BURLINGTON, Mass., May 7, 2020 /PRNewswire/ -- Nuance
Communications, Inc. (NASDAQ: NUAN) today announced financial
results for its second quarter ended March
31, 2020.
Q2 2020 Performance Summary
- GAAP revenue of $369.3 million
and GAAP earnings per diluted share of $(0.05).
- Non-GAAP revenue of $369.5
million and non-GAAP earnings per diluted share of
$0.21.
"Despite COVID-19, we had another excellent quarter, with
revenue and EPS exceeding the high end of our guidance," said
Mark Benjamin, Chief Executive
Officer at Nuance. "We achieved 11% year-over-year organic
revenue growth, with strength from both our Healthcare and
Enterprise segments. Enterprise reported 19% annual revenue growth,
the highest in 10 years, driven by our Intelligent Engagement
solutions. Healthcare revenue grew 10% year-over-year, driven by
strong growth in Dragon Medical cloud and increased demand from our
newer cloud-based solutions, PowerScribe One and CDE One.
In line with our capital allocation focus, we repurchased 3.8
million shares of common stock and paid down $170 million of debt during the quarter. This
occurred before these programs were put on hold in March when the
COVID-19 pandemic escalated. We ended the quarter with a strong
cash position and remain confident in the resiliency of our highly
recurring business model.
Given our compelling financial and operating position, we fully
expect to weather the disruption of this pandemic. However,
we also expect a near-term impact on our business, particularly
within Healthcare, given the significant reduction in elective
procedures and the reprioritization of initiatives by hospitals to
focus on COVID-19. As such, we have revised our full-year
guidance.
Despite the uncertain near-term operating environment, I believe
the markets we serve will expand post COVID-19 as our customers
appreciate the critical need for AI-based solutions, remote access
capabilities for healthcare workers, and increased demand for
telehealth, and security and fraud protection solutions. We remain
an incredibly resilient company, and I am confident that we will
emerge from this pandemic stronger."
Q2 2020 Performance Summary
Q2 2020 results for
continuing operations include:
- Revenue of $369.3 million,
compared to $336.6 million in the
same period last year.
- Non-GAAP revenue of $369.5
million, compared to $336.9
million in the same period last year.
- Organic revenue growth of 11% compared to the same period last
year.
- GAAP EPS of $(0.05), compared to
$(0.10) in the same period last
year.
- Non-GAAP EPS of $0.21, compared
to $0.11 in the same period last
year.
- GAAP net loss of $13.5 million,
compared to a net loss of $28.4
million in the same period last year.
- Non-GAAP net income of $59.7
million, compared to $30.8
million in the same period last year.
- GAAP operating margin of 6.8%, compared to (0.5)% in the same
period last year.
- Non-GAAP operating margin of 22.7%, compared to 17.0% in the
same period last year.
- Operating cash flows from continuing operations was
$87.9 million, compared to
$79.5 million in the same period last
year.
Capital Allocation
In the second quarter of 2020, we
repurchased approximately 3.8 million shares of common stock at an
average price of $20.40 per share for
total consideration of $76.8 million.
From the beginning of the fiscal year through March 31, 2020,
the Company repurchased a total of 9.5 million shares of its common
stock, at an average price of $17.89
per share, for aggregate consideration of $169.2 million. As of March 31, 2020, there was $261.2 million available under our existing
authorization for share repurchases.
During the second quarter of fiscal year 2020, we also
repurchased $87.3 million of 2025
convertible debentures, $36.5 million
2035 convertible debentures, and redeemed the remaining
$46.6 million of the 2031 convertible
debentures. In addition, in an effort to protect our financial
strength as the COVID-19 pandemic escalated, we drew $230 million from our revolving credit facility.
This brought our total cash and marketable securities balance to
approximately $526 million at quarter
end.
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 Remarks
Nuance 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 9089263.
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 are 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 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 impact of the
COVID-19 pandemic, 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 Measures
We believe
that providing 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 months ended March
31, 2020 and 2019, 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, that 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 Press
Nancy
Scott
Nuance Communications, Inc.
Tel: 781-565-4130
Email: 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
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
$235,514
|
|
$217,527
|
|
$465,991
|
|
$445,244
|
Product and
licensing
|
|
69,599
|
|
58,226
|
|
194,779
|
|
174,115
|
Maintenance and
support
|
|
64,224
|
|
60,831
|
|
126,800
|
|
136,900
|
Total revenues
|
|
369,337
|
|
336,584
|
|
787,570
|
|
756,259
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Hosting and
professional services
|
|
133,196
|
|
134,294
|
|
268,986
|
|
270,892
|
Product and
licensing
|
|
9,316
|
|
9,373
|
|
43,494
|
|
41,778
|
Maintenance and
support
|
|
7,965
|
|
8,911
|
|
15,759
|
|
16,672
|
Amortization of
intangible assets
|
|
6,616
|
|
6,681
|
|
13,243
|
|
14,037
|
Total cost of revenues
|
|
157,093
|
|
159,259
|
|
341,482
|
|
343,379
|
Gross
profit
|
|
212,244
|
|
177,325
|
|
446,088
|
|
412,880
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
57,909
|
|
45,758
|
|
114,462
|
|
92,624
|
Sales and
marketing
|
|
71,024
|
|
67,683
|
|
137,496
|
|
135,053
|
General and
administrative
|
|
38,376
|
|
39,857
|
|
76,690
|
|
83,323
|
Amortization of
intangible assets
|
|
11,821
|
|
13,824
|
|
24,370
|
|
27,666
|
Acquisition-related
costs, net
|
|
1,680
|
|
2,051
|
|
2,847
|
|
4,652
|
Restructuring and
other charges, net
|
|
6,329
|
|
9,858
|
|
13,012
|
|
24,499
|
Total
operating expenses
|
|
187,139
|
|
179,031
|
|
368,877
|
|
367,817
|
Income (loss) from
operations
|
|
25,105
|
|
(1,706)
|
|
77,211
|
|
45,063
|
Other expenses,
net
|
|
(23,805)
|
|
(27,282)
|
|
(57,474)
|
|
(58,170)
|
Income (loss) before
income taxes
|
|
1,300
|
|
(28,988)
|
|
19,737
|
|
(13,107)
|
Provision (benefit)
for income taxes
|
|
14,810
|
|
(591)
|
|
(21,630)
|
|
1,409
|
Net (loss) income
from continuing operations
|
|
(13,510)
|
|
(28,397)
|
|
41,367
|
|
(14,516)
|
Net income (loss)
from discontinued operations
|
|
-
|
|
105,729
|
|
(6,192)
|
|
110,938
|
Net (loss)
income
|
|
$ (13,510)
|
|
$
77,332
|
|
$
35,175
|
|
$
96,422
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share - basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.05)
|
|
$
(0.10)
|
|
$
0.15
|
|
$
(0.05)
|
Discontinued
operations
|
|
-
|
|
0.37
|
|
(0.03)
|
|
0.39
|
Total net (loss)
income per basic common share
|
|
$
(0.05)
|
|
$
0.27
|
|
$
0.12
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share - diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.05)
|
|
$
(0.10)
|
|
$
0.14
|
|
$
(0.05)
|
Discontinued
operations
|
|
-
|
|
0.37
|
|
(0.02)
|
|
0.39
|
Total net (loss)
income per diluted common share
|
|
$
(0.05)
|
|
$
0.27
|
|
$
0.12
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
282,576
|
|
285,866
|
|
283,366
|
|
286,849
|
Diluted
|
|
282,576
|
|
285,866
|
|
288,214
|
|
286,849
|
Nuance
Communications, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
September 30,
2019
|
ASSETS
|
|
Unaudited
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
397,907
|
|
$
560,961
|
|
Marketable
securities
|
|
123,373
|
|
186,555
|
|
Accounts receivable,
net
|
|
222,474
|
|
240,673
|
|
Prepaid expenses and
other current assets
|
|
148,494
|
|
175,166
|
|
Current assets of
discontinued operations
|
|
-
|
|
91,858
|
|
Total current
assets
|
|
892,248
|
|
1,255,213
|
|
|
|
|
|
|
Marketable
securities
|
|
4,897
|
|
17,287
|
Land, building and
equipment, net
|
|
127,721
|
|
121,203
|
Goodwill
|
|
2,125,053
|
|
2,127,896
|
Intangible assets,
net
|
|
253,414
|
|
291,371
|
Right-of-use
assets
|
|
110,838
|
|
-
|
Other
assets
|
|
242,579
|
|
316,215
|
Long-term assets of
discontinued operations
|
|
-
|
|
1,236,608
|
|
Total
assets
|
|
$
3,756,750
|
|
$
5,365,793
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
230,000
|
|
$
1,142,870
|
|
Contingent and
deferred acquisition payments
|
14,676
|
|
17,470
|
|
Accounts
payable
|
|
75,638
|
|
90,826
|
|
Accrued expenses and
other current liabilities
|
187,401
|
|
249,570
|
|
Deferred
revenue
|
|
259,639
|
|
214,223
|
|
Current liabilities
of discontinued operations
|
|
-
|
|
130,117
|
|
Total current
liabilities
|
|
767,354
|
|
1,845,076
|
|
|
|
|
|
|
Long-term
debt
|
|
1,512,859
|
|
793,536
|
Deferred revenue, net
of current portion
|
|
113,705
|
|
133,783
|
Deferred tax
liability
|
|
63,942
|
|
54,216
|
Operating lease
liabilities
|
|
108,420
|
|
-
|
Other
liabilities
|
|
74,753
|
|
79,378
|
Long-term liabilities
of discontinued operations
|
|
-
|
|
286,654
|
|
Total
liabilities
|
|
2,641,033
|
|
3,192,643
|
|
|
|
|
|
|
Stockholders'
equity
|
|
1,115,717
|
|
2,173,150
|
|
Total liabilities and
stockholders' equity
|
|
$
3,756,750
|
|
$
5,365,793
|
Nuance
Communications, Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
Unaudited
|
|
|
|
Three Months Ended March 31,
|
|
Six Months
Ended March 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net (loss) income
from continuing operations
|
|
$ (13,510)
|
|
$ (28,397)
|
|
$
41,367
|
|
$ (14,516)
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
8,967
|
|
12,689
|
|
19,150
|
|
26,368
|
Amortization
|
|
18,437
|
|
20,505
|
|
37,613
|
|
41,703
|
Stock-based
compensation
|
|
33,662
|
|
24,798
|
|
64,895
|
|
54,295
|
Non-cash interest
expense
|
|
12,574
|
|
12,388
|
|
25,318
|
|
24,686
|
Deferred tax
provision (benefit)
|
|
1,033
|
|
(9,553)
|
|
(39,255)
|
|
(11,642)
|
Loss on
extinguishment of debt
|
|
3,656
|
|
910
|
|
18,656
|
|
910
|
Other
|
|
2,325
|
|
493
|
|
1,576
|
|
805
|
Changes in operating
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
39,176
|
|
35,027
|
|
19,934
|
|
19,773
|
Prepaid expenses and
other assets
|
|
(23,760)
|
|
11,228
|
|
6,358
|
|
(14,698)
|
Accounts
payable
|
|
(4,873)
|
|
(9,919)
|
|
(6,219)
|
|
2,584
|
Accrued expenses and
other liabilities
|
|
10,055
|
|
12,236
|
|
(61,686)
|
|
(7,081)
|
Deferred
revenue
|
|
136
|
|
(2,930)
|
|
27,031
|
|
28,951
|
Net cash provided by
operating activities - continuing operations
|
|
87,878
|
|
79,475
|
|
154,738
|
|
152,138
|
Net cash provided by
(used in) operating activities - discontinued operations
|
|
-
|
|
24,190
|
|
(13,307)
|
|
51,418
|
Net cash provided by
operating activities
|
|
87,878
|
|
103,665
|
|
141,431
|
|
203,556
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(16,983)
|
|
(11,214)
|
|
(31,187)
|
|
(23,434)
|
Proceeds from
disposition of businesses, net of transaction fees
|
|
-
|
|
404,045
|
|
-
|
|
404,045
|
Purchases of
marketable securities and other investments
|
|
(62,181)
|
|
(71,663)
|
|
(148,880)
|
|
(119,165)
|
Proceeds from sales
and maturities of marketable securities and other
investments
|
|
142,399
|
|
71,983
|
|
224,987
|
|
117,661
|
Other
|
|
60
|
|
(1,106)
|
|
1,332
|
|
(2,553)
|
Net cash provided by
investing activities
|
|
63,295
|
|
392,045
|
|
46,252
|
|
376,554
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Repayment and
redemption of debt
|
|
(200,142)
|
|
(300,000)
|
|
(513,642)
|
|
(300,000)
|
Net distribution from
Cerence upon the spin-off
|
|
-
|
|
-
|
|
139,090
|
|
-
|
Payments for
repurchase of common stock
|
|
(76,774)
|
|
(16,165)
|
|
(169,218)
|
|
(91,321)
|
Proceeds from
issuance of common stock from employee stock plans
|
|
7,204
|
|
8,643
|
|
7,204
|
|
8,643
|
Proceeds from the
revolving credit facility
|
|
230,000
|
|
-
|
|
230,000
|
|
-
|
Payments for taxes
related to net share settlement of equity awards
|
|
(6,530)
|
|
(6,540)
|
|
(36,488)
|
|
(38,191)
|
Other financing
activities
|
|
(2,109)
|
|
(514)
|
|
(2,834)
|
|
(1,210)
|
Net cash used in
financing activities
|
|
(48,351)
|
|
(314,576)
|
|
(345,888)
|
|
(422,079)
|
Effects of exchange
rate changes on cash and cash equivalents
|
|
(6,373)
|
|
391
|
|
(4,849)
|
|
782
|
Net increase
(decrease) in cash and cash equivalents
|
|
96,449
|
|
181,525
|
|
(163,054)
|
|
158,813
|
Cash and cash
equivalents at beginning of period
|
|
301,458
|
|
293,251
|
|
560,961
|
|
315,963
|
Cash and cash
equivalents at end of period
|
|
$397,907
|
|
$474,776
|
|
$397,907
|
|
$474,776
|
Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations
|
(in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
Six Months Ended
March 31,
|
|
2020
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
GAAP
revenues
|
$369,337
|
|
$336,584
|
|
|
$787,570
|
|
$756,259
|
Acquisition-related
revenue adjustments: hosting and professional
services
|
212
|
|
128
|
|
|
301
|
|
269
|
Acquisition-related
revenue adjustments: product and licensing
|
-
|
|
120
|
|
|
-
|
|
167
|
Acquisition-related
revenue adjustments: maintenance and support
|
-
|
|
91
|
|
|
-
|
|
256
|
Non-GAAP
revenues
|
$369,549
|
|
$336,923
|
|
|
$787,871
|
|
$756,951
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenues
|
$157,093
|
|
$159,259
|
|
|
$341,482
|
|
$343,379
|
Cost of revenues from
amortization of intangible assets
|
(6,616)
|
|
(6,681)
|
|
|
(13,243)
|
|
(14,037)
|
Cost of revenues
adjustments: hosting and professional services (1)
|
(6,504)
|
|
(4,731)
|
|
|
(12,045)
|
|
(11,688)
|
Cost of revenues
adjustments: product and licensing (1)
|
(130)
|
|
(132)
|
|
|
(259)
|
|
(396)
|
Cost of revenues
adjustments: maintenance and support (1)
|
(453)
|
|
(381)
|
|
|
(846)
|
|
(147)
|
Cost of revenues
adjustments: Other
|
66
|
|
(10)
|
|
|
-
|
|
(446)
|
Non-GAAP cost of
revenues
|
$143,456
|
|
$147,324
|
|
|
$315,089
|
|
$316,665
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$212,244
|
|
$177,325
|
|
|
$446,088
|
|
$412,880
|
Gross profit
adjustments
|
13,849
|
|
12,274
|
|
|
26,694
|
|
27,406
|
Non-GAAP gross
profit
|
$226,093
|
|
$189,599
|
|
|
$472,782
|
|
$440,286
|
|
|
|
|
|
|
|
|
|
GAAP income (loss)
from operations
|
$
25,105
|
|
$
(1,706)
|
|
|
$
77,211
|
|
$
45,063
|
Gross profit
adjustments
|
13,849
|
|
12,274
|
|
|
26,694
|
|
27,406
|
Research and
development (1)
|
8,682
|
|
4,530
|
|
|
17,386
|
|
9,906
|
Sales and marketing
(1)
|
7,991
|
|
6,616
|
|
|
15,019
|
|
14,868
|
General and
administrative (1)
|
9,902
|
|
8,408
|
|
|
19,340
|
|
17,290
|
Acquisition-related
costs, net
|
1,680
|
|
2,051
|
|
|
2,847
|
|
4,652
|
Amortization of
intangible assets
|
11,821
|
|
13,824
|
|
|
24,370
|
|
27,666
|
Restructuring and
other charges, net
|
6,329
|
|
9,858
|
|
|
13,012
|
|
24,499
|
Other
|
(1,410)
|
|
1,402
|
|
|
(1,218)
|
|
5,680
|
Non-GAAP income
from operations
|
$
83,949
|
|
$
57,257
|
|
|
$194,661
|
|
$177,030
|
|
|
|
|
|
|
|
|
|
GAAP income (loss)
before income taxes
|
$
1,300
|
|
$ (28,988)
|
|
|
$
19,737
|
|
$ (13,107)
|
Gross profit
adjustments
|
13,849
|
|
12,274
|
|
|
26,694
|
|
27,406
|
Research and
development (1)
|
8,682
|
|
4,530
|
|
|
17,386
|
|
9,906
|
Sales and marketing
(1)
|
7,991
|
|
6,616
|
|
|
15,019
|
|
14,868
|
General and
administrative (1)
|
9,902
|
|
8,408
|
|
|
19,340
|
|
17,290
|
Acquisition-related
costs, net
|
1,680
|
|
2,051
|
|
|
2,847
|
|
4,652
|
Amortization of
intangible assets
|
11,821
|
|
13,824
|
|
|
24,370
|
|
27,666
|
Restructuring and
other charges, net
|
6,329
|
|
9,858
|
|
|
13,012
|
|
24,499
|
Non-cash interest
expense
|
12,574
|
|
12,388
|
|
|
25,318
|
|
24,686
|
Loss on
extinguishment of debt
|
3,656
|
|
910
|
|
|
18,656
|
|
910
|
Other
|
(1,405)
|
|
1,683
|
|
|
(1,709)
|
|
6,379
|
Non-GAAP income
before income taxes
|
$
76,379
|
|
$
43,554
|
|
|
$180,670
|
|
$145,155
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations,
continued
|
(in thousands, except
per share amounts)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
GAAP provision
(benefit) for income taxes
|
$ 14,810
|
|
$
(591)
|
|
$ (21,630)
|
|
$
1,409
|
Income tax effect of
Non-GAAP adjustments
|
10,147
|
|
28,556
|
|
30,819
|
|
54,376
|
Removal of valuation
allowance and other items
|
(999)
|
|
(15,245)
|
|
40,503
|
|
(21,228)
|
Removal of discrete
items
|
(7,253)
|
|
-
|
|
(7,253)
|
|
1,253
|
Non-GAAP provision
for income taxes
|
$ 16,705
|
|
$ 12,720
|
|
$
42,439
|
|
$
35,810
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income from continuing operations
|
$(13,510)
|
|
$(28,397)
|
|
$
41,367
|
|
$ (14,516)
|
Acquisition-related
adjustment - revenues (2)
|
212
|
|
339
|
|
301
|
|
692
|
Acquisition-related
costs, net
|
1,680
|
|
2,051
|
|
2,847
|
|
4,652
|
Cost of revenue from
amortization of intangible assets
|
6,616
|
|
6,681
|
|
13,243
|
|
14,037
|
Amortization of
intangible assets
|
11,821
|
|
13,824
|
|
24,370
|
|
27,666
|
Restructuring and
other charges, net
|
6,329
|
|
9,858
|
|
13,012
|
|
24,499
|
Stock-based
compensation (1)
|
33,662
|
|
24,798
|
|
64,895
|
|
54,295
|
Non-cash interest
expense
|
12,574
|
|
12,388
|
|
25,318
|
|
24,686
|
Loss on
extinguishment of debt
|
3,656
|
|
910
|
|
18,656
|
|
910
|
Adjustment to income
tax expense
|
(1,895)
|
|
(13,311)
|
|
(64,069)
|
|
(34,401)
|
Other
|
(1,471)
|
|
1,693
|
|
(1,709)
|
|
6,825
|
Non-GAAP net
income
|
$ 59,674
|
|
$ 30,834
|
|
$138,231
|
|
$109,345
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
net income per share
|
$
0.21
|
|
$
0.11
|
|
$
0.48
|
|
$
0.38
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
286,949
|
|
287,866
|
|
288,214
|
|
289,012
|
Nuance
Communications, Inc.
|
Supplemental
Financial Information - GAAP to Non-GAAP Reconciliations,
continued
|
(in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(1) Stock-based
compensation
|
|
|
|
|
|
|
|
Cost of hosting and
professional services
|
$
6,504
|
|
$
4,731
|
|
$12,045
|
|
$11,688
|
Cost of product and
licensing
|
130
|
|
132
|
|
259
|
|
396
|
Cost of maintenance
and support
|
453
|
|
381
|
|
846
|
|
147
|
Research and
development
|
8,682
|
|
4,530
|
|
17,386
|
|
9,906
|
Sales and
marketing
|
7,991
|
|
6,616
|
|
15,019
|
|
14,868
|
General and
administrative
|
9,902
|
|
8,408
|
|
19,340
|
|
17,290
|
Total
|
$
33,662
|
|
$24,798
|
|
$64,895
|
|
$54,295
|
|
|
|
|
|
|
|
|
(2)
Acquisition-related revenue
|
|
|
|
|
|
|
|
Acquisition-related
revenue adjustments
|
$
212
|
|
$
339
|
|
$
301
|
|
$
692
|
Total
|
$
212
|
|
$
339
|
|
$
301
|
|
$
692
|
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SOURCE Nuance Communications, Inc.