Delaware | 000-27038 | 94-3156479 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | o |
NUANCE COMMUNICATIONS, INC. | ||||||
Date: February 8, 2018 | By: | /s/ Daniel D. Tempesta | ||||
Daniel D. Tempesta Executive Vice President and Chief Financial Officer |
2018 first quarter results | February 8, 2018 | |
Press release |
– | GAAP revenue of $501.6 million, up 2.9% over prior year |
– | Non-GAAP revenue of $508.8 million, up 2.6% over prior year |
– | Organic revenue growth of 1% over the prior year |
– | GAAP diluted EPS of $0.18; Non-GAAP diluted EPS of $0.27 |
– | Net New Bookings of $418.4 million, up 10% over prior year |
• | 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. |
– | 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. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
– | 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. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
December 31, 2017 | September 30, 2017 | ||||||||
ASSETS | |||||||||
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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 | ) | — | |||||
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 payments on other long-term liabilities | (65 | ) | (87 | ) | ||||
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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 | ||||
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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 | |||
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Press release |
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved. |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
1 |
• | We reported GAAP revenue of $501.6 million, up 2.9% over the prior year. |
• | Non-GAAP revenue was $508.8 million, up 2.6% year over year and 1% organically. This performance was achieved despite the continued and expected HIM revenue loss from the 2017 malware incident. |
• | Revenue growth in the quarter was driven by strength across the business, providing evidence of the continued adoption of our solutions. |
• | Total recurring revenue represented 71% of total revenue in the quarter. |
• | We also delivered on the bottom line, with GAAP diluted EPS of $0.18 and non-GAAP diluted EPS of $0.27, up $0.01 over Q1 17. |
• | Cash flow from operations was $86.1 million, or 107% of non-GAAP net income. |
• | Driving continued, significant adoption for Dragon Medical cloud as a platform for better clinical documentation, greater insights for physicians, and valuable outcomes for healthcare institutions; |
• | Ongoing growth and adoption for our omni-channel portfolio with strength in our digital assistant and live-chat offerings, as well as significant adoption for our security and biometrics solutions in financial services; |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
2 |
• | Introducing our new Dragon Drive automotive platform that integrates conversational AI with non-verbal modalities, offers enhanced interoperability with other virtual assistants, and introduces Just Talk to invoke the automotive assistant without pushing a button or using a wake-up word; and, |
• | Working with NVIDIA to bring the power of machine learning to radiologists and data scientists working across the entire healthcare system with the Nuance AI Marketplace for Diagnostic Imaging which combines the power of NVIDIA’s deep learning platform with Nuance’s diagnostics offering, used by 70 percent of all radiologists in the U.S. |
($ in millions except earnings per share) | Q1 2017 | Q1 2018 | Change |
Net New Bookings % Growth | $380.3 | $418.4 | $38.1 10% |
GAAP Revenue % Recurring Revenue | $487.7 72% | $501.6 71% | $13.9 (100) bps |
Non-GAAP Revenue % Recurring Revenue | $496.0 73% | $508.8 71% | $12.8 (200) bps |
GAAP Operating Income GAAP Operating Margin | $24.0 4.9% | $8.8 1.8% | $(15.2) (310) bps |
Non-GAAP Operating Income Non-GAAP Operating Margin | $133.6 26.9% | $124.7 24.5% | $(8.9) (240) bps |
GAAP Net (Loss) Income | $(23.9) | $53.2 | $77.1 |
Non-GAAP Net Income | $76.9 | $80.7 | $3.8 |
GAAP Diluted EPS | $(0.08) | $0.18 | $0.26 |
Non-GAAP Diluted EPS | $0.26 | $0.27 | $0.01 |
Cash Flow from Operations | $124.9 | $86.1 | $(38.8) |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
3 |
• | We delivered net new bookings in Q1 18 of $418.4 million, up 10% year over year, with strong growth in Automotive and Enterprise. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | |
Net New Bookings (in millions) | $380.3 | $410.4 | $438.5 | $424.4 | $1,653.6 | $418.4 |
• | In Q1 18, we delivered GAAP revenue of $501.6 million, up 2.9% from a year ago. |
• | Non-GAAP revenue was $508.8 million, up 2.6% from a year ago. |
• | We returned to growth in Q1 18 delivering organic revenue growth of 1% compared to Q1 17. |
• | The performance was primarily the result of strength in our Enterprise, Healthcare, Imaging and Automotive offerings. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | |
Hosting | $195.6 | $204.8 | $192.5 | $150.9 | $743.9 | $186.3 |
% of Revenue | 39% | 40% | 39% | 32% | 38% | 37% |
Maintenance and Support | $82.7 | $82.0 | $80.7 | $82.7 | $328.1 | $80.9 |
% of Revenue | 17% | 16% | 16% | 17% | 17% | 16% |
Perpetual Product and Licensing | $79.3 | $77.0 | $74.4 | $77.7 | $308.4 | $76.9 |
% of Revenue | 16% | 15% | 15% | 16% | 16% | 15% |
Recurring Product and Licensing | $78.2 | $90.6 | $85.8 | $98.9 | $353.5 | $90.7 |
% of Revenue | 16% | 18% | 17% | 21% | 18% | 18% |
Professional Services | $60.3 | $56.7 | $62.2 | $64.4 | $243.6 | $74.0 |
% of Revenue | 12% | 11% | 13% | 14% | 12% | 15% |
Total revenue | $496.0 | $511.1 | $495.6 | $474.7 | $1,977.4 | $508.8 |
Total Recurring Revenue * | $360.5 | $381.7 | $363.2 | $336.8 | $1,442.3 | $362.2 |
% of Revenue | 73% | 75% | 73% | 71% | 73% | 71% |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
4 |
• | In Q1 18, GAAP recurring revenue was $355.3 million, compared to $353.0 million a year ago. As a percentage of total revenue, GAAP recurring revenue decreased to 71% from 72% compared to a year ago. |
• | Non-GAAP recurring revenue in Q1 18 was $362.2 million compared to $360.5 million a year ago. As a percentage of total revenue, non-GAAP recurring revenue decreased to 71% in Q1 18 compared to 73% in Q1 17. |
• | The decline in GAAP and non-GAAP recurring revenue as a percentage of total revenue was due to less HIM revenues from a year ago as a result of the 2017 malware incident, as well as a revenue mix shift with growing demand for our professional services offerings. |
• | At the end of the quarter, the estimated three-year value of total on-demand contracts was $2,349.8 million, down from $2,499.4 million a year ago. This was due primarily to the effect of the 2017 malware incident and the expected decline in our HIM business, offset by growth in our Dragon Medical cloud and Automotive businesses. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | |
Estimated 3-Year Value of Total On-Demand Contracts (in millions) | $2,499.4 | $2,568.3 | $2,359.5 | $2,307.3 | $2,349.8 |
• | GAAP gross margin in Q1 18 was 55.9%, a decrease of 50-basis points year over year. |
• | Non-GAAP gross margin in Q1 18 was 61.3%, a decrease of 90-basis points year over year. The reduction in gross margin was due primarily to Healthcare and Automotive professional services, offset partly by improvements in contributions to gross margin from Enterprise digital solutions, Diagnostics, and Dragon Medical cloud. |
• | GAAP operating expenses in Q1 18 were $271.6 million, compared to $251.2 million a year ago. |
• | GAAP operating margin in Q1 18 was 1.8%. |
• | Non-GAAP operating expenses in Q1 18 were $187.1 million, compared to $175.0 million a year ago. |
• | Non-GAAP operating margin in Q1 18 was 24.5%, a decrease of 240-basis points year over year due primarily to a decline in gross margins as well as incremental R&D investments to support growth in our Automotive, Enterprise omni-channel and biometrics offerings, IP litigation, and IT and security-related investments to support future growth. |
• | GAAP net interest expense was $33.9 million in Q1 18, down $3.1 million year over year. |
• | Non-GAAP net interest expense was $20.5 million in Q1 18, down $3.4 million year over year. |
• | The decrease in GAAP and non-GAAP net interest expense in Q1 18 is due to the payment of |
• | $331 million of the 2.75% convertible debt and higher interest income. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
5 |
• | Q1 18 GAAP benefit for income taxes was $(78.5) million, compared to a provision of $10.4 million a year ago. The Q1 18 benefit was driven by the Tax Cuts and Jobs Act of 2017, resulting in approximately $96 million of benefit related to changes in the carrying value of certain deferred tax assets and liabilities due to lower tax rates. This benefit was offset in part, by an expense of approximately $14 million related to one-time mandatory tax for deemed repatriation of foreign cash and earnings. |
• | Q1 18 non-GAAP provision for income taxes was $23.3 million, compared to $32.2 million a year ago. The non-GAAP tax rate was 22% in Q1 18, compared to 30% a year ago due primarily to lower U.S. Federal tax rates. |
• | Q1 18 cash tax was $19.6 million, which included $14 million related to the one-time mandatory tax for deemed repatriation of foreign cash and earnings. |
• | GAAP EPS in Q1 18 was $0.18 per diluted share, compared to a loss of $(0.08) per share a year ago. |
• | Non-GAAP EPS in Q1 18 was $0.27 per diluted share, up $0.01 from a year ago primarily due to revenue growth and approximately $0.02 per share benefit resulting from the new U.S. tax rates. |
• | During Q1 18, we did not repurchase any shares of our common stock. As of December 31, 2017, we had approximately $193.4 million remaining under the Board’s current repurchase program authorization. |
• | CFFO in Q1 18 was $86.1 million, a decrease of 31% year over year, as anticipated, primarily due to collections shortfalls and expenses related to the 2017 malware incident. |
• | CFFO as a percent of non-GAAP net income was 107% in Q1 18 compared to 162% in |
• | Q1 17. This decline was the result of the expected lower collections and higher expenses related to the 2017 malware incident, as well as the impact from lower taxes and therefore higher net income due to the lower U.S. Federal tax rates. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | |
Cash Flow from Operations (in millions) | $124.9 | $125.4 | $132.0 | $(3.5) | $378.9 | $86.1 |
• | As of December 31, 2017, our balance of cash, cash equivalents and marketable securities was |
• | $552.6 million. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
6 |
• | In Q1 18, our DSO was 78 days, up seven days compared to a year ago. The increase in DSO was due to delayed collections and lower revenues in our Healthcare segment due to the effects of the 2017 malware incident, higher Mobile and Enterprise billings, and expected longer collections cycles as we conduct more business in China and emerging markets. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | |
Days Sales Outstanding | 71 | 69 | 66 | 76 | 78 |
• | We ended Q1 18 with deferred revenue of $880.6 million, up 9.7% from a year ago. This growth was driven primarily by our hosting solutions, most notably for Automotive connected services. |
• | Q1 18 deferred revenue was up $90.6 million from Q4 17. The increase is primarily the result of our annual renewal of a government contract in Healthcare, as well as growth related to our Healthcare clinical documentation-hosted offerings where a portion of cash is paid in advance of services. In addition, we had modest growth in Automotive connected services, consistent with our expectations, though we expect Automotive-related deferred revenue growth to slow throughout the remainder of 2018. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | |
Total Deferred Revenue (in millions) | $802.5 | $802.4 | $798.7 | $790.0 | $880.6 |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | |
Healthcare | $239.2 | $238.5 | $232.6 | $189.0 | $899.3 | $245.5 |
Yr/yr. Organic Growth | (6)% | (5)% | (4)% | (22)% | (9)% | 1% |
Mobile | $91.8 | $100.2 | $101.5 | $104.5 | $398.0 | $89.8 |
Yr/yr. Organic Growth | (5)% | 8% | 7% | 6% | 4% | (5)% |
Enterprise | $112.9 | $119.4 | $112.1 | $117.9 | $462.3 | $117.8 |
Yr/yr. Organic Growth | 15% | 14% | 6% | 4% | 9% | 4% |
Imaging | $52.1 | $53.0 | $49.4 | $63.2 | $217.7 | $55.6 |
Yr/yr. Organic Growth | (15)% | (7)% | (13)% | (5)% | (10)% | 7% |
Total revenue | $496.0 | $511.1 | $495.6 | $474.7 | $1,977.4 | $508.8 |
Yr/yr. Organic Growth | (3)% | 1% | (1)% | (9)% | (3)% | 1% |
Yr/yr. Constant Currency Organic Growth | 0% |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
7 |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | |
Healthcare | $78.6 | $83.3 | $70.5 | $29.8 | $262.1 | $77.4 |
Segment Margin % | 33% | 35% | 30% | 16% | 29% | 32% |
Mobile | $33.5 | $40.4 | $41.4 | $39.5 | $154.9 | $25.4 |
Segment Margin % | 36% | 40% | 41% | 38% | 39% | 28% |
Enterprise | $32.0 | $41.8 | $34.4 | $33.0 | $141.2 | $38.9 |
Segment Margin % | 28% | 35% | 31% | 28% | 31% | 33% |
Imaging | $17.6 | $18.5 | $16.9 | $26.5 | $79.5 | $15.6 |
Segment Margin % | 34% | 35% | 34% | 42% | 37% | 28% |
Total Segment Profit | $161.6 | $184.0 | $163.2 | $128.9 | $637.7 | $157.4 |
Segment Margin % | 33% | 36% | 33% | 27% | 32% | 31% |
• | The highest segment revenue quarter and best Clintegrity revenue quarter since the first quarter of fiscal year 2016. |
• | For the second straight quarter, Healthcare growth solutions outpaced decliners with Dragon Medical cloud and professional services, diagnostics, development platforms and Clintegrity all delivering revenue growth in the quarter. |
• | During the quarter we launched The Nuance AI Marketplace for Diagnostic Imaging that combines the power of NVIDIA’s deep learning platform with Nuance’s PowerScribe radiology reporting and PowerShare image exchange network, used by 70% of all radiologists in the U.S. |
• | We further advanced conversational AI in healthcare, partnering with Epic to deliver computer-assisted physician documentation (CAPD) capabilities. |
Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | |
Annualized line run-rate in healthcare on-demand business (in billions) | 4.651 | 4.743 | 4.345 | 2.936* | 3.340 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
8 |
• | Net new bookings were 21% higher than Q1 17, and segment profit margin also improved year over year and quarter over quarter. |
• | Digital engagement solutions delivered record growth in the quarter with wins at UPS and Wells Fargo. The business saw growth across the globe including with Aviva, Commonwealth Bank of Australia, FedEx, Swedbank. New wins in emerging regions included RISL in India and Safaricom in Kenya. |
• | Strengthened our AI expertise with the introduction of a new AI Engagement Services team, and newly formed predictive AI and analytics professional services offering. |
• | We expanded the value of our omni-channel engagement platform to enable enterprises to interact with their consumers directly on social channels, including Twitter, Facebook and Facebook Messenger, and to access the Nuance Nina Virtual Assistant using Google Home and Amazon Echo. |
• | We also advanced our Voice and Security business across IVR, Analytics and Biometrics solutions, with wins or expansion at Feneco, HSBC, HMRC, KCom, Kagoshima Bank, Takacom and Avangrid. We saw increased demand for the combination of transcription and analytics solutions, and continue to see demand from large financial institutions looking to leverage biometrics as a more convenient and secure way to identify their customers. |
• | Strong Q1 18 bookings and revenue, driven by growth in both Automotive and our mobile operator services business. |
• | Automotive growth driven by execution with Daimler and Harman and connected speech design wins with HKMC (Hyundai-Kia Motors Corporation), in which we replaced Google, and SAIC-General Motors, one of the top-selling automakers in China. Introduced our newest Dragon Drive automotive platform that integrates conversational AI with non-verbal modalities such as gaze detection; offers enhanced interoperability with other virtual assistants and bots; and, introduces Just Talk to invoke the automotive assistant without pushing a button or using a wake-up word. |
• | Received a CES 2018 Innovation Award win for Dragon Drive’s new multimodal and Just Talk capabilities. |
• | Introduced our cognitive arbitrator, which enables automotive manufacturers to incorporate the specific capabilities and vocabularies of multiple assistants spread across different services and devices. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
9 |
• | Continued expansion of our telecommunications and cable service providers business in emerging markets with customer wins including Viettel in Vietnam and Claro Costa Rica. |
• | Dragon TV capability with Liberty Global to bring our voice technology to the Virgin Media TV Anywhere App for subscribers in Ireland. |
• | Al Monserrat, an accomplished technology veteran and the former CEO of RES Software, joined us as the executive vice president and general manager of the Imaging segment to advance the business with an ambitious agenda focused on new AI-based innovations, evolving product roadmaps, and a deepening vertical focus. |
• | Customers continued to voice their preference for Nuance’s Imaging solutions with notable wins, including US Army National Guard Alabama, Humana, DLA Piper, Raytheon, Stanford Health, and Cognizant. |
• | Announced a new strategic arrangement with Canon Europe building upon last quarter’s agreement with Canon USA demonstrating client demand for a full Imaging portfolio suite. |
• | Debuted a PowerPDF subscription offering through Ingram cloud marketplace that we expect will help accelerate our success with the Power PDF product family. |
• | Maintaining our net new bookings growth range of 5% to 7%, consistent with our previous guidance. |
• | Increasing our GAAP revenue guidance range to $2,038.0 to $2,078.0 million from $2,012.0 to $2,062.0 million. |
• | Raising our non-GAAP revenue guidance range to $2,055.0 to $2,095.0 million from $2,030.0 to $2,080.0 million, incorporating the revenue benefits in Q1 18 as well as an upside for the remainder of the year. |
• | Increasing our organic revenue growth rate guidance to 3% to 5%, up from our previous guidance of 2% to 4%, as a result of continued strength in Healthcare, Enterprise and Automotive. |
• | Adjusting our non-GAAP recurring revenue guidance to a range of 72% to 73%, from our previous guidance of approximately 73%, as a result of a revenue mix shift toward professional services in Healthcare. |
• | Moderating our non-GAAP gross margin guidance to a range of 62.5% to 63.0%, from approximately 63.0% previously, as a result of a revenue mix shift toward professional services. |
• | Adjusting our non-GAAP operating margin guidance to a range of 26.0% to 26.5%, from our previous guidance of 26.5% to 27.0%, as we balance our productivity initiatives with investments in Automotive, Enterprise, and |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
10 |
• | Lowering our U.S. non-GAAP Federal tax rates to a range of 24.0% to 25.0%, from 28.0% to 29.0%, as a result of lower U.S. Federal tax rates. |
• | Raising our GAAP EPS guidance to a range of $0.14 to $0.22 per diluted share from $(0.09) to $0.03 per share primarily due to the Q1 18 tax benefits related to the impacts of the Tax Cut and Jobs Act of 2017. |
• | Increasing our non-GAAP diluted EPS guidance to a range of $1.14 to $1.20 per share, from $1.06 to $1.15 per share, largely due to benefit from the new U.S. Federal tax rates, offset in part, by the operating margin dynamics noted above. |
• | As a result of the revised tax rates which increase our non-GAAP net income without any cash benefit, we are reducing our CFFO as a percentage of non-GAAP net income guidance to between 123% to 127%, compared to our previous guidance of 130% to 135%. We are maintaining our CFFO guidance of between $430 million and $450 million. |
• | Consistent with prior comments, deferred revenue growth will taper in FY 18, resulting in a flat to 3% expected deferred revenue growth rate, as the result of a shift to deal structures that do not generate deferred revenue and the timing of amortization of deferred revenue in our Automotive business. |
• | We expect GAAP revenue in a range of $506.0 to $520.0 million, and non-GAAP revenue in a range of $511.0 to $525.0 million. |
• | We expect GAAP EPS in a range of ($0.09) to ($0.06) per share, and non-GAAP EPS in a range of $0.26 to $0.28 per diluted share. |
• | In Healthcare, we expect revenue will increase through growth in Dragon Medical cloud, professional services, diagnostics, and our CAPD offerings, partially offset by the malware incident impact and continued erosion in our transcription offerings. Dragon Medical will continue to deliver double-digit annual growth led by cloud and strong demand for professional services. As noted last quarter, we expect the ongoing transition to our cloud-based offerings and the effects of the 2017 malware incident will cause our HIM business to continue to decline to approximately $250 million in revenue in FY 18. Healthcare net new bookings growth in FY 18 is expected to come from Dragon Medical cloud, professional services and diagnostics. |
• | In Enterprise, we expect demand for our AI-powered omni-channel engagement solutions and biometrics and security offerings will remain strong and will support continued revenue growth for the segment. Additionally, we expect to benefit from synergies resulting from the inclusion of our Mobile CSP business in Enterprise as we drive additional opportunity in the telecommunications market. |
• | In Mobile, we expect net new bookings and revenue growth led by our Automotive business. This will be partially offset by an expected decline in devices revenue. |
• | In Imaging, we expect that revenue will be slightly up driven by our MFP offerings as well as our improved sales management and execution dynamics. Imaging bookings growth is expected to be driven by new product innovations that will culminate in a newly combined suite of print and scan offerings. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
11 |
($ in millions except earnings per share) | CURRENT OUTLOOK | PRIOR OUTLOOK | |
Net New Bookings Growth | 5% to 7% | 5% to 7% | |
GAAP Revenue | $2,038.0 to $2,078.0 | $2,012.0 to $2,062.0 | |
Non-GAAP Revenue % Recurring Revenue | $2,055.0 to $2,095.0 72% to 73% | $2,030.0 to $2,080.0 ~ 73% | |
Organic Non-GAAP Revenue Growth | 3% to 5% | 2% to 4% | |
Non-GAAP Gross Margin | 62.5% to 63.0% | ~ 63.0% | |
Non-GAAP Operating Margin | 26.0% to 26.5% | 26.5% to 27.0% | |
GAAP Diluted EPS | $0.14 to $0.22 | $(0.09) to $0.03 | |
Non-GAAP Diluted EPS | $1.14 to $1.20 | $1.06 to $1.15 | |
Cash Flow from Operations (CFFO) | $430 to $450 | $430 to $450 | |
Cash Flow from Operations (CFFO) as a percentage of non-GAAP revenue | 123% to 127% | 130% to 135% | |
Capital expenditures | ~ $50 | ~ $50 | |
Net cash interest and other expense | $80 - $85 | ~ $85 | |
Non-GAAP tax rate | 24.0% to 25.0% | 28.0% to 29.0% | |
Net cash taxes(1) | $44 | $30 to $35 | |
Diluted share count | ~ 301m | ~ 301m |
(1) | Current outlook includes approximately $14 million related to one-time mandatory tax related to deemed repatriation of foreign cash and earnings due to the Tax Cuts and Job Act of 2017. |
Q2 2018 | Low | High | |
GAAP revenue | $506.0 | $520.0 | |
Non-GAAP revenue | $511.0 | $525.0 | |
GAAP EPS | $(0.09) | $(0.06) | |
Non-GAAP diluted EPS | $0.26 | $0.28 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
12 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
13 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
14 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
15 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
16 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
17 |
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
18 |
December 31, 2017 | September 30, 2017 | ||||||||
ASSETS | |||||||||
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
19 |
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 | ) | — | |||||
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 payments on other long-term liabilities | (65 | ) | (87 | ) | ||||
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 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
20 |
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 | ||||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
21 |
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. |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
22 |
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 | |||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
23 |
Three months ended December 31, | |||||||
2017 | 2016 | ||||||
GAAP operating expenses | $ | 271,644 | $ | 251,216 | |||
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 operating expenses | $ | 187,145 | $ | 174,988 | |||
GAAP research and development expense | $ | 73,366 | $ | 66,322 | |||
Stock-based compensation (1) | (9,696 | ) | (8,490 | ) | |||
Non-GAAP research and development expense | $ | 63,670 | $ | 57,832 | |||
GAAP sales and marketing expense | $ | 101,960 | $ | 101,516 | |||
Stock-based compensation (1) | (10,676 | ) | (11,969 | ) | |||
Non-GAAP sales and marketing expense | $ | 91,284 | $ | 89,547 | |||
GAAP general and administrative expense | $ | 52,892 | $ | 39,790 | |||
Stock-based compensation (1) | (8,737 | ) | (9,192 | ) | |||
Other | (11,964 | ) | (2,989 | ) | |||
Non-GAAP general and administrative expense | $ | 32,191 | $ | 27,609 | |||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
24 |
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 | ||||||||||||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
25 |
Total Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | ||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
GAAP Revenues | $ | 487.7 | $ | 499.6 | $ | 486.2 | $ | 465.9 | $ | 1,939.4 | $ | 501.6 | ||||||||||||
Adjustment | 8.4 | 11.5 | 9.4 | 8.7 | 38.0 | 7.2 | ||||||||||||||||||
Non-GAAP Revenues | $ | 496.0 | $ | 511.1 | $ | 495.6 | $ | 474.7 | $ | 1,977.4 | $ | 508.8 | ||||||||||||
Healthcare | Q1 | Q2 | Q3 | Q4 | FY | Q1 | ||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
GAAP Revenues | $ | 237.7 | $ | 237.3 | $ | 231.2 | $ | 186.7 | $ | 893.0 | $ | 244.0 | ||||||||||||
Adjustment | 1.5 | 1.2 | 1.4 | 2.3 | 6.3 | 1.5 | ||||||||||||||||||
Non-GAAP Revenues | $ | 239.2 | $ | 238.5 | $ | 232.6 | $ | 189.0 | $ | 899.3 | $ | 245.5 | ||||||||||||
Mobile | Q1 | Q2 | Q3 | Q4 | FY | Q1 | ||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
GAAP Revenues | $ | 90.5 | $ | 98.5 | $ | 99.0 | $ | 103.1 | $ | 391.0 | $ | 88.7 | ||||||||||||
Adjustment | 1.3 | 1.7 | 2.6 | 1.4 | 7.0 | 1.1 | ||||||||||||||||||
Non-GAAP Revenues | $ | 91.8 | $ | 100.2 | $ | 101.5 | $ | 104.5 | $ | 398.0 | $ | 89.8 | ||||||||||||
Enterprise | Q1 | Q2 | Q3 | Q4 | FY | Q1 | ||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
GAAP Revenues | $ | 109.3 | $ | 112.5 | $ | 108.1 | $ | 114.3 | $ | 444.1 | $ | 114.5 | ||||||||||||
Adjustment | 3.7 | 6.9 | 3.9 | 3.7 | 18.2 | 3.3 | ||||||||||||||||||
Non-GAAP Revenues | $ | 112.9 | $ | 119.4 | $ | 112.1 | $ | 117.9 | $ | 462.3 | $ | 117.8 | ||||||||||||
Imaging | Q1 | Q2 | Q3 | Q4 | FY | Q1 | ||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
GAAP Revenues | $ | 50.1 | $ | 51.3 | $ | 47.9 | $ | 61.9 | $ | 211.2 | $ | 54.4 | ||||||||||||
Adjustment | 1.9 | 1.8 | 1.5 | 1.3 | 6.5 | 1.2 | ||||||||||||||||||
Non-GAAP Revenues | $ | 52.1 | $ | 53.0 | $ | 49.4 | $ | 63.2 | $ | 217.7 | $ | 55.6 | ||||||||||||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
26 |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | 2018 | |||||||||||||||||||
Total segment revenues | $ | 496.0 | $ | 511.1 | $ | 495.6 | $ | 474.7 | $ | 1,977.4 | $ | 508.8 | ||||||||||||
Acquisition-related revenue adjustments | (8.4 | ) | (11.5 | ) | (9.4 | ) | (8.7 | ) | (38.0 | ) | (7.2 | ) | ||||||||||||
Total consolidated revenues | $ | 487.7 | $ | 499.6 | $ | 486.2 | $ | 466.0 | $ | 1,939.4 | $ | 501.6 | ||||||||||||
Total segment profit | $ | 161.6 | $ | 184.0 | $ | 163.2 | $ | 128.9 | $ | 637.7 | $ | 157.4 | ||||||||||||
Corporate expenses and other, net | (31.0 | ) | (30.2 | ) | (31.7 | ) | (33.1 | ) | (125.9 | ) | (44.7 | ) | ||||||||||||
Acquisition-related revenues and costs of revenues adjustment | (8.4 | ) | (11.5 | ) | (9.4 | ) | (8.7 | ) | (38.0 | ) | (7.2 | ) | ||||||||||||
Stock-based compensation | (39.1 | ) | (40.3 | ) | (42.3 | ) | (32.5 | ) | (154.3 | ) | (38.0 | ) | ||||||||||||
Amortization of intangible assets | (43.4 | ) | (45.1 | ) | (44.9 | ) | (45.3 | ) | (178.7 | ) | (38.4 | ) | ||||||||||||
Acquisition-related costs, net | (9.0 | ) | (5.4 | ) | (7.6 | ) | (5.7 | ) | (27.7 | ) | (5.6 | ) | ||||||||||||
Restructuring and other charges, net | (6.7 | ) | (19.9 | ) | (13.0 | ) | (21.4 | ) | (61.1 | ) | (14.8 | ) | ||||||||||||
Other expenses, net | (37.6 | ) | (56.2 | ) | (39.5 | ) | (37.7 | ) | (171.0 | ) | (34.1 | ) | ||||||||||||
Loss before income taxes | $ | (13.6 | ) | $ | (24.7 | ) | $ | (25.2 | ) | $ | (55.5 | ) | $ | (119.0 | ) | $ | (25.3 | ) | ||||||
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
27 |
Three months ended March 31, 2018 | |||||||
Low | High | ||||||
GAAP revenue | $ | 506,000 | $ | 520,000 | |||
Acquisition-related adjustment - revenue | 5,000 | 5,000 | |||||
Non-GAAP revenue | $ | 511,000 | $ | 525,000 | |||
GAAP net income per share | $ | (0.09 | ) | $ | (0.06 | ) | |
Acquisition-related adjustment - revenue | 0.01 | 0.01 | |||||
Acquisition-related costs, net | 0.02 | 0.02 | |||||
Cost of revenue from amortization of intangible assets | 0.05 | 0.05 | |||||
Amortization of intangible assets | 0.08 | 0.08 | |||||
Non-cash stock-based compensation | 0.14 | 0.14 | |||||
Non-cash interest expense | 0.04 | 0.04 | |||||
Adjustment to income tax expense | (0.06) | (0.07) | |||||
Restructuring and other charges, net | 0.02 | 0.02 | |||||
Other | 0.05 | 0.05 | |||||
Non-GAAP net income per share | $ | 0.26 | $ | 0.28 | |||
Shares used in computing GAAP and non-GAAP net income per share: | |||||||
Weighted average common shares: basic | 295,000 | 295,000 | |||||
Weighted average common shares: diluted | 297,000 | 297,000 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
2018 first quarter results | February 8, 2018 | |
Prepared remarks | ||
28 |
Twelve months ended September 30, 2018 | |||||||
Low | High | ||||||
GAAP revenue | $ | 2,038,000 | $ | 2,078,000 | |||
Acquisition-related adjustment - revenue | 17,000 | 17,000 | |||||
Non-GAAP revenue | $ | 2,055,000 | $ | 2,095,000 | |||
GAAP net income per share | $ | 0.14 | $ | 0.22 | |||
Acquisition-related adjustment - revenue | 0.06 | 0.06 | |||||
Acquisition-related costs, net | 0.08 | 0.08 | |||||
Cost of revenue from amortization of intangible assets | 0.18 | 0.18 | |||||
Amortization of intangible assets | 0.30 | 0.30 | |||||
Non-cash stock-based compensation | 0.57 | 0.57 | |||||
Non-cash interest expense | 0.17 | 0.17 | |||||
Adjustment to income tax expense | (0.53) | (0.55) | |||||
Restructuring and other charges, net | 0.07 | 0.07 | |||||
Other | 0.10 | 0.10 | |||||
Non-GAAP net income per share | $ | 1.14 | $ | 1.20 | |||
Shares used in computing GAAP and non-GAAP net income per share: | |||||||
Weighted average common shares: basic | 295,000 | 295,000 | |||||
Weighted average common shares: diluted | 301,000 | 301,000 |
![]() | © 2018 Nuance Communications, Inc. All rights reserved |
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