Nuance Reports Record New Bookings, but Records Loss for Fiscal Year 2016

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Nuance Communications today announced financial results for its fiscal 2016 year and fourth quarter that both ended on September 30, 2016. In fiscal 2016, Nuance saw improvement across numerous “key metrics” as it says its business continued to transition toward recurring revenue models. However, for its fiscal-year 2016, Nuance recorded a net loss of $12.5 million, or $0.04 per share, compared to a net loss of $115.0 million, or $0.36 per share, for fiscal-year 2015.

Nevertheless, Nuance says it delivered a “strong fourth quarter and ended fiscal 2016 with excellent performance and momentum” as demonstrated by the following:

  • Delivered record net new bookings for the fourth quarter of $516.9 million, up 45 percent compared to fourth-quarter 2015, and for the year $1,502.3 million, up 4 percent compared to fiscal-year 2015.
  • Reported non-GAAP (Generally Accepted Accounting Principles) revenue of $512.4 million in fourth-quarter 2016 and $1,979.6 million in fiscal-year year 2016, and GAAP revenue of $506.2 million in fourth-quarter 2016 and $1,948.9 million in fiscal-year 2016.
  • Increased recurring revenue both for the quarter and the year to 70 percent of total revenue, an increase of 400 basis points year-over-year from fiscal-year 2015, on both a non-GAAP and GAAP basis.
  • Delivered non-GAAP operating margin of 28.5 percent and GAAP operating margin of 7.1 percent for fiscal-year 2016;
  • Generated fourth-quarter 2016 non-GAAP earnings per share (EPS) of $0.41 and fiscal-year 2016 non-GAAP diluted EPS of $1.52 and fourth-quarter 2016 GAAP EPS of $0.06 and fiscal-year 2016 GAAP diluted EPS of $(0.04); and,
  • Delivered record Cash Flow From Operations (CFFO) for fiscal-year 2016 of $565.8 million, up 16 percent from fiscal-year 2015.

Fourth Quarter of Fiscal 2016 Performance

In the fourth quarter of fiscal 2016, Nuance reported GAAP revenue of $506.2 million, compared to $504.1 million a year ago. Nuance reported non-GAAP revenue of $512.4 million, which includes revenue lost to “accounting treatment in conjunction with acquisitions,” compared to $513.3 million in the fourth quarter of fiscal 2015.

In the fourth quarter of 2016, total recurring revenue represented 70 percent of total revenue, compared to 68 percent a year ago, on both a GAAP and non-GAAP basis. In the fourth quarter of fiscal 2016, Nuance reported net new bookings of $516.9 million, up 45 percent from $357.4 million a year ago.

In the fourth quarter of fiscal 2016, Nuance reported GAAP net income of $18.5 million, or $0.06 per diluted share, compared to a GAAP net loss of $11.0 million, or $0.04 per basic share, in the fourth quarter of fiscal 2015.

Nuance reported non-GAAP net income of $118.6 million, or $0.41 per diluted share, which was flat compared to non-GAAP net income of $129.6 million, or $0.41 per diluted share, in the fourth quarter of fiscal 2015.

Nuance’s fourth-quarter fiscal 2016 GAAP operating margin was 9.0 percent up from 5.7 percent in the fourth quarter of fiscal 2015. Nuance’s fourth quarter fiscal 2016 non GAAP operating margin was 29.9 percent, down from 30.2 percent in the fourth quarter of fiscal 2015. Nuance reported cash flow from operations of $138.9 million in the fourth quarter of fiscal 2016, down 8 percent from $151.6 million in the fourth quarter of fiscal 2015.

Fiscal Year 2016 Performance

In fiscal 2016, Nuance reported GAAP revenue of $1,948.9 million, up from $1,931.1 million in fiscal 2015. Nuance reported non-GAAP revenue of $1,979.6 million, which includes revenue lost to accounting treatment in conjunction with acquisitions, up from non-GAAP revenue of $1,979.1 million in fiscal 2015. In fiscal 2016, total recurring revenue represented 70 percent of total revenue, compared to 66 percent in fiscal 2015, on both a GAAP and non-GAAP basis. In fiscal 2016, Nuance reported net new bookings of $1,502.3 million, up 4 percent from $1,450.4 million in fiscal 2015.

In fiscal 2016, Nuance recognized GAAP net loss of $12.5 million, or $0.04 per share, compared to GAAP net loss of $115.0 million, or $0.36 per share, in fiscal 2015. In fiscal 2016, Nuance reported non-GAAP net income of $454.4 million, or $1.52 per diluted share, compared to $411.6 million, or $1.27 per diluted share, in fiscal 2015. Nuance’s fiscal 2016 GAAP operating margin was 7.1 percent, up from 2.8 percent in fiscal 2015. Nuance’s fiscal 2016 non-GAAP operating margin was 28.5 percent, compared to 26.2 percent in fiscal 2015. Nuance reported cash flow from operations of $565.8 million in fiscal 2016, compared to $487.6 million in fiscal 2015.

Nuance ended fiscal 2016 with total deferred revenue of $736.1 million, up 10 percent compared to $668.2 million a year ago. Nuance ended fiscal 2016 with $608.1 million in cash, cash equivalents and marketable securities.

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