Nuance Shows Solid Growth in Q3 Update

“…the Artificial Intelligence specialist has delivered revenues near the high end of its guidance range.”

Nuance Communications has issued its results for the third quarter of 2019, showing solid growth across multiple business areas.

Bearing in mind that Nuance adopted the ASC 606 revenue recognition standard last October, comparison of its latest results with those of Q3 of last year is somewhat complicated, with results also reported under the old ASC 605 standard. Regardless, a key takeaway from this latest report is that the Artificial Intelligence specialist has delivered revenues near the high end of its guidance range.

ASC 605 revenues for the quarter came in at $458.3 million, compared against ASC 605 revenues of $449.4 million in Q3 of 2019. Nuance is also reporting a GAAP net income of $12.2 million, compared to a GAAP net loss of $20.7 million in the same period in 2018. Non-GAAP net income was reported at $88.9 million, compared to $64 million in Q3 of last year.

“We generated solid revenue growth across each strategic business segment with better than expected margins, leading to better than anticipated results on the bottom line,” proclaimed Nuance CEO Mark Benjamin in a statement announcing the results. Benjamin went on to highlight strategic corporate changes undertaken by the company, including the “accelerated” exit from Nuance’s Subscription Revenue Services business – a move aimed at allowing Nuance to better focus on AI technologies – and the “significant progress” made in Nuance’s efforts to establish an automotive technologies spinoff, which Benjamin said was “demonstrated by the announcement of the name of the new company, Cerence Inc., and the selection of the Board of Directors.”

The strong performance in this quarter and in the first three quarters of the fiscal year in general have prompted Nuance to raise its guidance for EPS and operating margins for the full fiscal year. “In addition, we are maintaining our annual ARR guidance of $245 million to $255 million, which represents approximately 35% growth from last year,” Benjamin said.

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August 12, 2019 – by Alex Perala