Nuance Announces Third-Quarter Results

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Nuance Communications today announced financial results for the third quarter of its fiscal-year 2018 (April 1 to June 30, 2018), stating that it had delivered a strong performance across several key financial metrics, and that its portfolio and business review are proceeding as planned. It also announced a $500-million share-repurchase program, and a $150-million debt repayment.

According to Nuance CEO Mark Benjamin: “We delivered solid third-quarter 2018 results, including non-GAAP (Generally Accepted Accounting Principles) revenue above the high-end of our guidance, non-GAAP diluted EPS (earnings per share) slightly above the midpoint of our guidance, and 7 percent net new bookings growth. In addition, we made significant changes to our board of directors and governance, and acted on our commitment to rebalance our capital allocation strategy, repurchasing 8.1 million shares, or approximately 3 percent of our total shares outstanding.

“We also made meaningful progress with our portfolio and business reviews in the quarter,” continued Benjamin. “We are acting with urgency and driving toward a simplified and more efficient business, capable of sustainable, long-term revenue and earnings growth with resources keenly focused on opportunities that leverage Nuance’s core strengths in key vertical markets. As we committed last quarter, we will discuss Nuance’s next phase of growth and the evolution of our business in more detail when we report our fiscal fourth quarter and full-year 2018 results.”

Nuance’s third-quarter 2018 financial results are as follows;

  • Revenue of $502.9 million, up 3 percent compared to $486.2 million for third-quarter 2017
  • Recurring revenue made up 73 percent of total revenue, consistent with results for third-quarter 2017
  • A net loss of $14.0 million, or $0.05 per share, compared to a loss of $27.8 million, or $0.10 per share, for third-quarter 2017
  • Operating margin of 5.7 percent, compared to 2.9 percent for third-quarter 2017
  • Cash flow from operations of $99.7 million, compared to $132.0 million for third-quarter 2017

On a non-GAAP basis:

  • Revenue of $506.0 million, up 2 percent compared to $495.6 million for third-quarter 2017
  • Organic revenue grew 1 percent in the quarter to $506.0 million compared to $502.8 million for third-quarter 2017
  • Recurring revenue made up 73 percent of total non-GAAP revenue, consistent with results for third-quarter 2017
  • Net income of $79.6 million, or $0.27 per diluted share, compared to non-GAAP net income of $79.2 million, or $0.27 per diluted share, for third-quarter 2017
  • Operating margin of 24.7 percent, compared to 27.0 percent for third-quarter 2017
  • Cash flow from operations of $99.7 million, or 125 percent of non-GAAP net income
  • Net new bookings growth of 7 percent, to $471.1 million, compared to $438.5 million for third-quarter 2017

Outlook

Nuance re-affirmed its expectations for 5 to 7 percent net new bookings growth and approximately 3 percent organic revenue growth for fiscal year 2018, consistent with the midpoint of its prior guidance of 2 to 4 percent organic revenue growth.

Nuance expects fiscal-year 2018 GAAP EPS in a range of a loss of $0.44 to $0.39 and non-GAAP diluted EPS in a range of $1.11 to $1.15 per share, an increase of $0.01 at the mid-point from its prior guidance range of $1.09 to $1.15 per share, and inclusive of an estimated $0.01 benefit as a result of share repurchases.

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