Nuance Announces First Quarter 2017 Results
Delivers Strong Q1 17 Revenues, EPS, Net New Bookings and Cash Flows
Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its first quarter fiscal 2017, ended December
31, 2016. In the first quarter of fiscal 2017 Nuance delivered strong results across key financial metrics. The Company’s Q1 17
performance was led by increased bookings and revenue for its enhanced solutions that combine speech and natural language
technologies with artificial intelligence, particularly in Enterprise, automotive, and clinical documentation.
Nuance delivered a strong first quarter with continued solid performance and momentum across our business as demonstrated by the
following:
- Net new bookings in the quarter of $380.3 million, up 23% compared to Q1 16;
- Reported GAAP revenue of $487.7 million and non-GAAP revenue of $496.0 million;
- Recurring revenue was 72% of total GAAP revenue in Q1 17, an increase of 500 basis points from Q1 16.
Recurring revenue for the quarter was 73% of total non-GAAP revenue, an increase of 600 basis points from Q1 16;
- GAAP diluted EPS of $(0.08) and Non-GAAP diluted EPS of $0.35; and,
- Cash Flow from Operations (CFFO) of $124.9 million with CFFO as a percent of non-GAAP net income at
122%.
First Quarter of Fiscal 2017 Performance
In the first quarter of fiscal 2017, Nuance reported GAAP revenue of $487.7 million, compared to $486.1 million a year ago. Nuance
reported non-GAAP revenue of $496.0 million, which includes revenue lost to accounting treatment in conjunction with acquisitions,
compared to $494.9 million in the first quarter of fiscal 2016. In the first quarter of fiscal 2017, total recurring revenue
represented 72% of total GAAP revenue. On a non-GAAP basis, total recurring revenue represented 73% of total non-GAAP revenue,
compared to 67% a year ago. In the first quarter of fiscal 2017, Nuance reported net new bookings of $380.3 million, up 23% from
$308.7 million a year ago.
In the first quarter of fiscal 2017, Nuance reported GAAP net loss of $(23.9) million, or $(0.08) per share, compared to GAAP
net loss of $(12.1) million, or $(0.04) per share, in the first quarter of fiscal 2016. Nuance reported non-GAAP net income of
$102.5 million, or $0.35 per diluted share, down from non-GAAP net income of $113.0 million, or $0.36 per diluted share, in the
first quarter of fiscal 2016. Nuance’s first quarter fiscal 2017 GAAP operating margin was 4.9% down from 6.5% in the first quarter
of fiscal 2016. Nuance’s first quarter fiscal 2017 non-GAAP operating margin was 26.9%, down from 28.6% in the first quarter of
fiscal 2016. Nuance reported cash flow from operations of $124.9 million in the first quarter of fiscal 2017, down 12% from $141.1
million in the first quarter of fiscal 2016.
“Nuance delivered strong performance against our guidance in the first quarter as we continued our execution and momentum across
the business,” said Dan Tempesta, Nuance’s CFO. “We produced solid results in each of our key financial metrics including net new
bookings, revenue, recurring revenue, deferred revenue, EPS and cash flow from operations. We believe last quarter’s groundwork and
a robust outlook for the second quarter place the company on track for our FY17 non-GAAP guidance with a return to organic revenue
growth, and continued strong cost discipline and profitability.”
Please refer to the “Discussion of Non-GAAP Financial Measures” and to the “GAAP to Non-GAAP Reconciliations,” included
elsewhere in this release, for more information regarding the company’s use of non-GAAP measures.
Conference Call and Prepared Remarks
Nuance 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 612-332-0802 at least five
minutes prior to the call and referencing code 416161. 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 416161.
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.
Definitions of Bookings and Net New Bookings
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 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.
Definitions of Non-GAAP Organic Revenue Growth
Organic revenue growth is calculated by comparing current period non-GAAP revenue to non-GAAP revenue from the corresponding
prior-year period. For purposes of this calculation, prior period non-GAAP revenue is adjusted to include revenue from companies
acquired by Nuance as if we had owned the acquired businesses in all periods presented. Non-GAAP organic revenue growth on a
constant currency basis is calculated using current period non-GAAP revenue for entities reporting in currencies other than United
States dollars, excluding United States dollar denominated transactions recorded in those entities, converted into United States
dollars using the average exchange rates from the prior year period rather than the actual exchange rates in effect during the
current period.
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; 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, 2016. 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 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, 2016 and 2015, our management has either included or excluded items in six
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, Notable Solutions, and Quantim for the three months ended December 31, 2016 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 expect to 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 in connection with acquisition activities, and disputes and regulatory matters related to
acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include 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 provide supplemental non-GAAP financial measures, which exclude the amortization of acquired intangible assets. Amortization of
acquired intangibles assets is inconsistent in amount and frequency and is 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.
Costs Associated with IP Collaboration Agreement.
We entered into IP collaboration agreements with a third party to gain access to the third party's extensive speech recognition and
natural language and semantic processing technologies. The contracts had terms ranging between five and six years all ending during
or before fiscal year 2016. Depending on the agreement, some or all intellectual property derived from these collaborations is
jointly owned by the two parties. We had sole rights to commercialize a majority of the developed intellectual property for periods
ranging between two to six years, depending on the agreement. These sole-commercialization rights expired in fiscal year 2016. We
consider these long-term contracts and the resulting acquisitions of intellectual property from this third-party over the
agreements’ terms to be an investing activity occurring outside of our normal, organic, continuing operating activities. We are
therefore presenting supplemental non-GAAP financial measures to show the results excluding these expenses. We do not exclude from
our non-GAAP results the corresponding revenue, if any, generated from these collaboration efforts. Costs associated with the
research and development portion of the agreements have been excluded from research and development expense and costs for the
marketing exclusivity period are excluded from sales and marketing expense.
Non-Cash Expenses.
We provide supplementary non-GAAP financial measures relative to the following non-cash expenses: (i) stock-based compensation;
(ii) certain accrued interest; and (iii) certain accrued income taxes. These items are further discussed as follows:
Stock-based compensation. Stock-based compensation consists primarily of expenses for employee
restricted stock and restricted stock unit awards, including awards associated with acquisitions. We evaluate our financial
performance both with and without these expenses because they are non-cash, are generally not controllable in the short-term and
can vary significantly based on the Company’s stock price, timing, size and nature of awards granted, including the timing and
amount of new grants associated with acquisitions. We do not include such expenses in our operating plans. We expect stock-based
compensation to continue and may vary significantly in future periods.
Certain accrued interest and income taxes. We also exclude certain accrued interest and certain
accrued income taxes because we believe that excluding these non-cash expenses 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. These non-cash expenses will continue in future periods.
Other Expenses.
We provide supplementary non-GAAP financial measures that exclude certain other expenses that arise outside of the ordinary course
of continuing operations in order to measure the operating performance of the business both with and without these expenses. By
providing this information, we believe management, as well as other users of our financial statements, are better able to
understand the financial performance of our continuing operations. Expenses excluded are items such as restructuring and other
charges, net, loss on extinguishment of debt, and contributions to the Nuance Foundation which was established to provide grants to
educational institutions and other non-profit organizations to advance charitable, scientific, literary or educational purposes.
Other items such as consulting and professional services fees related to assessing strategic alternatives and our transformation
program are also excluded.
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.
Financial Tables Follow
|
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|
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|
|
Nuance Communications, Inc. |
Condensed Consolidated Statements of Operations |
(in thousands, except per share amounts) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
December 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Professional services and hosting |
|
|
|
$ |
253,417 |
|
|
|
|
$ |
227,135 |
|
Product and licensing |
|
|
|
|
151,752 |
|
|
|
|
|
179,050 |
|
Maintenance and support |
|
|
|
|
82,489 |
|
|
|
|
|
79,930 |
|
Total revenues |
|
|
|
|
487,658 |
|
|
|
|
|
486,115 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
Professional services and hosting |
|
|
|
|
164,892 |
|
|
|
|
|
153,259 |
|
Product and licensing |
|
|
|
|
18,378 |
|
|
|
|
|
23,412 |
|
Maintenance and support |
|
|
|
|
13,598 |
|
|
|
|
|
13,296 |
|
Amortization of intangible assets |
|
|
|
|
15,542 |
|
|
|
|
|
15,631 |
|
Total cost of revenues |
|
|
|
|
212,410 |
|
|
|
|
|
205,598 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
275,248 |
|
|
|
|
|
280,517 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
|
|
66,322 |
|
|
|
|
|
70,525 |
|
Sales and marketing |
|
|
|
|
101,516 |
|
|
|
|
|
100,590 |
|
General and administrative |
|
|
|
|
39,790 |
|
|
|
|
|
40,501 |
|
Amortization of intangible assets |
|
|
|
|
27,859 |
|
|
|
|
|
27,033 |
|
Acquisition-related costs, net |
|
|
|
|
9,026 |
|
|
|
|
|
2,480 |
|
Restructuring and other charges, net |
|
|
|
|
6,703 |
|
|
|
|
|
7,888 |
|
Total operating expenses |
|
|
|
|
251,216 |
|
|
|
|
|
249,017 |
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
|
|
24,032 |
|
|
|
|
|
31,500 |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
|
|
(37,608 |
) |
|
|
|
|
(35,798 |
) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
|
|
(13,576 |
) |
|
|
|
|
(4,298 |
) |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
10,353 |
|
|
|
|
|
7,767 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
$ |
(23,929 |
) |
|
|
|
$ |
(12,065 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(0.04 |
) |
Diluted |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
288,953 |
|
|
|
|
|
307,794 |
|
Diluted |
|
|
|
|
288,953 |
|
|
|
|
|
307,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands) |
Unaudited |
|
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|
|
|
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|
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|
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|
ASSETS |
|
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|
December 31, 2016 |
|
|
|
September 30, 2016 |
|
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|
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|
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|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
$ |
961,607 |
|
|
|
$ |
481,620 |
|
Marketable securities |
|
|
|
|
133,684 |
|
|
|
|
98,840 |
|
Accounts receivable, net |
|
|
|
|
384,639 |
|
|
|
|
380,004 |
|
Prepaid expenses and other current assets |
|
|
|
|
93,640 |
|
|
|
|
78,126 |
|
Total current assets |
|
|
|
|
1,573,570 |
|
|
|
|
1,038,590 |
|
|
|
|
|
|
|
|
|
|
Marketable securities |
|
|
|
|
42,174 |
|
|
|
|
27,632 |
Land, building and equipment, net |
|
|
|
|
178,220 |
|
|
|
|
185,169 |
Goodwill |
|
|
|
|
3,503,442 |
|
|
|
|
3,508,879 |
Intangible assets, net |
|
|
|
|
762,322 |
|
|
|
|
762,220 |
Other assets |
|
|
|
|
135,402 |
|
|
|
|
138,980 |
|
Total assets |
|
|
|
$ |
6,195,130 |
|
|
|
$ |
5,661,470 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
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|
|
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|
|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
$ |
977,458 |
|
|
|
$ |
- |
|
Contingent and deferred acquisition payments |
|
|
|
|
67,363 |
|
|
|
|
9,468 |
|
Accounts payable and accrued expenses |
|
|
|
|
254,200 |
|
|
|
|
332,258 |
|
Deferred revenue |
|
|
|
|
399,299 |
|
|
|
|
349,173 |
|
Total current liabilities |
|
|
|
|
1,698,320 |
|
|
|
|
690,899 |
|
|
|
|
|
|
|
|
|
|
Long-term portion of debt |
|
|
|
|
1,961,230 |
|
|
|
|
2,433,152 |
Deferred revenue, net of current portion |
|
|
|
|
403,155 |
|
|
|
|
386,960 |
Other liabilities |
|
|
|
|
206,721 |
|
|
|
|
219,129 |
|
Total liabilities |
|
|
|
|
4,269,426 |
|
|
|
|
3,730,140 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
1,925,704 |
|
|
|
|
1,931,330 |
|
Total liabilities and stockholders' equity |
|
|
|
$ |
6,195,130 |
|
|
|
$ |
5,661,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
|
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Consolidated Statements of Cash Flows |
|
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|
|
(in thousands) |
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
December 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
|
|
$ |
(23,929 |
) |
|
|
|
$ |
(12,065 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
58,006 |
|
|
|
|
|
58,275 |
|
Stock-based compensation |
|
|
|
|
39,130 |
|
|
|
|
|
42,348 |
|
Non-cash interest expense |
|
|
|
|
13,039 |
|
|
|
|
|
8,636 |
|
Deferred tax provision (benefit) |
|
|
|
|
2,006 |
|
|
|
|
|
(351 |
) |
Loss on extinguishment of debt |
|
|
|
|
- |
|
|
|
|
|
4,851 |
|
Other |
|
|
|
|
1,856 |
|
|
|
|
|
393 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
(9,713 |
) |
|
|
|
|
(3,894 |
) |
Prepaid expenses and other assets |
|
|
|
|
(15,999 |
) |
|
|
|
|
(20,097 |
) |
Accounts payable |
|
|
|
|
(21,244 |
) |
|
|
|
|
(5,940 |
) |
Accrued expenses and other liabilities |
|
|
|
|
5,841 |
|
|
|
|
|
305 |
|
Deferred revenue |
|
|
|
|
75,907 |
|
|
|
|
|
68,680 |
|
Net cash provided by operating activities |
|
|
|
|
124,900 |
|
|
|
|
|
141,141 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
(11,399 |
) |
|
|
|
|
(20,555 |
) |
Payments for business and technology acquisitions, net of cash acquired |
|
|
|
|
(22,949 |
) |
|
|
|
|
(674 |
) |
Purchases of marketable securities and other investments |
|
|
|
|
(72,797 |
) |
|
|
|
|
(17,070 |
) |
Proceeds from sales and maturities of marketable securities and
other investments |
|
10,105 |
|
|
|
|
|
14,128 |
|
Net cash used in investing activities |
|
|
|
|
(97,040 |
) |
|
|
|
|
(24,171 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Payments of debt |
|
|
|
|
- |
|
|
|
|
|
(511,844 |
) |
Proceeds from issuance of long-term debt, net of issuance costs |
|
|
|
|
495,000 |
|
|
|
|
|
664,605 |
|
Payments for repurchase of common stock |
|
|
|
|
- |
|
|
|
|
|
(189,580 |
) |
Net payments on other long-term liabilities |
|
|
|
|
(87 |
) |
|
|
|
|
(851 |
) |
Proceeds from issuance of common stock from employee stock plans |
|
|
|
|
45 |
|
|
|
|
|
36 |
|
Cash used to net share settle employee equity awards |
|
|
|
|
(40,360 |
) |
|
|
|
|
(52,171 |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
454,598 |
|
|
|
|
|
(89,805 |
) |
Effects of exchange rate changes on cash and cash equivalents |
|
|
|
|
(2,471 |
) |
|
|
|
|
39 |
|
Net increase in cash and cash equivalents |
|
|
|
|
479,987 |
|
|
|
|
|
27,204 |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
481,620 |
|
|
|
|
|
479,449 |
|
Cash and cash equivalents at end of period |
|
|
|
$ |
961,607 |
|
|
|
|
$ |
506,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
|
Supplemental Financial Information - GAAP to Non-GAAP
Reconciliations |
|
(in thousands, except per share amounts) |
|
Unaudited |
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
December 31, |
|
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenues |
|
|
|
$ |
487,658 |
|
|
|
|
|
$ |
486,115 |
|
|
Acquisition-related revenue adjustments: professional services and hosting |
|
|
|
|
2,434 |
|
|
|
|
|
|
2,528 |
|
|
Acquisition-related revenue adjustments: product and licensing |
|
|
|
|
5,716 |
|
|
|
|
|
|
5,993 |
|
|
Acquisition-related revenue adjustments: maintenance and support |
|
|
|
|
211 |
|
|
|
|
|
|
234 |
|
|
Non-GAAP revenues |
|
|
|
$ |
496,019 |
|
|
|
|
|
$ |
494,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of revenues |
|
|
|
$ |
212,410 |
|
|
|
|
|
$ |
205,598 |
|
|
Cost of revenues from amortization of intangible assets |
|
|
|
|
(15,542 |
) |
|
|
|
|
|
(15,631 |
) |
|
Cost of revenues adjustments: professional services and hosting (1,2) |
|
|
|
|
(8,410 |
) |
|
|
|
|
|
(7,591 |
) |
|
Cost of revenues adjustments: product and licensing (1,2) |
|
|
|
|
(92 |
) |
|
|
|
|
|
(122 |
) |
|
Cost of revenues adjustments: maintenance and support (1) |
|
|
|
|
(977 |
) |
|
|
|
|
|
(1,068 |
) |
|
Non-GAAP cost of revenues |
|
|
|
$ |
187,389 |
|
|
|
|
|
$ |
181,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit |
|
|
|
$ |
275,248 |
|
|
|
|
|
$ |
280,517 |
|
|
Gross profit adjustments |
|
|
|
|
33,382 |
|
|
|
|
|
|
33,167 |
|
|
Non-GAAP gross profit |
|
|
|
$ |
308,630 |
|
|
|
|
|
$ |
313,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from operations |
|
|
|
$ |
24,032 |
|
|
|
|
|
$ |
31,500 |
|
|
Gross profit adjustments |
|
|
|
|
33,382 |
|
|
|
|
|
|
33,167 |
|
|
Research and development (1) |
|
|
|
|
8,490 |
|
|
|
|
|
|
9,933 |
|
|
Sales and marketing (1) |
|
|
|
|
11,969 |
|
|
|
|
|
|
12,837 |
|
|
General and administrative (1) |
|
|
|
|
9,192 |
|
|
|
|
|
|
10,631 |
|
|
Amortization of intangible assets |
|
|
|
|
27,859 |
|
|
|
|
|
|
27,033 |
|
|
Costs associated with IP collaboration agreements |
|
|
|
|
- |
|
|
|
|
|
|
2,000 |
|
|
Acquisition-related costs, net |
|
|
|
|
9,026 |
|
|
|
|
|
|
2,480 |
|
|
Restructuring and other charges, net |
|
|
|
|
6,703 |
|
|
|
|
|
|
7,888 |
|
|
Other |
|
|
|
|
2,989 |
|
|
|
|
|
|
3,850 |
|
|
Non-GAAP income from operations |
|
|
|
$ |
133,642 |
|
|
|
|
|
$ |
141,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP provision for income taxes |
|
|
|
$ |
10,353 |
|
|
|
|
|
$ |
7,767 |
|
|
Non-cash taxes |
|
|
|
|
(3,814 |
) |
|
|
|
|
|
(1,612 |
) |
|
Non-GAAP provision for income taxes |
|
|
|
$ |
6,539 |
|
|
|
|
|
$ |
6,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
|
|
$ |
(23,929 |
) |
|
|
|
|
$ |
(12,065 |
) |
|
Acquisition-related adjustment - revenues (2) |
|
|
|
|
8,361 |
|
|
|
|
|
|
8,755 |
|
|
Acquisition-related adjustment - cost of revenues (2) |
|
|
|
|
- |
|
|
|
|
|
|
(166 |
) |
|
Acquisition-related costs, net |
|
|
|
|
9,026 |
|
|
|
|
|
|
2,480 |
|
|
Cost of revenue from amortization of intangible assets |
|
|
|
|
15,542 |
|
|
|
|
|
|
15,631 |
|
|
Amortization of intangible assets |
|
|
|
|
27,859 |
|
|
|
|
|
|
27,033 |
|
|
Restructuring and other charges, net |
|
|
|
|
6,703 |
|
|
|
|
|
|
7,888 |
|
|
Stock-based compensation (1) |
|
|
|
|
39,130 |
|
|
|
|
|
|
42,348 |
|
|
Non-cash interest expense |
|
|
|
|
13,039 |
|
|
|
|
|
|
8,636 |
|
|
Non-cash income taxes |
|
|
|
|
3,814 |
|
|
|
|
|
|
1,612 |
|
|
Costs associated with IP collaboration agreements |
|
|
|
|
- |
|
|
|
|
|
|
2,000 |
|
|
Loss on extinguishment of debt |
|
|
|
|
- |
|
|
|
|
|
|
4,851 |
|
|
Other |
|
|
|
|
2,989 |
|
|
|
|
|
|
4,010 |
|
|
Non-GAAP net income |
|
|
|
$ |
102,534 |
|
|
|
|
|
$ |
113,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net income per share |
|
|
|
$ |
0.35 |
|
|
|
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding |
|
|
|
|
293,909 |
|
|
|
|
|
|
314,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations,
continued |
(in thousands) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
December 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation
|
|
|
|
|
|
|
|
|
Cost of professional services and hosting |
|
|
|
$ |
8,410 |
|
|
|
$ |
7,757 |
|
Cost of product and licensing |
|
|
|
|
92 |
|
|
|
|
122 |
|
Cost of maintenance and support |
|
|
|
|
977 |
|
|
|
|
1,068 |
|
Research and development |
|
|
|
|
8,490 |
|
|
|
|
9,933 |
|
Sales and marketing |
|
|
|
|
11,969 |
|
|
|
|
12,837 |
|
General and administrative |
|
|
|
|
9,192 |
|
|
|
|
10,631 |
|
Total |
|
|
|
$ |
39,130 |
|
|
|
$ |
42,348 |
|
|
|
|
|
|
|
|
|
|
(2) Acquisition-related revenue and cost of revenue
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
$ |
8,361 |
|
|
|
$ |
8,755 |
|
Cost of Professional services and hosting |
|
|
|
|
- |
|
|
|
|
(166 |
) |
Total |
|
|
|
$ |
8,361 |
|
|
|
$ |
8,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications, Inc. |
|
Supplemental Financial Information – GAAP to Non-GAAP Reconciliations,
continued |
|
(in millions) |
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hosting Revenue
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenue |
|
|
|
$ |
177.4 |
|
|
|
$ |
184.6 |
|
|
|
$ |
181.1 |
|
|
|
$ |
187.0 |
|
|
|
$ |
730.2 |
|
|
|
$ |
193.3 |
|
Adjustment |
|
|
|
|
2.3 |
|
|
|
|
2.5 |
|
|
|
|
2.0 |
|
|
|
|
2.3 |
|
|
|
|
9.1 |
|
|
|
|
2.3 |
|
Non-GAAP Revenue |
|
|
|
$ |
179.7 |
|
|
|
$ |
187.1 |
|
|
|
$ |
183.2 |
|
|
|
$ |
189.3 |
|
|
|
$ |
739.2 |
|
|
|
$ |
195.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance and Support Revenue
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenue |
|
|
|
$ |
79.9 |
|
|
|
$ |
79.9 |
|
|
|
$ |
82.5 |
|
|
|
$ |
82.0 |
|
|
|
$ |
324.3 |
|
|
|
$ |
82.5 |
|
Adjustment |
|
|
|
|
0.2 |
|
|
|
|
0.1 |
|
|
|
|
0.0 |
|
|
|
|
0.0 |
|
|
|
|
0.4 |
|
|
|
|
0.2 |
|
Non-GAAP Revenue |
|
|
|
$ |
80.2 |
|
|
|
$ |
80.0 |
|
|
|
$ |
82.5 |
|
|
|
$ |
82.0 |
|
|
|
$ |
324.7 |
|
|
|
$ |
82.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetual Product and Licensing Revenue
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenue |
|
|
|
$ |
115.2 |
|
|
|
$ |
88.0 |
|
|
|
$ |
80.9 |
|
|
|
$ |
99.5 |
|
|
|
$ |
383.6 |
|
|
|
$ |
78.7 |
|
Adjustment |
|
|
|
|
2.0 |
|
|
|
|
2.2 |
|
|
|
|
1.4 |
|
|
|
|
1.0 |
|
|
|
|
6.6 |
|
|
|
|
0.7 |
|
Non-GAAP Revenue |
|
|
|
$ |
117.2 |
|
|
|
$ |
90.2 |
|
|
|
$ |
82.3 |
|
|
|
$ |
100.5 |
|
|
|
$ |
390.2 |
|
|
|
$ |
79.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring Product and Licensing Revenue
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenue |
|
|
|
$ |
63.9 |
|
|
|
$ |
70.6 |
|
|
|
$ |
72.1 |
|
|
|
$ |
79.1 |
|
|
|
$ |
285.6 |
|
|
|
$ |
73.1 |
|
Adjustment |
|
|
|
|
4.0 |
|
|
|
|
3.5 |
|
|
|
|
3.3 |
|
|
|
|
2.7 |
|
|
|
|
13.5 |
|
|
|
|
5.1 |
|
Non-GAAP Revenue |
|
|
|
$ |
67.9 |
|
|
|
$ |
74.1 |
|
|
|
$ |
75.3 |
|
|
|
$ |
81.7 |
|
|
|
$ |
299.1 |
|
|
|
$ |
78.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services Revenue
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenue |
|
|
|
$ |
49.7 |
|
|
|
$ |
55.6 |
|
|
|
$ |
61.2 |
|
|
|
$ |
58.7 |
|
|
|
$ |
225.2 |
|
|
|
$ |
60.1 |
|
Adjustment |
|
|
|
|
0.3 |
|
|
|
|
0.4 |
|
|
|
|
0.3 |
|
|
|
|
0.2 |
|
|
|
|
1.1 |
|
|
|
|
0.2 |
|
Non-GAAP Revenue |
|
|
|
$ |
50.0 |
|
|
|
$ |
55.9 |
|
|
|
$ |
61.5 |
|
|
|
$ |
58.9 |
|
|
|
$ |
226.3 |
|
|
|
$ |
60.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Recurring Revenues
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
FY |
|
|
|
Q1 |
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2017 |
|
GAAP Revenues |
|
|
|
$ |
326.1 |
|
|
|
$ |
339.6 |
|
|
|
$ |
339.7 |
|
|
|
$ |
352.1 |
|
|
|
$ |
1,357.4 |
|
|
|
$ |
353.0 |
|
Adjustment |
|
|
|
|
6.4 |
|
|
|
|
6.2 |
|
|
|
|
5.3 |
|
|
|
|
5.0 |
|
|
|
|
22.9 |
|
|
|
|
7.5 |
|
Non-GAAP Revenues |
|
|
|
$ |
332.5 |
|
|
|
$ |
345.8 |
|
|
|
$ |
345.0 |
|
|
|
$ |
357.1 |
|
|
|
$ |
1,380.3 |
|
|
|
$ |
360.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedules may not add due to rounding.
Nuance Communications, Inc.
For Investors
Christine Marchuska, 781-565-5000
christine.marchuska@nuance.com
or
For Media
Richard Mack, 781-565-5000
richard.mack@nuance.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170207006426/en/