Revenue up for Nuance’s Third Quarter, but Firm Reports a Loss
Nuance Communications today reported financial results for the third quarter of fiscal 2014, ended June 30, 2014. Revenue was $475.5 million, an increase from the $469.8 million reported for the same quarter a year ago. Nuance also reported bookings of $547.0 million, up 16.7 percent from $468.8 million for third-quarter 2013. Year-to-date, Nuance reported bookings of $1,822.4 million, up 28.4 percent from the $1,418.8 million it reported for the first three quarters of fiscal 2013.
However, for third-quarter 2014, Nuance reported a loss of $54.2 million, or $0.17 per share, compared with a loss of $35.0 million, or $0.11 per share, for third-quarter 2013. Nuance ended third-quarter 2014 with a balance of cash, cash equivalents and marketable securities of $888.5 million.
Third Quarter and Year-to-Date Highlights
In the third quarter of fiscal 2014, Nuance delivered year-over-year bookings growth of 17 percent and deferred revenue growth of 32 percent. Through the first three quarters of the fiscal year, total bookings have grown 28 percent, exceeding Nuance’s forecast, and the growth rate for on-demand bookings was materially higher. Bookings strength in the quarter was led by healthcare on-demand, Dragon Medical, automotive, Enterprise OnDemand and MFP printing solutions.
Revenue was strong for Nuance’s Dragon Medical, Diagnostics, automotive and Enterprise OnDemand solutions, but this strength was outweighed by faster than expected transition in the revenue model, lower than expected contributions from acquisitions and underperformance in the Imaging business unit.
Performance in the third quarter of fiscal 2014, includes:
- Total recurring revenue grew 12 percent year-over-year and represented 65 percent of total revenue.
- On-demand revenue exceeded product and licensing revenue for the first time.
- On demand revenue grew 12 percent year-over-year and 11 percent year-to-date compared to the first three quarters of fiscal 2013.
- Year-to date on-demand revenue represented 36 percent of total revenue, compared to 32 percent through the first three quarters of fiscal 2013.
- Maintenance and support revenue grew 11 percent year-over-year, and 11 percent year-to-date compared to the first three quarters of fiscal 2013.
- Year-to-date maintenance and support revenue represented 15 percent of total revenue, compared to 14 percent through the first three quarters of fiscal 2013.
- Product and licensing revenue declined 15 percent year-over-year, and 12 percent year-to-date compared to the first three quarters of fiscal 2013.
- Year-to-date product and licensing revenue represented 37 percent of total revenue, compared to 42 percent of revenue through the first three quarters of fiscal 2013.
- Nuance delivered earnings per share (EPS) at the midpoint of its guidance range despite the underperformance in revenue and as a result of cost reductions and expense control.
“Our third quarter results balanced strong bookings, deferred revenue, cash flow, and EPS with revenue that was just below our guidance range. These results reflect continued progress in key markets, a continuing shift to recurring revenue streams and additional focus on expense control. Our bookings and deferred revenue growth are evidence that we are on the right trajectory for a return to growth,” commented Nuance CFO Tom Beaudoin.
Other highlights for Nuance’s third quarter include:
- Healthcare – For Nuance’s healthcare solutions, third-quarter fiscal 2014 non-GAAP (Generally Accepted Accounting Principles) revenue was $240.1 million. Key healthcare customers included Adventist Hospital, Barnabas Health, Community Hospital East, Dolbey Systems, Eastern, Erie County Medical Center, Froedert Health, Howard University Hospital, Integris, Memorial, Peace Health, Springfield Clinic, University of North Carolina, and University of Washington.
- Mobile & Consumer – For Nuance’s mobile and consumer solutions, third-quarter fiscal 2014 non-GAAP revenue was $109.2 million. Key mobile customers included AT&T, BlackBerry, Delphi, Desay, Ford, GM, Honda, Hyundai, Kyocera, Motorola, Renault, Samsung, Sasktel, Subaru, Suzuki, Teltech, Toyota, Visteon, West, Yangfeng, and YouMail.
- Enterprise – For Nuance’s enterprise solutions, third quarter fiscal 2014 non-GAAP revenue was $85.1 million. Key enterprise customers included Amtrak, AT&T, Bank of America, Barclays, BNY Mellon, CSAA, Deutsche Telekom, DHS, DTE Energy, ICICI Bank, OnStar, Optus, PSCU, PHH, Swedbank, and Telecom Italia.
- Imaging – For Nuance’s document-imaging solutions, third-quarter fiscal 2014 non-GAAP revenue was $52.4 million. Key imaging customers included BP, Central Asia Bank, Dorsey, Fuji Xerox, Hewlett-Packard, Lexmark International, Marsh McLennan, and Staples.
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