Nuance Communications, Inc. (NASDAQ:NUAN) today announced financial
results for its first quarter fiscal 2018, ended December 31, 2017.
“Three years ago, we undertook a plan to transform our business
and today, with our first quarter results, we reached a milestone
of returning to organic growth,” said Dan Tempesta, Nuance’s chief
financial officer. “This progress is the result of multiple
initiatives designed to drive efficiencies in the business and to
reinvest in innovation, sales, channels and services to fuel our
growth. This success motivates our confidence in the business and
the ability to raise our 2018 organic growth targets to 3% to
5%.”
The Company continues to capture new customers and to expand its
business with existing customers, with net new bookings in the
first quarter 2018 of $418.4 million, up 10% over the prior year,
led by strong performance in the Automotive business, as well as
the Enterprise division.
During the quarter, Nuance demonstrated significant progress in
the business with intensifying focus and investment in key vertical
industries, including:
- Driving continued, significant adoption of Dragon Medical cloud
as a platform in healthcare;
- Ongoing growth and adoption for our omni-channel and security
portfolio, especially concentrated in financial services and
telecommunications;
- Introducing our new Dragon Drive automotive platform; and,
- Partnering with NVIDIA on the Nuance AI Marketplace for
Diagnostic Imaging.
First Quarter of Fiscal 2018 Performance
Highlights
On a GAAP basis:
- GAAP revenue of $501.6 million, up 2.9% compared to $487.7
million a year ago.
- Total recurring revenue of 71% of total GAAP revenue, compared
to 72% a year ago.
- GAAP net income of $53.2 million, or $0.18 per diluted share,
compared to GAAP net loss of $(23.9) million, or $(0.08) per share,
in the first quarter of fiscal 2017.
- GAAP operating margin of 1.8%, down from 4.9% in the first
quarter of fiscal 2017.
- Cash flow from operations of $86.1 million in the first quarter
of fiscal 2018, down 31% from $124.9 million in the first quarter
of fiscal 2017.
On a Non-GAAP basis:
- Non‑GAAP revenue of $508.8 million, up 2.6% as reported,
compared to $496.0 million in the first quarter of fiscal 2017, and
up 1% on an organic basis.
- Net new bookings of $418.4 million, up 10% from $380.3 million
a year ago.
- Non-GAAP recurring revenue of 71% of total non-GAAP revenue,
compared to 73% a year ago.
- Non-GAAP net income of $80.7 million, or $0.27 per diluted
share, up from non-GAAP net income of $76.9 million, or $0.26 per
diluted share, in the first quarter of fiscal 2017.
- Non‑GAAP operating margin of 24.5%, down from 26.9% in the
first quarter of fiscal 2017.
Guidance and Business OutlookCurrent momentum
in the business and strong market demand and pipeline, provide
Nuance with confidence in its second quarter and FY 18 outlook. The
Company expects to deliver annual net new bookings growth of
between 5% to 7%, and is raising its guidance for organic revenue
growth in fiscal year 2018 to be in the range 3% to 5%, up from 2%
to 4% previously.
For a complete discussion on Nuance’s guidance 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.
Conference Call and Prepared RemarksNuance is
providing a copy of prepared remarks in combination with its press
release. These remarks are offered to provide shareholders and
analysts with additional time and detail for analyzing results in
advance of the company’s quarterly conference call. The
remarks will be available at
http://www.nuance.com/earnings-results/ in conjunction with the
press release.
Nuance will host an investor conference call today that will
begin at 5:00 p.m. ET and will include only brief comments followed
by questions and answers. To access the live broadcast, please
visit the Investor Relations section of Nuance’s website at
http://investors.nuance.com. The call can also be heard by
dialing 800-230-1059 or 612-234-9959 at least five minutes prior to
the call and referencing code 442359. A replay will be
available within 24 hours of the announcement by dialing
800-475-6701 or 320-365-3844 and using the access code 442359.
About Nuance Communications,
Inc.Nuance Communications, Inc. (NASDAQ:NUAN) is
a leading provider of voice and language solutions for businesses
and consumers around the world. Its technologies,
applications and services make the user experience more compelling
by transforming the way people interact with devices and systems.
Every day, millions of users and thousands of businesses experience
Nuance’s proven applications. 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,” 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:
fluctuations in demand for our existing and future products;
further unanticipated costs resulting from the FY17 malware
incident including potential costs associated with litigation or
governmental investigations that may result from the incident;
inaccuracies in the assumptions underlying our estimates of lost
revenue attributable to the malware incident; changes to economic
conditions in the United States and internationally; fluctuating
currency rates; our ability to control and successfully manage our
expenses and cash position; our ability to execute our formal
transformation program to reduce costs and optimize processes; the
effects of competition, including pricing pressure; possible
quality issues in our products and technologies; our ability to
successfully integrate operations and employees of acquired
businesses; the conversion rate of bookings into revenue; the
ability to realize anticipated synergies from acquired businesses;
and the other factors described in our annual report on Form 10-K
for the fiscal year ended September 30, 2017. We disclaim any
obligation to update any forward-looking statements as a result of
developments occurring after the date of this document.
Definitions of Bookings and Net New
BookingsBookings. Bookings represent the
estimated gross revenue value of transactions at the time of
contract execution, except for maintenance and support offerings.
For fixed price contracts, the bookings value represents the gross
total contract value. For contracts where revenue is based on
transaction volume, the bookings value represents the contract
price multiplied by the estimated future transaction volume during
the contract term, whether or not such transaction volumes are
guaranteed under a minimum commitment clause. Actual results could
be different than our initial estimates. The maintenance and
support bookings value represents the amounts billed in the period
the customer is invoiced. Because of the inherent estimates
required to determine bookings and the fact that the actual
resultant revenue may differ from our initial bookings estimates,
we consider bookings one indicator of potential future revenue and
not as an arithmetic measure of backlog.
Net new bookings. Net new bookings represents the estimated
revenue value at the time of contract execution from new
contractual arrangements or the estimated revenue value incremental
to the portion of value that will be renewed under pre-existing
arrangements. Constant currency for net new bookings is
calculated using current period net new bookings denominated in
currencies other than United States dollars, converted into United
States dollars using the average exchange rate for those currencies
from the prior year period rather than the actual exchange rate in
effect during the current period.
Discussion of Non-GAAP Financial Measures We
utilize a number of different financial measures, both Generally
Accepted Accounting Principles (“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 months ended December 31, 2017 and 2016,
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, which include
revenue related to acquisitions, primarily from TouchCommerce, NSI,
Primordial, and Tweddle for the three months ended December 31,
2017 that we would have recognized but for the purchase accounting
treatment of these 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 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. These events are unplanned and arise
outside of the ordinary course of continuing operations. These
items include losses from extinguishing our convertible debt.
Other items such as consulting and professional services fees
related to assessing strategic alternatives and our transformation
program, 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.Effective Q2 2017, we changed our
method of calculating our non-GAAP income tax provision. Under the
prior method, we calculated our non-GAAP tax provision using a cash
tax method to reflect the estimated amount we expected to pay or
receive in taxes related to the period, which is equivalent to our
GAAP current tax provision. Under the new method, 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, which in fiscal
year 2018 also includes certain impacts from the Tax Cut and Jobs
Act of 2017.
We believe that providing the non-GAAP 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.
Contact Information
For Investors/MediaRichard MackNuance
Communications, Inc. Tel: 781-565-5000 Email:
richard.mack@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, |
|
|
2017 |
|
2016 |
|
|
|
|
|
Revenues: |
|
|
|
|
Professional services and hosting |
|
$ |
259,027 |
|
|
$ |
253,417 |
|
Product
and licensing |
|
|
161,810 |
|
|
|
151,752 |
|
Maintenance and support |
|
|
80,808 |
|
|
|
82,489 |
|
Total
revenues |
|
|
501,645 |
|
|
|
487,658 |
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
Professional services and hosting |
|
|
172,528 |
|
|
|
164,892 |
|
Product
and licensing |
|
|
19,069 |
|
|
|
18,378 |
|
Maintenance and support |
|
|
14,241 |
|
|
|
13,598 |
|
Amortization of intangible assets |
|
|
15,356 |
|
|
|
15,542 |
|
Total
cost of revenues |
|
|
221,194 |
|
|
|
212,410 |
|
|
|
|
|
|
Gross
profit |
|
|
280,451 |
|
|
|
275,248 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
Research
and development |
|
|
73,366 |
|
|
|
66,322 |
|
Sales and
marketing |
|
|
101,960 |
|
|
|
101,516 |
|
General
and administrative |
|
|
52,892 |
|
|
|
39,790 |
|
Amortization of intangible assets |
|
|
23,064 |
|
|
|
27,859 |
|
Acquisition-related costs, net |
|
|
5,561 |
|
|
|
9,026 |
|
Restructuring and other charges, net |
|
|
14,801 |
|
|
|
6,703 |
|
Total
operating expenses |
|
|
271,644 |
|
|
|
251,216 |
|
|
|
|
|
|
Income from
operations |
|
|
8,807 |
|
|
|
24,032 |
|
|
|
|
|
|
Other expenses,
net |
|
|
(34,100 |
) |
|
|
(37,608 |
) |
|
|
|
|
|
Loss before income
taxes |
|
|
(25,293 |
) |
|
|
(13,576 |
) |
|
|
|
|
|
(Benefit) provision for
income taxes |
|
|
(78,521 |
) |
|
|
10,353 |
|
|
|
|
|
|
Net income (loss) |
|
$ |
53,228 |
|
|
$ |
(23,929 |
) |
|
|
|
|
|
Net income
(loss) per share: |
|
|
|
|
Basic |
|
$ |
0.18 |
|
|
$ |
(0.08 |
) |
Diluted |
|
$ |
0.18 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
Basic |
|
|
291,367 |
|
|
|
288,953 |
|
Diluted |
|
|
295,995 |
|
|
|
288,953 |
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
December 31, 2017 |
|
September 30, 2017 |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
398,461 |
|
$ |
592,299 |
|
Marketable
securities |
|
|
112,044 |
|
|
251,981 |
|
Accounts receivable,
net |
|
|
432,552 |
|
|
395,392 |
|
Prepaid expenses and
other current assets |
|
|
105,411 |
|
|
88,269 |
|
Total
current assets |
|
|
1,048,468 |
|
|
1,327,941 |
|
|
|
|
|
|
Marketable
securities |
|
|
42,115 |
|
|
29,844 |
Land,
building and equipment, net |
|
|
172,748 |
|
|
176,548 |
Goodwill |
|
|
3,600,768 |
|
|
3,590,608 |
Intangible
assets, net |
|
|
627,556 |
|
|
664,474 |
Other
assets |
|
|
145,902 |
|
|
142,508 |
|
Total
assets |
|
$ |
5,637,557 |
|
$ |
5,931,923 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current portion of
long-term debt |
|
$ |
- |
|
$ |
376,121 |
|
Contingent and deferred
acquisition payments |
|
|
15,506 |
|
|
28,860 |
|
Accounts
payable, accrued expenses and other current liabilities |
|
276,080 |
|
|
340,505 |
|
Deferred revenue |
|
|
427,541 |
|
|
366,042 |
|
Total
current liabilities |
|
|
719,127 |
|
|
1,111,528 |
|
|
|
|
|
|
Long-term
debt |
|
|
2,299,594 |
|
|
2,241,283 |
Deferred
revenue, net of current portion |
|
|
453,106 |
|
|
423,929 |
Other
liabilities |
|
|
140,599 |
|
|
223,801 |
|
Total
liabilities |
|
|
3,612,426 |
|
|
4,000,541 |
|
|
|
|
|
|
Stockholders' equity |
|
|
2,025,131 |
|
|
1,931,382 |
|
Total
liabilities and stockholders' equity |
|
$ |
5,637,557 |
|
$ |
5,931,923 |
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Consolidated Statements of Cash Flows |
(in thousands) |
Unaudited |
|
|
Three months ended |
|
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
Net
income (loss) |
|
$ |
53,228 |
|
|
$ |
(23,929 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
54,315 |
|
|
|
58,006 |
|
Stock-based compensation |
|
|
37,986 |
|
|
|
39,130 |
|
Non-cash
interest expense |
|
|
13,341 |
|
|
|
13,039 |
|
Deferred
tax (benefit) provision |
|
|
(97,226 |
) |
|
|
2,006 |
|
Other |
|
|
631 |
|
|
|
1,856 |
|
Changes
in operating assets and liabilities, excluding effects of
acquisitions: |
|
|
|
|
Accounts
receivable |
|
|
(36,340 |
) |
|
|
(9,713 |
) |
Prepaid
expenses and other assets |
|
|
(18,972 |
) |
|
|
(15,999 |
) |
Accounts
payable |
|
|
(11,856 |
) |
|
|
(21,244 |
) |
Accrued
expenses and other liabilities |
|
|
3,099 |
|
|
|
5,841 |
|
Deferred
revenue |
|
|
87,899 |
|
|
|
75,907 |
|
Net cash
provided by operating activities |
|
|
86,105 |
|
|
|
124,900 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital
expenditures |
|
|
(12,543 |
) |
|
|
(11,399 |
) |
Payments
for business and asset acquisitions, net of cash acquired |
|
|
(8,648 |
) |
|
|
(22,949 |
) |
Purchases of marketable securities and other investments |
|
|
(32,447 |
) |
|
|
(72,797 |
) |
Proceeds
from sales and maturities of marketable securities and other
investments |
|
|
159,805 |
|
|
|
10,105 |
|
Net cash
provided by (used in) investing activities |
|
|
106,167 |
|
|
|
(97,040 |
) |
Cash flows from
financing activities: |
|
|
|
|
Payments
and redemption of debt |
|
|
(331,172 |
) |
|
|
- |
|
Proceeds
from issuance of long-term debt, net of issuance costs |
|
|
- |
|
|
|
495,000 |
|
Acquisition payments with extended payment terms |
|
|
(16,880 |
) |
|
|
- |
|
Net
payments on other long-term liabilities |
|
|
(65 |
) |
|
|
(87 |
) |
Proceeds
from issuance of common stock from employee stock plans |
|
|
6 |
|
|
|
45 |
|
Cash
used to net share settle employee equity awards |
|
|
(38,617 |
) |
|
|
(40,360 |
) |
Net cash
(used in) provided by financing activities |
|
|
(386,728 |
) |
|
|
454,598 |
|
Effects
of exchange rate changes on cash and cash equivalents |
|
|
618 |
|
|
|
(2,471 |
) |
Net
(decrease) increase in cash and cash equivalents |
|
|
(193,838 |
) |
|
|
479,987 |
|
Cash and
cash equivalents at beginning of period |
|
|
592,299 |
|
|
|
481,620 |
|
Cash and
cash equivalents at end of period |
|
$ |
398,461 |
|
|
$ |
961,607 |
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations |
(in thousands) |
Unaudited |
|
|
Three months ended |
|
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
GAAP
revenues |
|
$ |
501,645 |
|
|
$ |
487,658 |
|
Acquisition-related revenue adjustments: professional services and
hosting |
|
|
1,275 |
|
|
|
2,434 |
|
Acquisition-related revenue adjustments: product and licensing |
|
|
5,848 |
|
|
|
5,716 |
|
Acquisition-related revenue adjustments: maintenance and
support |
|
|
57 |
|
|
|
211 |
|
Non-GAAP
revenues |
|
$ |
508,825 |
|
|
$ |
496,019 |
|
|
|
|
|
|
GAAP cost of
revenues |
|
$ |
221,194 |
|
|
$ |
212,410 |
|
Cost of
revenues from amortization of intangible assets |
|
|
(15,356 |
) |
|
|
(15,542 |
) |
Cost of
revenues adjustments: professional services and hosting (1) |
|
|
(7,407 |
) |
|
|
(8,410 |
) |
Cost of
revenues adjustments: product and licensing (1) |
|
|
(266 |
) |
|
|
(92 |
) |
Cost of
revenues adjustments: maintenance and support (1) |
|
|
(1,204 |
) |
|
|
(977 |
) |
Non-GAAP cost
of revenues |
|
$ |
196,961 |
|
|
$ |
187,389 |
|
|
|
|
|
|
GAAP gross
profit |
|
$ |
280,451 |
|
|
$ |
275,248 |
|
Gross
profit adjustments |
|
|
31,413 |
|
|
|
33,382 |
|
Non-GAAP gross
profit |
|
$ |
311,864 |
|
|
$ |
308,630 |
|
|
|
|
|
|
GAAP income
from operations |
|
$ |
8,807 |
|
|
$ |
24,032 |
|
Gross
profit adjustments |
|
|
31,413 |
|
|
|
33,382 |
|
Research
and development (1) |
|
|
9,696 |
|
|
|
8,490 |
|
Sales and
marketing (1) |
|
|
10,676 |
|
|
|
11,969 |
|
General
and administrative (1) |
|
|
8,737 |
|
|
|
9,192 |
|
Acquisition-related costs, net |
|
|
5,561 |
|
|
|
9,026 |
|
Amortization of intangible assets |
|
|
23,064 |
|
|
|
27,859 |
|
Restructuring and other charges, net |
|
|
14,801 |
|
|
|
6,703 |
|
Other |
|
|
11,964 |
|
|
|
2,989 |
|
Non-GAAP income
from operations |
|
$ |
124,719 |
|
|
$ |
133,642 |
|
|
|
|
|
|
GAAP loss
before income taxes |
|
$ |
(25,293 |
) |
|
$ |
(13,576 |
) |
Gross
profit adjustments |
|
|
31,413 |
|
|
|
33,382 |
|
Research
and development (1) |
|
|
9,696 |
|
|
|
8,490 |
|
Sales and
marketing (1) |
|
|
10,676 |
|
|
|
11,969 |
|
General
and administrative (1) |
|
|
8,737 |
|
|
|
9,192 |
|
Acquisition-related costs, net |
|
|
5,561 |
|
|
|
9,026 |
|
Amortization of intangible assets |
|
|
23,064 |
|
|
|
27,859 |
|
Restructuring and other charges, net |
|
|
14,801 |
|
|
|
6,703 |
|
Non-cash
interest expense |
|
|
13,341 |
|
|
|
13,039 |
|
Other |
|
|
11,964 |
|
|
|
2,989 |
|
Non-GAAP income
before income taxes |
|
$ |
103,960 |
|
|
$ |
109,073 |
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations, continued |
(in thousands, except per share amounts) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
GAAP (benefit)
provision for income taxes |
|
$ |
(78,521 |
) |
|
$ |
10,353 |
|
Income
tax effect of Non-GAAP adjustments |
|
|
32,161 |
|
|
|
42,631 |
|
Removal
of valuation allowance and other items |
|
|
(13,543 |
) |
|
|
(20,747 |
) |
Removal
of discrete items (3) |
|
|
83,195 |
|
|
|
(57 |
) |
Non-GAAP
provision for income taxes |
|
$ |
23,292 |
|
|
$ |
32,180 |
|
|
|
|
|
|
GAAP net income
(loss) |
|
$ |
53,228 |
|
|
$ |
(23,929 |
) |
Acquisition-related adjustment - revenues (2) |
|
|
7,180 |
|
|
|
8,361 |
|
Acquisition-related costs, net |
|
|
5,561 |
|
|
|
9,026 |
|
Cost of
revenue from amortization of intangible assets |
|
|
15,356 |
|
|
|
15,542 |
|
Amortization of intangible assets |
|
|
23,064 |
|
|
|
27,859 |
|
Restructuring and other charges, net |
|
|
14,801 |
|
|
|
6,703 |
|
Stock-based compensation (1) |
|
|
37,986 |
|
|
|
39,130 |
|
Non-cash
interest expense |
|
|
13,341 |
|
|
|
13,039 |
|
Adjustment to income tax expense |
|
|
(101,813 |
) |
|
|
(21,827 |
) |
Other |
|
|
11,964 |
|
|
|
2,989 |
|
Non-GAAP net
income |
|
$ |
80,668 |
|
|
$ |
76,893 |
|
|
|
|
|
|
Non-GAAP
diluted net income per share |
|
$ |
0.27 |
|
|
$ |
0.26 |
|
|
|
|
|
|
Diluted
weighted average common shares outstanding |
|
|
295,995 |
|
|
|
293,909 |
|
|
|
|
|
|
(3) Includes impact of the Tax Cuts and Jobs Act of
2017 of approximately $96 million benefit related to changes in
carrying value of certain deferred tax assets and liabilities due
to lower tax rates, offset in part by approximately $14 million
related to one-time mandatory tax for deemed repatriation of
foreign cash and earnings.
|
|
|
Nuance Communications, Inc. |
|
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations, continued |
|
(in thousands) |
|
Unaudited |
|
|
|
|
|
|
|
|
Three months ended |
|
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
(1) Stock-based
compensation |
|
|
|
|
|
Cost of
professional services and hosting |
$ |
7,407 |
|
|
$ |
8,410 |
|
|
Cost of
product and licensing |
|
266 |
|
|
|
92 |
|
|
Cost of
maintenance and support |
|
1,204 |
|
|
|
977 |
|
|
Research
and development |
|
9,696 |
|
|
|
8,490 |
|
|
Sales and
marketing |
|
10,676 |
|
|
|
11,969 |
|
|
General
and administrative |
|
8,737 |
|
|
|
9,192 |
|
|
Total |
$ |
37,986 |
|
|
$ |
39,130 |
|
|
|
|
|
|
|
|
(2) Acquisition-related
revenue and cost of revenue |
|
|
|
|
|
Revenues |
$ |
7,180 |
|
|
$ |
8,361 |
|
|
Total |
$ |
7,180 |
|
|
$ |
8,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information – GAAP to Non-GAAP
Reconciliations, continued |
(in millions) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hosting Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
193.3 |
|
$ |
202.2 |
|
$ |
189.4 |
|
$ |
149.0 |
|
$ |
733.8 |
|
$ |
185.1 |
Adjustment |
|
|
2.3 |
|
|
2.7 |
|
|
3.1 |
|
|
2.0 |
|
|
10.1 |
|
|
1.2 |
Non-GAAP
Revenues |
|
$ |
195.6 |
|
$ |
204.8 |
|
$ |
192.5 |
|
$ |
150.9 |
|
$ |
743.9 |
|
$ |
186.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance and Support Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
82.5 |
|
$ |
81.6 |
|
$ |
80.5 |
|
$ |
82.5 |
|
$ |
327.1 |
|
$ |
80.8 |
Adjustment |
|
|
0.2 |
|
|
0.4 |
|
|
0.2 |
|
|
0.2 |
|
|
1.0 |
|
|
0.1 |
Non-GAAP Revenues |
|
$ |
82.7 |
|
$ |
82.0 |
|
$ |
80.7 |
|
$ |
82.7 |
|
$ |
328.1 |
|
$ |
80.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetual Product and Licensing Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
78.7 |
|
$ |
76.5 |
|
$ |
73.5 |
|
$ |
77.3 |
|
$ |
306.0 |
|
$ |
76.6 |
Adjustment |
|
|
0.7 |
|
|
0.5 |
|
|
0.9 |
|
|
0.4 |
|
|
2.4 |
|
|
0.4 |
Non-GAAP Revenues |
|
$ |
79.3 |
|
$ |
77.0 |
|
$ |
74.4 |
|
$ |
77.7 |
|
$ |
308.4 |
|
$ |
76.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring Product and Licensing Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
73.1 |
|
$ |
82.8 |
|
$ |
80.8 |
|
$ |
92.8 |
|
$ |
329.4 |
|
$ |
85.2 |
Adjustment |
|
|
5.1 |
|
|
7.8 |
|
|
5.0 |
|
|
6.1 |
|
|
24.1 |
|
|
5.4 |
Non-GAAP Revenues |
|
$ |
78.2 |
|
$ |
90.6 |
|
$ |
85.8 |
|
$ |
98.9 |
|
$ |
353.5 |
|
$ |
90.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
60.1 |
|
$ |
56.5 |
|
$ |
62.1 |
|
$ |
64.3 |
|
$ |
243.1 |
|
$ |
73.9 |
Adjustment |
|
|
0.2 |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
|
0.5 |
|
|
0.1 |
Non-GAAP Revenues |
|
$ |
60.3 |
|
$ |
56.7 |
|
$ |
62.2 |
|
$ |
64.4 |
|
$ |
243.6 |
|
$ |
74.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Recurring Revenues |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2018 |
GAAP Revenues |
|
$ |
353.0 |
|
$ |
370.2 |
|
$ |
354.5 |
|
$ |
328.6 |
|
$ |
1,406.4 |
|
$ |
355.3 |
Adjustment |
|
|
7.5 |
|
|
11.4 |
|
|
8.7 |
|
|
8.2 |
|
|
35.9 |
|
|
6.9 |
Non-GAAP Revenues |
|
$ |
360.5 |
|
$ |
381.7 |
|
$ |
363.2 |
|
$ |
336.8 |
|
$ |
1,442.3 |
|
$ |
362.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedules may not add due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
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