0001768267false00017682672022-08-092022-08-09

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

 

CERENCE INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware		001-39030		83-4177087
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
1 Burlington Woods Drive, Suite 301A Burlington, Massachusetts				01803
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (857) 362-7300

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.01 par value		CRNC		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On August 9, 2022, Cerence Inc. (the "Company") announced its financial results for the quarter ended June 30, 2022. The press release, including the financial information contained therein, is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

Also on August 9, 2022, the Company used a presentation on its call with investors, discussing its financial results for the quarter ended June 30, 2022, and such earnings release presentation is furnished herewith as Exhibit 99.2. The press release and earnings release presentation include certain non-GAAP financial measures. A description of the non-GAAP measures, the reasons for their use, and GAAP to non-GAAP reconciliations are included in the press release and earnings release presentation.

The information in this Item 2.02 and the exhibit attached hereto are being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press Release announcing financial results dated August 9, 2022
99.2		Earnings Release Presentation dated August 9, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		Cerence Inc.
Date: August 9, 2022		By:	/s/ Thomas L. Beaudoin
			Name: Thomas L. Beaudoin
			Title: Executive Vice President and Chief Financial Officer

 

 

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Exhibit 99.1

Cerence Announces Third Quarter Fiscal Year 2022 Results

Headlines

 

BURLINGTON, Mass., August 9, 2022 – Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today reported its third quarter fiscal year 2022 results for the quarter ended June 30, 2022.

 

Results Summary (1)

(in millions, except per share data)

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
GAAP Revenue		$	89.0			$	96.8			$	269.7			$	289.1
GAAP Gross Margin			72.8	%			75.4	%			73.0	%			73.4	%
Non-GAAP Gross Margin			73.7	%			79.1	%			75.3	%			77.0	%
GAAP Operating Margin			17.7	%			15.4	%			16.7	%			17.2	%
Non-GAAP Operating Margin			29.4	%			37.7	%			30.6	%			38.0	%
GAAP Net (Loss) Income (2)		$	(99.3	)		$	5.8			$	(80.7	)		$	37.9
Non-GAAP Net Income		$	17.0			$	26.1			$	55.9			$	78.8
Adjusted EBITDA		$	28.5			$	38.7			$	89.4			$	117.1
Adjusted EBITDA Margin			32.0	%			40.0	%			33.2	%			40.5	%
GAAP Net (Loss) Income per Share - diluted		$	(2.53	)		$	0.15			$	(2.06	)		$	0.97
Non-GAAP Net Income per Share - diluted		$	0.43			$	0.62			$	1.34			$	1.87

 

 

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Stefan Ortmanns, Chief Executive Officer at Cerence, commented, “Our third quarter brought meaningful and exciting progress across our business, from celebrating 43 customer global SOPs and introducing our new Cerence Cloud services to delivering record professional services revenue and securing a strategic win-back from Big Tech. Notwithstanding external headwinds, we are invigorated for the future and confident in our direction.

Ortmanns continued, “In that vein, in order to enhance predictability and visibility into our future revenue, we have decided to sign no fixed contracts in our fourth quarter and apply an approach in the future to keep the annual contribution of fixed contracts within the historical range of approximately $40 million per year. We are aware of the short-term impact of this decision but stand firm in our belief that, in the long run, this will return the business to more predictable, long-term growth that is consistent with our solid underlying results.”

“Overall, we’re confident in our ability to make the type of decisions that will set us up for success in the coming quarters and years. We’re proud to continue to support our automaker partners as they build the next generation of connected in-vehicle experiences. And, with a strong innovation pipeline in place, we are confident in Cerence’s integral role for the digital cabin of the future,” Ortmanns concluded.

Cerence Key Performance Indicators

To help investors gain further insight into the Cerence business and its performance, management provides a set of key performance indicators that includes:

Key Performance Indicator1		Q3FY22
Percent of worldwide auto production with Cerence Technology (TTM)			51	%
Average contract duration - years (TTM):			7.7
Repeatable software contribution (TTM):			77	%
Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)			(19	%)
Growth in billings per car (TTM over prior year TTM) (excludes Legacy contract3)			10	%

 

Fourth Quarter and Full Year Fiscal 2022 Outlook

As discussed last quarter, the Company has been continuing to assess the right balance of fixed contracts for the business as part of the long-term planning process. In order to further enhance predictability and

 

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visibility into future revenue, after Q3, the Company decided not to book any fixed contracts in the fourth quarter. For future fiscal years, starting in FY23, the company is committed to managing the annual contribution of fixed contracts to stay at the historical level of approximately $40 million per year.

The near-term impact of this decision is materially adverse to the company’s financial performance but the Company believes that in the long run this will return the business to predictable, long-term growth that is more consistent with our underlying performance. This shift is also expected to improve the Company’s focus on long-term margins and returns while capitalizing on strong demand for Cerence products. In addition to no contribution from fixed contracts in the quarter other factors included in the fourth quarter guidance are uncertainties around non-auto licensing agreements and currency fluctuations.

The Company is convinced the reduction in fixed contracts best serves the long-term interests of the company as this will enhance visibility into the strong core business and will demonstrate more consistent underlying results. Further, the Company would expect these effects to be in fiscal year 2023 allowing for more predictability in revenue in 2024 and beyond.

For the fiscal quarter ending September 30, 2022, revenue is expected to be in the range of $52 million to $58 million. Adjusted EBITDA is expected to be in the range of approximately ($11) million to ($5) million.

For the full fiscal year ending September 30, 2022, revenue is now expected to be in the range of $322 million to $328 million. Adjusted EBITDA is expected to be in the range of approximately $79 million to $85 million.

The adjusted EBITDA guidance excludes acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs.

Additional details regarding guidance will be provided during the earnings call.

Third Quarter Conference Call

The company will host a live conference call and webcast with slides to discuss the results today at 8:30 a.m. Eastern Time/5:30 a.m. Pacific Time. Interested investors and analysts are invited to dial into the conference call by using the following link: Register Here

Webcast access will also be available on the Investor Information section of the company’s website at https://www.cerence.com/investors/events-and-resources.

A replay of the webcast can be accessed by visiting our web site 90 minutes following the conference call at https://www.cerence.com/investors/events-and-resources.

Forward Looking Statements

Statements in this release regarding Cerence’s future performance, results and financial condition, expected growth, opportunities, business and market trends, our strategy regarding fixed contracts and its impact on financial results, demand for Cerence products, and innovation and new product offerings, 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

 

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statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “intends” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: impacts of the COVID-19 pandemic on our and our customers’ businesses; the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain, or the global economy more generally; the impact of the war in Ukraine on our and our customers’ businesses; our ability to control and successfully manage our expenses and cash position; our strategy to increase cloud offerings; escalating pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the loss of business from any of our largest customers; effects of customer defaults; our inability to successfully introduce new products, applications and services; the inability to recruit and retain qualified personnel; disruptions arising from transitions in management personnel; cybersecurity and data privacy incidents; fluctuating currency rates; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

 

Discussion of Non-GAAP Financial Measures

We believe that providing the non-GAAP information 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 should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. 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.

 

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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 and nine months ended June 30, 2022 and 2021, our management has either included or excluded the following items in general categories, each of which is described below.

Adjusted EBITDA

Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net or impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.

Restructuring and other costs, net.

Restructuring and other charges, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as employee severance costs, costs for consolidating duplication facilities, and separation costs directly attributable to the Cerence business becoming a standalone public company.

 

Acquisition-related costs, net.
In the past, 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

 

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that providing a supplemental non-GAAP measure, which excludes these items allows management and investors to consider the ongoing operations of the business both with, and without, such expenses.

These acquisition-related costs fall into the following categories: (i) transition and integration costs; (ii) professional service fees and expenses; and (iii) acquisition-related adjustments. Although these expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. These categories are further discussed as follows:

Amortization of acquired intangible assets.

We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets.

 

Non-cash expenses.

We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows:

 

 

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Other expenses.

We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations. Included in these expenses are items such as other charges (credits), net, losses from extinguishment of debt, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions.

Adjustments to income tax provision.

Adjustments to our GAAP income tax provision to arrive at non-GAAP net income is determined based on our non-GAAP pre-tax income. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.

Bookings.

Bookings is defined as the amount of revenue we expect to earn from an agreement with our customers for products and services. To count as a booking, we expect there to be persuasive evidence of an arrangement, which may be evidenced by a legally binding document or documents, and that the collectability of the amounts payable under the arrangement are reasonably assured. The revenue we may actually recognize from our estimated bookings is subject to multiple factors, including but not limited to the timing of satisfying performance obligations, potential terminations, or changes in the scope of programs utilizing our technology and currency fluctuations. There is no comparable GAAP financial measure.

 

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Key Performance Indicators

We believe that providing key performance indicators (“KPIs”), allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended June 30, 2022, our management has reviewed the following KPIs, each of which is described below:

See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures.

To learn more about Cerence, visit www.cerence.com, and follow the company on LinkedIn and Twitter.

 

About Cerence Inc.

Cerence (NASDAQ: CRNC) is the global industry leader in creating unique, moving experiences for the mobility world. As an innovation partner to the world’s leading automakers and mobility OEMs, it is helping advance the future of connected mobility through intuitive, powerful interaction between humans and their vehicles, connecting consumers’ digital lives to their daily journeys no matter where they are. Cerence’s track record is built on more than 20 years of knowledge and more than 450 million cars shipped with Cerence technology. Whether it’s connected cars, autonomous driving, e-vehicles, or two-wheelers, Cerence is mapping the road ahead. For more information, visit www.cerence.com.

 

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Contact Information

Rich Yerganian

Senior Vice President of Investor Relations

Cerence Inc.

Tel: 617-987-4799

Email: richard.yerganian@cerence.com

 

 

 

 

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CERENCE INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
Revenues:
License		$	46,452			$	49,980			$	139,610			$	150,765
Connected services			19,990				30,283				67,475				83,949
Professional services			22,599				16,538				62,662				54,392
Total revenues			89,041				96,801				269,747				289,106
Cost of revenues:
License			585				863				1,692				2,718
Connected services			5,391				6,108				16,766				19,960
Professional services			18,173				14,985				51,448				48,632
Amortization of intangible assets			103				1,879				2,879				5,637
Total cost of revenues			24,252				23,835				72,785				76,947
Gross profit			64,789				72,966				196,962				212,159
Operating expenses:
Research and development			26,040				30,370				81,808				83,365
Sales and marketing			8,299				9,534				22,487				28,097
General and administrative			10,614				13,173				31,941				38,563
Amortization of intangible assets			2,862				3,180				9,151				9,521
Restructuring and other costs, net			1,197				1,760				6,586				2,777
Total operating expenses			49,012				58,017				151,973				162,323
Income from operations			15,777				14,949				44,989				49,836
Interest income			243				34				416				68
Interest expense			(3,815	)			(3,294	)			(10,602	)			(10,569	)
Other (expense) income, net			(478	)			173				(764	)			1,432
Income before income taxes			11,727				11,862				34,039				40,767
Provision for income taxes			110,994				6,064				114,738				2,865
Net (loss) income		$	(99,267	)		$	5,798			$	(80,699	)		$	37,902
Net (loss) income per share:
Basic		$	(2.53	)		$	0.15			$	(2.06	)		$	1.01
Diluted		$	(2.53	)		$	0.15			$	(2.06	)		$	0.97
Weighted-average common share outstanding:
Basic			39,313				37,825				39,113				37,664
Diluted			39,313				39,296				39,113				39,135

 

 

 

 

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CERENCE INC.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

		June 30,				September 30,
		2022				2021
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	108,454				128,428
Marketable securities			18,890				30,435
Accounts receivable, net of allowances of $167 and $395			62,698				45,560
Deferred costs			7,422				6,095
Prepaid expenses and other current assets			57,689				76,530
Total current assets			255,153				287,048
Long-term marketable securities			8,784				7,339
Property and equipment, net			38,027				31,505
Deferred costs			24,308				31,702
Operating lease right of use assets			16,641				14,901
Goodwill			1,114,556				1,128,511
Intangible assets, net			12,546				25,348
Deferred tax assets			49,780				159,293
Other assets			57,042				20,081
Total assets		$	1,576,837			$	1,705,728
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	15,370			$	11,636
Deferred revenue			75,166				78,394
Short-term operating lease liabilities			5,486				4,562
Short-term debt			9,375				6,250
Accrued expenses and other current liabilities			48,990				64,467
Total current liabilities			154,387				165,309
Long-term debt			261,202				265,093
Deferred revenue, net of current portion			173,519				198,343
Long-term operating lease liabilities			13,021				12,216
Other liabilities			24,596				32,822
Total liabilities			626,725				673,783
Stockholders' Equity:
Common stock, $0.01 par value, 560,000 shares authorized; 39,316 and 38,025 shares issued and outstanding, respectively			393				381
Accumulated other comprehensive (loss) income			(21,055	)			1,634
Additional paid-in capital			1,023,896				1,002,353
(Accumulated deficit) Retained earnings			(53,122	)			27,577
Total stockholders' equity			950,112				1,031,945
Total liabilities and stockholders' equity		$	1,576,837			$	1,705,728

 

 

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CERENCE INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

		Nine Months Ended
		June 30,
		2022				2021
Cash flows from operating activities:
Net (loss) income		$	(80,699	)		$	37,902
Adjustments to reconcile net (loss) income to net cash provided by operations:
Depreciation and amortization			18,853				22,276
Benefit from credit loss reserve			(414	)			(412	)
Stock-based compensation			23,020				42,179
Non-cash interest expense			3,922				3,730
Deferred tax provision (benefit)			103,394				(3,812	)
Other			5,137				(1,590	)
Changes in operating assets and liabilities:
Accounts receivable			(21,626	)			(1,698	)
Prepaid expenses and other assets			(34,621	)			(17,065	)
Deferred costs			3,753				5,078
Accounts payable			4,638				2,906
Accrued expenses and other liabilities			(2,698	)			(4,026	)
Deferred revenue			(19,844	)			(34,400	)
Net cash provided by operating activities			2,815				51,068
Cash flows from investing activities:
Capital expenditures			(14,418	)			(8,055	)
Purchases of marketable securities			(21,153	)			(33,800	)
Sale and maturities of marketable securities			31,003				9,000
Payments for equity investments			(584	)			(2,563	)
Other investing activities			1,735				702
Net cash used in investing activities			(3,417	)			(34,716	)
Cash flows from financing activities:
Payments for long-term debt issuance costs			-				(520	)
Principal payments of long-term debt			(4,689	)			(4,689	)
Common stock repurchases for tax withholdings for net settlement of equity awards			(47,960	)			(34,089	)
Principal payment of lease liabilities arising from a finance lease			(289	)			(326	)
Proceeds from the issuance of common stock			34,943				6,682
Net cash used in financing activities			(17,995	)			(32,942	)
Effects of exchange rate changes on cash and cash equivalents			(1,377	)			1,363
Net change in cash and cash equivalents			(19,974	)			(15,227	)
Cash and cash equivalents at beginning of period			128,428				136,067
Cash and cash equivalents at end of period		$	108,454			$	120,840

 

 

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CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

(unaudited - in thousands)

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
GAAP revenue		$	89,041			$	96,801			$	269,747			$	289,106
GAAP gross profit		$	64,789			$	72,966			$	196,962			$	212,159
Stock-based compensation			722				1,708				3,384				4,945
Amortization of intangible assets			103				1,879				2,879				5,637
Non-GAAP gross profit		$	65,614			$	76,553			$	203,225			$	222,741
GAAP gross margin			72.8	%			75.4	%			73.0	%			73.4	%
Non-GAAP gross margin			73.7	%			79.1	%			75.3	%			77.0	%
GAAP operating income		$	15,777			$	14,949			$	44,989			$	49,836
Stock-based compensation*			6,253				14,710				19,020				42,179
Amortization of intangible assets			2,965				5,059				12,030				15,158
Restructuring and other costs, net*			1,197				1,760				6,586				2,777
Non-GAAP operating income		$	26,192			$	36,478			$	82,625			$	109,950
GAAP operating margin			17.7	%			15.4	%			16.7	%			17.2	%
Non-GAAP operating margin			29.4	%			37.7	%			30.6	%			38.0	%
GAAP net (loss) income		$	(99,267	)		$	5,798			$	(80,699	)		$	37,902
Stock-based compensation*			6,253				14,710				19,020				42,179
Amortization of intangible assets			2,965				5,059				12,030				15,158
Restructuring and other costs, net*			1,197				1,760				6,586				2,777
Depreciation			2,314				2,270				6,823				7,118
Total other income (expense), net			(4,050	)			(3,087	)			(10,950	)			(9,069	)
Provision for income taxes			110,994				6,064				114,738				2,865
Adjusted EBITDA		$	28,506			$	38,748			$	89,448			$	117,068
GAAP net (loss) income margin			-111.5	%			6.0	%			-29.9	%			13.1	%
Adjusted EBITDA margin			32.0	%			40.0	%			33.2	%			40.5	%
* - $4.0 million in stock-based compensation is included in Restructuring and other costs, net

 

 

 

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CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
GAAP net (loss) income		$	(99,267	)		$	5,798			$	(80,699	)		$	37,902
Stock-based compensation*			6,253				14,710				19,020				42,179
Amortization of intangible assets			2,965				5,059				12,030				15,158
Restructuring and other costs, net*			1,197				1,760				6,586				2,777