquisition-related revenue adjustments: product and licensing |
|
- |
|
|
|
47 |
|
Acquisition-related revenue adjustments: maintenance and
support |
|
- |
|
|
|
165 |
|
Non-GAAP revenues |
$ |
418,322 |
|
|
$ |
420,028 |
|
|
|
|
|
GAAP cost of revenues |
$ |
184,389 |
|
|
$ |
184,120 |
|
Cost of revenues from amortization of intangible assets |
|
(6,627 |
) |
|
|
(7,356 |
) |
Cost of revenues adjustments: hosting and professional services
(1) |
|
(5,541 |
) |
|
|
(6,957 |
) |
Cost of revenues adjustments: product and licensing (1) |
|
(129 |
) |
|
|
(264 |
) |
Cost of revenues adjustments: maintenance and support (1) |
|
(393 |
) |
|
|
234 |
|
Cost of revenues adjustments: Other |
|
(66 |
) |
|
|
(436 |
) |
Non-GAAP cost of revenues |
$ |
171,633 |
|
|
$ |
169,341 |
|
|
|
|
|
GAAP gross profit |
$ |
233,844 |
|
|
$ |
235,555 |
|
Gross profit adjustments |
|
12,845 |
|
|
|
15,132 |
|
Non-GAAP gross profit |
$ |
246,689 |
|
|
$ |
250,687 |
|
|
|
|
|
GAAP income from operations |
$ |
52,106 |
|
|
$ |
46,769 |
|
Gross profit adjustments |
|
12,845 |
|
|
|
15,132 |
|
Research and development (1) |
|
8,704 |
|
|
|
5,376 |
|
Sales and marketing (1) |
|
7,028 |
|
|
|
8,252 |
|
General and administrative (1) |
|
9,438 |
|
|
|
8,882 |
|
Acquisition-related costs, net |
|
1,167 |
|
|
|
2,601 |
|
Amortization of intangible assets |
|
12,549 |
|
|
|
13,842 |
|
Restructuring and other charges, net |
|
6,683 |
|
|
|
14,641 |
|
Other |
|
192 |
|
|
|
4,278 |
|
Non-GAAP income from operations |
$ |
110,712 |
|
|
$ |
119,773 |
|
|
|
|
|
GAAP income before income taxes |
$ |
18,437 |
|
|
$ |
15,881 |
|
Gross profit adjustments |
|
12,845 |
|
|
|
15,132 |
|
Research and development (1) |
|
8,704 |
|
|
|
5,376 |
|
Sales and marketing (1) |
|
7,028 |
|
|
|
8,252 |
|
General and administrative (1) |
|
9,438 |
|
|
|
8,882 |
|
Acquisition-related costs, net |
|
1,167 |
|
|
|
2,601 |
|
Amortization of intangible assets |
|
12,549 |
|
|
|
13,842 |
|
Restructuring and other charges, net |
|
6,683 |
|
|
|
14,641 |
|
Non-cash interest expense |
|
12,744 |
|
|
|
12,298 |
|
Loss on extinguishment of debt |
|
15,000 |
|
|
|
- |
|
Other |
|
(304 |
) |
|
|
4,696 |
|
Non-GAAP income before income taxes |
$ |
104,291 |
|
|
$ |
101,601 |
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations, continued |
(in thousands, except per share amounts) |
Unaudited |
|
|
|
Three Months Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
GAAP (benefit) provision for income taxes |
$ |
(36,440 |
) |
|
$ |
2,000 |
|
Income tax effect of Non-GAAP adjustments |
|
20,672 |
|
|
|
25,820 |
|
Removal of valuation allowance and other items |
|
41,502 |
|
|
|
(5,983 |
) |
Removal of discrete items |
|
- |
|
|
|
1,253 |
|
Non-GAAP provision for income taxes |
$ |
25,734 |
|
|
$ |
23,090 |
|
|
|
|
|
GAAP net income from continuing operations |
$ |
54,877 |
|
|
$ |
13,881 |
|
Acquisition-related adjustment - revenues (2) |
|
89 |
|
|
|
353 |
|
Acquisition-related costs, net |
|
1,167 |
|
|
|
2,601 |
|
Cost of revenue from amortization of intangible assets |
|
6,627 |
|
|
|
7,356 |
|
Amortization of intangible assets |
|
12,549 |
|
|
|
13,842 |
|
Restructuring and other charges, net |
|
6,683 |
|
|
|
14,641 |
|
Stock-based compensation (1) |
|
31,233 |
|
|
|
29,497 |
|
Non-cash interest expense |
|
12,744 |
|
|
|
12,298 |
|
Loss on extinguishment of debt |
|
15,000 |
|
|
|
- |
|
Adjustment to income tax expense |
|
(62,174 |
) |
|
|
(21,090 |
) |
Other |
|
(238 |
) |
|
|
5,132 |
|
Non-GAAP net income |
$ |
78,557 |
|
|
$ |
78,511 |
|
|
|
|
|
Non-GAAP diluted net income per share |
$ |
0.27 |
|
|
$ |
0.27 |
|
|
|
|
|
Diluted weighted average common shares
outstanding |
|
289,453 |
|
|
|
292,359 |
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations, continued |
(in thousands) |
Unaudited |
|
|
|
|
|
Three Months Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
(1) Stock-based compensation |
|
|
|
Cost of hosting and professional services |
$ |
5,541 |
|
|
$ |
6,957 |
|
Cost of product and licensing |
|
129 |
|
|
|
264 |
|
Cost of maintenance and support |
|
393 |
|
|
|
(234 |
) |
Research and development |
|
8,704 |
|
|
|
5,376 |
|
Sales and marketing |
|
7,028 |
|
|
|
8,252 |
|
General and administrative |
|
9,438 |
|
|
|
8,882 |
|
Total |
$ |
31,233 |
|
|
$ |
29,497 |
|
|
|
|
|
(2) Acquisition-related revenue |
|
|
|
Acquisition related revenue adjustments |
$ |
89 |
|
|
$ |
353 |
|
Total |
$ |
89 |
|
|
$ |
353 |
|
|
|
|
|
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