BURLINGTON, Mass.--(BUSINESS WIRE)--Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its fiscal 2015 and fourth quarter, ended September 30, 2015.
Fiscal Fourth Quarter Performance
In the fourth quarter of
fiscal 2015, Nuance reported GAAP revenue of $504.1 million, up from
$502.3 million a year ago. Nuance reported non-GAAP revenue of $513.3
million, which includes $9.2 million of revenue lost to accounting
treatment in conjunction with acquisitions, compared to $520.3 million
in the fourth quarter of fiscal 2014. Fourth quarter 2015 revenue was
negatively affected by currency fluctuations as well. If fourth quarter
2014 currency rates were applied to fourth quarter 2015 non-GAAP
revenue, Nuance would have achieved approximately 1% organic non-GAAP
revenue growth for the quarter. In the fourth quarter of 2015, total
recurring revenue was $347.0 million and represented 68% of total
non-GAAP revenue, compared to $325.7 million and 63% a year ago. In the
fourth quarter of fiscal 2015, Nuance reported net new bookings of
$357.4 million, up 8.7% from $328.8 million a year ago. If fourth
quarter 2014 currency rates were applied to Nuance’s fourth quarter
2015, net new bookings would have been up 12% from a year ago.
In the fourth quarter of fiscal 2015, Nuance recognized GAAP net loss of $(11.0) million, or $(0.04) per share, compared to GAAP net loss of $(1.5) million, or $(0.00) per share, in the fourth quarter of fiscal 2014. Nuance reported non-GAAP net income of $129.6 million, or $0.41 per diluted share, up from non-GAAP net income of $107.6 million, or $0.33 per diluted share, in the fourth quarter of fiscal 2014. Nuance’s fourth quarter fiscal 2015 non-GAAP operating margin was 30.2%, up from 25.9% in the fourth quarter of fiscal 2014. Nuance reported cash flow from operations of $151.6 million in the fourth quarter of fiscal 2015, up 58.0% from $95.9 million in the fourth quarter of fiscal 2014.
“Nuance delivered a strong finish to its fiscal year, reporting revenue, EPS, cash flow from operations, margins and net new bookings that all exceeded our expectations,” said Dan Tempesta, Nuance’s CFO. “We made substantial progress on our company-wide transformation project, and continued to prioritize resources and focus toward our most significant market opportunities. We expect to continue our improvements in financial performance and lead the company to improved growth in 2016 and beyond.”
Fiscal Year 2015 Performance
In fiscal 2015, Nuance reported
GAAP revenue of $1,931.1 million, up from $1,923.5 million in fiscal
2014. Nuance reported non-GAAP revenue of $1,979.1 million, which
includes $47.9 million of revenue lost to accounting treatment in
conjunction with acquisitions. Fiscal 2015 non-GAAP revenue declined
slightly from non-GAAP revenue of $1,987.1 million in fiscal 2014.
Fiscal 2015 revenue was negatively affected by currency fluctuations. If
fiscal 2014 currency rates were applied to Nuance’s fiscal 2015 non-GAAP
revenue, Nuance would have achieved approximately 1% organic non-GAAP
revenue growth for the year. In fiscal 2015, total recurring revenue was
$1,314.7 million and represented 66% of total non-GAAP revenue, compared
to $1,263.3 million and 64% in fiscal 2014. In fiscal 2015, Nuance
reported net new bookings of $1,450.4 million, up 3.6% from $1,400.6
million in fiscal 2014. If fiscal year 2014 currency rates were applied
to Nuance’s fiscal year 2015, net new bookings would have been up 6%
from a year ago.
In fiscal 2015, Nuance recognized GAAP net loss of $(115.0) million, or $(0.36) per share, compared to GAAP net loss of $(150.3) million, or $(0.47) per share, in fiscal 2014. In fiscal 2015, Nuance reported non-GAAP net income of $411.6 million, or $1.27 per diluted share, compared to $360.1 million, or $1.12 per diluted share, in fiscal 2014. Nuance’s fiscal 2015 non-GAAP operating margin was 26.2%, compared to 23.7% in fiscal 2014. Nuance reported cash flow from operations of $487.6 million in fiscal 2015, compared to $358.1 million in fiscal 2014. Nuance ended fiscal 2015 with total deferred revenue of $668.2 million, up 21.9% compared to $548.1 million a year ago. Nuance ended fiscal 2015 with $568.8 million in cash, cash equivalents and marketable securities.
Please refer to the “Discussion of Non-GAAP Financial Measures” and to the “GAAP to Non-GAAP Reconciliations,” included elsewhere in this release, for more information regarding the company’s use of non-GAAP measures.
Conference Call and Prepared Remarks
Nuance is providing a
copy of prepared remarks in combination with its press release. These
remarks are offered to provide shareholders and analysts with additional
time and detail for analyzing results in advance of the company’s
quarterly conference call. The remarks will be available at http://www.nuance.com/earnings-results/
in conjunction with the press release.
Nuance will host an investor conference call today that will begin at 5:00 p.m. EDT and will include only brief comments followed by questions and answers. To access the live broadcast, please visit the Investor Relations section of Nuance’s website at www.nuance.com. The call can also be heard by dialing 800-230-1085 or 612-288-0329 at least five minutes prior to the call and referencing code 372344. A replay will be available within 24 hours of the announcement by dialing 800-475-6701 or 320-365-3844 and using the access code 372344.
Nuance is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company’s quarterly conference call. The remarks will be available at http://www.nuance.com/earnings-results/ in conjunction with the press release.
About Nuance Communications, Inc.
Nuance Communications,
Inc. (NASDAQ: NUAN) is a leading provider of voice and language
solutions for businesses and consumers around the world. Its
technologies, applications and services make the user experience more
compelling by transforming the way people interact with devices and
systems. Every day, millions of users and thousands of businesses
experience Nuance’s proven applications. For more information, please
visit www.nuance.com.
Trademark reference: Nuance and the Nuance logo are registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.
Definitions of Bookings and Net New Bookings
Bookings
represent the estimated gross revenue value of transactions at the time
of contract execution, except for maintenance and support offerings. For
fixed price contracts, the bookings value represents the gross total
contract value. For contracts where revenue is based on transaction
volume, the bookings value represents the contract price multiplied by
the estimated future transaction volume during the contract term,
whether or not such transaction volumes are guaranteed under a minimum
commitment clause. Actual results could be different than our initial
estimates. The maintenance and support bookings value represents the
amounts billed in the period the customer is invoiced. Because of the
inherent estimates required to determine bookings and the fact that the
actual resultant revenue may differ from our initial bookings estimates,
we consider bookings one indicator of potential future revenue and not
as an arithmetic measure of backlog.
Net new bookings represents the estimated revenue value at the time of contract execution from new contractual arrangements or the estimated revenue value incremental to the portion of value that will be renewed under pre-existing arrangements.
Safe Harbor and Forward-Looking Statements
Statements in
this document regarding future performance 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 statements of
historical fact (including statements containing the words “believes,”
“plans,” “anticipates,” “expects,” or “estimates” or similar
expressions) should also be considered to be forward-looking statements.
There are a number of important factors that could cause actual results
or events to differ materially from those indicated by such
forward-looking statements, including but not limited to: fluctuations
in demand for our existing and future products; changes to economic
conditions in the United States and internationally; fluctuating
currency rates, our ability to control and successfully manage our
expenses and cash position; our ability to execute our formal
transformation program to reduce costs and optimize processes; the
effects of competition, including pricing pressure; possible defects in
our products and technologies; our ability to successfully integrate
operations and employees of acquired businesses; the conversion rate of
bookings into revenue; the ability to realize anticipated synergies from
acquired businesses; and the other factors described in our annual
report on Form 10-K for the fiscal year ended September 30, 2014 and our
quarterly reports, and other reports filed 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.
The information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.
Discussion of Non-GAAP Financial Measures
We utilize a
number of different financial measures, both Generally Accepted
Accounting Principles (“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. Our annual
financial plan is prepared both on a GAAP and non-GAAP basis, and the
non-GAAP annual financial plan is approved by our board of directors.
Continuous budgeting and forecasting for revenue and expenses are
conducted on a consistent non-GAAP basis (in addition to GAAP) and
actual results on a non-GAAP basis are assessed against the non-GAAP
annual financial plan. The board of directors and management utilize
these non-GAAP measures and results (in addition to the GAAP results) to
determine our allocation of resources. In addition and as a consequence
of the importance of these measures in managing the business, we use
non-GAAP measures and results in the evaluation process to establish
management’s compensation. For example, our annual bonus program
payments are based upon the achievement of consolidated non-GAAP revenue
and consolidated non-GAAP earnings per share financial targets. We
consider the use of non-GAAP revenue helpful in understanding the
performance of our business, as it excludes the purchase accounting
impact on acquired deferred revenue and other acquisition-related
adjustments to revenue. We also consider the use of non-GAAP earnings
per share helpful in assessing the organic performance of the continuing
operations of our business. By organic performance we mean performance
as if we had owned an acquired business in the same period a year ago.
By continuing operations we mean the ongoing results of the business
excluding certain unplanned costs. 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. 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 twelve months ended September 30,
2015 and 2014, our management has either included or excluded items in
six general categories, each of which is described below.
Acquisition-Related Revenue and Cost of Revenue.
We provide
supplementary non-GAAP financial measures of revenue, which include
revenue related to acquisitions, primarily from Notable Solutions,
Quantim and Equitrac for the three and twelve months ended September 30,
2015 that would otherwise have been recognized but for the purchase
accounting treatment of these transactions. Non-GAAP revenue also
includes revenue that we would have otherwise recognized had we not
acquired intellectual property and other assets from the same customer.
Because GAAP accounting requires the elimination of this revenue, GAAP
results alone do not fully capture all of our economic activities. These
non-GAAP adjustments are intended to reflect the full amount of such
revenue. We include non-GAAP revenue and cost of revenue to allow for
more complete comparisons to the financial results of historical
operations, forward-looking guidance and the financial results of peer
companies. We believe these adjustments are useful to management and
investors as a measure of the ongoing performance of the business
because, although we cannot be certain that customers will renew their
contracts, we have historically experienced high renewal rates on
maintenance and support agreements and other customer contracts.
Additionally, although acquisition-related revenue adjustments are
non-recurring with respect to past acquisitions, we generally will incur
these adjustments in connection with any future acquisitions.
Acquisition-Related Costs, Net.
In recent years, 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 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 are included in the following categories: (i) transition and integration costs; (ii) professional service fees; 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:
(i) Transition and integration costs. Transition and integration costs include retention payments, transitional employee costs, earn-out payments treated as compensation expense, as well as the costs of integration-related services, including services provided by third parties.
(ii) Professional service fees. Professional service fees include third party costs related to the acquisition, and legal and other professional service fees associated with disputes and regulatory matters related to acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to acquisition-related items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended, such as gains or losses on settlements of pre-acquisition contingencies.
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.
Costs Associated with IP Collaboration Agreement.
In order
to gain access to a third party's extensive speech recognition
technology and natural language and semantic processing technology, we
have entered into IP collaboration agreements, with terms ranging
between five and six years. Depending on the agreement, some or all
intellectual property derived from these collaborations will be jointly
owned by the two parties. For the majority of the developed intellectual
property, we will have sole rights to commercialize such intellectual
property for periods ranging between two to six years, depending on the
agreement. For non-GAAP purposes, we consider these long-term contracts
and the resulting acquisitions of intellectual property from this
third-party over the agreements’ terms to be an investing activity,
outside of our normal, organic, continuing operating activities, and are
therefore presenting this supplemental information to show the results
excluding these expenses. We do not exclude from our non-GAAP results
the corresponding revenue, if any, generated from these collaboration
efforts. Although our bonus program and other performance-based
incentives for executives are based on the non-GAAP results that exclude
these costs, certain engineering senior management are responsible for
execution and results of the collaboration agreement and have incentives
based on those results. Costs associated with the research and
development portion of the agreements have been excluded from research
and development expense while costs for the extension of the marketing
exclusivity period are excluded from sales and marketing expense.
Non-Cash Expenses.
We provide non-GAAP information relative
to the following non-cash expenses: (i) stock-based compensation; (ii)
certain accrued interest; and (iii) certain accrued income taxes. These
items are further discussed as follows:
(i) Stock-based compensation. Because of varying available valuation methodologies, subjective assumptions and the variety of award types, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of operating results to peer companies, as well as to times in our history when stock-based compensation was more or less significant as a portion of overall compensation than in the current period. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and the options and restricted awards granted are influenced by the Company’s stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.
(ii) and (iii) Certain accrued interest and income taxes. We also exclude certain accrued interest and certain accrued income taxes because we believe that excluding these non-cash expenses provides senior management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. These non-cash expenses will continue in future periods.
Other Expenses.
We exclude certain other expenses that are
the result of unplanned events to measure operating performance and
current and future liquidity both with and without these expenses; and
therefore, 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 restructuring
charges, asset impairments and other charges (credits), net. These
events are unplanned and arose outside of the ordinary course of
continuing operations. These items include losses from the
extinguishment of our convertible debt and adjustments from changes in
fair value of share-based instruments relating to the issuance of our
common stock with security price guarantees payable in cash. Other items
such as consulting and professional services fees related to assessing
strategic alternatives and our transformation program, and gains or
losses on non-controlling strategic equity interests, are also excluded.
We believe that providing the non-GAAP information to investors, 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.
| Nuance Communications, Inc. | |||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||
| Unaudited | |||||||||||||||||||||
| Three months ended | Twelve months ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Product and licensing | $ | 189,345 | $ | 189,508 | $ | 696,290 | $ | 710,988 | |||||||||||||
| Professional services and hosting | 234,552 | 233,557 | 919,479 | 910,916 | |||||||||||||||||
| Maintenance and support | 80,222 | 79,249 | 315,367 | 301,547 | |||||||||||||||||
| Total revenues | 504,119 | 502,314 | 1,931,136 | 1,923,451 | |||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||
| Product and licensing | 23,341 | 22,952 | 91,839 | 97,550 | |||||||||||||||||
| Professional services and hosting | 157,692 | 157,644 | 619,880 | 633,248 | |||||||||||||||||
| Maintenance and support | 13,363 | 14,020 | 54,514 | 52,553 | |||||||||||||||||
| Amortization of intangible assets | 17,108 | 15,447 | 63,646 | 60,989 | |||||||||||||||||
| Total cost of revenues | 211,504 | 210,063 | 829,879 | 844,340 | |||||||||||||||||
| Gross profit | 292,615 | 292,251 | 1,101,257 | 1,079,111 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | 73,939 | 86,355 | 310,332 | 338,543 | |||||||||||||||||
| Sales and marketing | 107,093 | 107,575 | 410,882 | 424,544 | |||||||||||||||||
| General and administrative | 45,178 | 52,773 | 182,456 | 184,663 | |||||||||||||||||
| Amortization of intangible assets | 26,104 | 27,733 | 104,630 | 109,063 | |||||||||||||||||
| Acquisition-related cost, net | 677 | 5,508 | 14,379 | 24,218 | |||||||||||||||||
| Restructuring and other charges, net | 10,966 | 2,265 | 23,669 | 19,443 | |||||||||||||||||
| Total operating expenses | 263,957 | 282,209 | 1,046,348 | 1,100,474 | |||||||||||||||||
| Income (loss) from operations | 28,658 | 10,042 | 54,909 | (21,363 | ) | ||||||||||||||||
| Other expense, net | (28,553 | ) | (32,506 | ) | (135,381 | ) | (133,657 | ) | |||||||||||||
| Income (loss) before income taxes | 105 | (22,464 | ) | (80,472 | ) | (155,020 | ) | ||||||||||||||
| Provision (benefit) for income taxes | 11,132 | (21,008 | ) | 34,538 | (4,677 | ) | |||||||||||||||
| Net loss | $ | (11,027 | ) | $ | (1,456 | ) | $ | (115,010 | ) | $ | (150,343 | ) | |||||||||
| Net loss per share: | |||||||||||||||||||||
| Basic | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.36 | ) | $ | (0.47 | ) | |||||||||
| Diluted | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.36 | ) | $ | (0.47 | ) | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||
| Basic | 309,281 | 318,725 | 317,028 | 316,936 | |||||||||||||||||
| Diluted | 309,281 | 318,725 | 317,028 | 316,936 | |||||||||||||||||
| Nuance Communications, Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands) | ||||||||||
| Unaudited | ||||||||||
| ASSETS | September 30, 2015 | September 30, 2014 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 479,449 | $ | 547,230 | ||||||
| Marketable securities | 57,237 | 40,974 | ||||||||
| Accounts receivable, net | 373,162 | 428,266 | ||||||||
| Prepaid expenses and other current assets | 134,086 | 148,030 | ||||||||
| Total current assets | 1,043,934 | 1,164,500 | ||||||||
| Marketable securities | 32,099 | - | ||||||||
| Land, building and equipment, net | 186,007 | 191,411 | ||||||||
| Goodwill | 3,378,334 | 3,410,893 | ||||||||
| Intangible assets, net | 796,285 | 915,483 | ||||||||
| Other assets | 148,686 | 137,997 | ||||||||
| Total assets | $ | 5,585,345 | $ | 5,820,284 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt | $ | 4,834 | $ | 4,834 | ||||||
| Contingent and deferred acquisition payments | 15,651 | 35,911 | ||||||||
| Accounts payable and accrued expenses | 281,190 | 303,039 | ||||||||
| Deferred revenue | 324,709 | 298,225 | ||||||||
| Total current liabilities | 626,384 | 642,009 | ||||||||
| Long-term portion of debt | 2,118,821 | 2,127,392 | ||||||||
| Deferred revenue, net of current portion | 343,452 | 249,879 | ||||||||
| Other liabilities | 231,436 | 219,012 | ||||||||
| Total liabilities | 3,320,093 | 3,238,292 | ||||||||
| Stockholders' equity | 2,265,252 | 2,581,992 | ||||||||
| Total liabilities and stockholders' equity | $ | 5,585,345 | $ | 5,820,284 | ||||||
| Nuance Communications, Inc. | |||||||||||||||||||||
| Consolidated Statements of Cash Flows | |||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Unaudited | |||||||||||||||||||||
| Three months ended | Twelve months ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||
| Net loss | $ | (11,027 | ) | $ | (1,456 | ) | $ | (115,010 | ) | $ | (150,343 | ) | |||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||||||
| Depreciation and amortization | 58,753 | 56,496 | 230,645 | 221,776 | |||||||||||||||||
| Stock-based compensation | 56,804 | 45,423 | 176,776 | 192,964 | |||||||||||||||||
| Non-cash interest expense | 7,300 | 8,532 | 29,378 | 36,719 | |||||||||||||||||
| Deferred tax provision (benefit) | 9,161 | (24,523 | ) | 16,690 | (22,172 | ) | |||||||||||||||
| Loss on extinguishment of debt | - | - | 17,714 | - | |||||||||||||||||
| Other | 4,203 | (3,432 | ) | 9,843 | (7,726 | ) | |||||||||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||||
| Accounts receivable | (9,333 | ) | (34,796 | ) | 41,657 | (39,502 | ) | ||||||||||||||
| Prepaid expenses and other assets | 10,778 | 9,057 | (3,931 | ) | (396 | ) | |||||||||||||||
| Accounts payable | 11,429 | (3,614 | ) | (3,218 | ) | (28,617 | ) | ||||||||||||||
| Accrued expenses and other liabilities | (4,952 | ) | 9,983 | (48,118 | ) | 13,617 | |||||||||||||||
| Deferred revenue | 18,491 | 34,264 | 135,151 | 141,827 | |||||||||||||||||
| Net cash provided by operating activities | 151,607 | 95,934 | 487,577 | 358,147 | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||
| Capital expenditures | (9,880 | ) | (18,928 | ) | (58,039 | ) | (60,287 | ) | |||||||||||||
| Payments for business and technology acquisitions, net of cash acquired | (1,244 | ) | (116,817 | ) | (83,278 | ) | (253,000 | ) | |||||||||||||
| Purchases of marketable securities and other investments | (33,932 | ) | (43,026 | ) | (148,697 | ) | (62,639 | ) | |||||||||||||
| Proceeds from sales and maturities of marketable securities and other investments | 34,386 | 32,124 | 83,867 | 64,975 | |||||||||||||||||
| Net cash used in investing activities | (10,670 | ) | (146,647 | ) | (206,147 | ) | (310,951 | ) | |||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||
| Payments of debt | (1,208 | ) | (251,183 | ) | (261,051 | ) | (255,038 | ) | |||||||||||||
| Proceeds from long-term debt, net of issuance costs | (2,988 | ) | - | 253,224 | - | ||||||||||||||||
| Payments for repurchase of common stock | (60,076 | ) | - | (298,279 | ) | (26,483 | ) | ||||||||||||||
| Payments on other long-term liabilities | (620 | ) | (674 | ) | (3,003 | ) | (2,890 | ) | |||||||||||||
| Payments for settlement of share-based derivatives, net | - | - | (340 | ) | (5,286 | ) | |||||||||||||||
| Proceeds from issuance of common stock from employee stock plans | 13,441 | 9,127 | 25,776 | 22,652 | |||||||||||||||||
| Cash used to net share settle employee equity awards | (4,287 | ) | (4,803 | ) | (57,560 | ) | (40,121 | ) | |||||||||||||
| Net cash used in financing activities | (55,738 | ) | (247,533 | ) | (341,233 | ) | (307,166 | ) | |||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | (2,866 | ) | (1,460 | ) | (7,978 | ) | (918 | ) | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | 82,333 | (299,706 | ) | (67,781 | ) | (260,888 | ) | ||||||||||||||
| Cash and cash equivalents at beginning of period | 397,116 | 846,936 | 547,230 | 808,118 | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | 479,449 | $ | 547,230 | $ | 479,449 | $ | 547,230 | |||||||||||||
| Nuance Communications, Inc. | ||||||||||||||||||||||
| Supplemental Financial Information - GAAP to Non-GAAP Reconciliations | ||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
| GAAP revenue | $ | 504,119 | $ | 502,314 | $ | 1,931,136 | $ | 1,923,451 | ||||||||||||||
| Acquisition-related revenue adjustments: product and licensing | 6,026 | 12,914 | 32,923 | 37,298 | ||||||||||||||||||
| Acquisition-related revenue adjustments: professional services and hosting | 2,843 | 4,346 | 13,142 | 23,117 | ||||||||||||||||||
| Acquisition-related revenue adjustments: maintenance and support | 332 | 679 | 1,868 | 3,219 | ||||||||||||||||||
| Non-GAAP revenue | $ | 513,320 | $ | 520,253 | $ | 1,979,069 | $ | 1,987,085 | ||||||||||||||
| GAAP cost of revenue | $ | 211,504 | $ | 210,063 | $ | 829,879 | $ | 844,340 | ||||||||||||||
| Cost of revenue from amortization of intangible assets | (17,108 | ) | (15,447 | ) | (63,646 | ) | (60,989 | ) | ||||||||||||||
| Cost of revenue adjustments: product and licensing (1,2) | 140 | 939 | 1,021 | 2,171 | ||||||||||||||||||
| Cost of revenue adjustments: professional services and hosting (1,2) | (10,494 | ) | (7,402 | ) | (29,735 | ) | (30,804 | ) | ||||||||||||||
| Cost of revenue adjustments: maintenance and support (1,2) | (1,413 | ) | (946 | ) | (3,989 | ) | (3,426 | ) | ||||||||||||||
| Non-GAAP cost of revenue | $ | 182,629 | $ | 187,207 | $ | 733,530 | $ | 751,292 | ||||||||||||||
| GAAP gross profit | $ | 292,615 | $ | 292,251 | $ | 1,101,257 | $ | 1,079,111 | ||||||||||||||
| Gross profit adjustments | 38,076 | 40,795 | 144,282 | 156,682 | ||||||||||||||||||
| Non-GAAP gross profit | $ | 330,691 | $ | 333,046 | $ | 1,245,539 | $ | 1,235,793 | ||||||||||||||
| GAAP income (loss) from operations | $ | 28,658 | $ | 10,042 | $ | 54,909 | $ | (21,363 | ) | |||||||||||||
| Gross profit adjustments | 38,076 | 40,795 | 144,282 | 156,682 | ||||||||||||||||||
| Research and development (1) | 12,651 | 10,436 | 39,038 | 44,139 | ||||||||||||||||||
| Sales and marketing (1) | 18,134 | 14,338 | 50,310 | 53,448 | ||||||||||||||||||
| General and administrative (1) | 13,638 | 12,462 | 51,955 | 59,164 | ||||||||||||||||||
| Amortization of intangible assets | 26,104 | 27,733 | 104,630 | 109,063 | ||||||||||||||||||
| Costs associated with IP collaboration agreements | 2,000 | 4,937 | 10,500 | 19,748 | ||||||||||||||||||
| Acquisition-related costs, net | 677 | 5,508 | 14,379 | 24,218 | ||||||||||||||||||
| Restructuring and other charges, net | 10,966 | 2,265 | 23,669 | 19,443 | ||||||||||||||||||
| Other | 4,342 | 6,124 | 24,933 | 7,185 | ||||||||||||||||||
| Non-GAAP income from operations | $ | 155,246 | $ | 134,640 | $ | 518,605 | $ | 471,727 | ||||||||||||||
| GAAP provision (benefit) for income taxes | $ | 11,132 | $ | (21,008 | ) | $ | 34,538 | $ | (4,677 | ) | ||||||||||||
| Non-cash taxes | (6,621 | ) | 24,853 | (15,199 | ) | 22,172 | ||||||||||||||||
| Non-GAAP provision for income taxes | $ | 4,511 | $ | 3,845 | $ | 19,339 | $ | 17,495 | ||||||||||||||
| GAAP net loss | $ | (11,027 | ) | $ | (1,456 | ) | $ | (115,010 | ) | $ | (150,343 | ) | ||||||||||
| Acquisition-related adjustment - revenue (2) | 9,201 | 17,939 | 47,933 | 63,634 | ||||||||||||||||||
| Acquisition-related adjustment - cost of revenue (2) | (614 | ) | (778 | ) | (2,770 | ) | (4,154 | ) | ||||||||||||||
| Acquisition-related costs, net | 677 | 5,508 | 14,379 | 24,218 | ||||||||||||||||||
| Cost of revenue from amortization of intangible assets | 17,108 | 15,447 | 63,646 | 60,989 | ||||||||||||||||||
| Amortization of intangible assets | 26,104 | 27,733 | 104,630 | 109,063 | ||||||||||||||||||
| Restructuring and other charges, net | 10,966 | 2,265 | 23,669 | 19,443 |
|
|||||||||||||||||
| Non-cash stock-based compensation (1) | 56,804 | 45,423 | 176,776 | 192,964 | ||||||||||||||||||
| Non-cash interest expense | 7,300 | 8,532 | 29,378 | 36,719 | ||||||||||||||||||
| Non-cash income taxes | 6,621 | (24,853 | ) | 15,199 | (22,172 | ) | ||||||||||||||||
| Costs associated with IP collaboration agreements | 2,000 | 4,937 | 10,500 | 19,748 | ||||||||||||||||||
| Change in fair value of share-based instruments | - | 787 | 204 | 4,358 | ||||||||||||||||||
| Loss on extinguishment of debt | - | - | 17,714 | - | ||||||||||||||||||
| Other | 4,507 | 6,124 | 25,362 | 5,670 | ||||||||||||||||||
| Non-GAAP net income | $ | 129,647 | $ | 107,608 | $ | 411,610 | $ | 360,137 | ||||||||||||||
| Non-GAAP diluted net income per share | $ | 0.41 | $ | 0.33 | $ | 1.27 | $ | 1.12 | ||||||||||||||
| Diluted weighted average common shares outstanding | 317,443 | 327,062 | 323,940 | 322,816 | ||||||||||||||||||
| Nuance Communications, Inc. | ||||||||||||||||||||
| Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
|
(1) Non-Cash Stock-Based Compensation |
||||||||||||||||||||
| Cost of product and licensing | $ | 185 | $ | (476 | ) | $ | 516 | $ | 724 | |||||||||||
| Cost of professional services and hosting | 10,783 | 7,717 | 30,968 | 32,063 | ||||||||||||||||
| Cost of maintenance and support | 1,413 | 946 | 3,989 | 3,426 | ||||||||||||||||
| Research and development | 12,651 | 10,436 | 39,038 | 44,139 | ||||||||||||||||
| Sales and marketing | 18,134 | 14,338 | 50,310 | 53,448 | ||||||||||||||||
| General and administrative | 13,638 | 12,462 | 51,955 | 59,164 | ||||||||||||||||
| Total | $ | 56,804 | $ | 45,423 | $ | 176,776 | $ | 192,964 | ||||||||||||
|
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||||||||||||||
| Revenue | $ | 9,201 | $ | 17,939 | $ | 47,933 | $ | 63,634 | ||||||||||||
| Cost of product and licensing | (325 | ) | (463 | ) | (1,537 | ) | (2,895 | ) | ||||||||||||
| Cost of professional services and hosting | (289 | ) | (315 | ) | (1,233 | ) | (1,259 | ) | ||||||||||||
| Total | $ | 8,587 | $ | 17,161 | $ | 45,163 | $ | 59,480 | ||||||||||||
| Nuance Communications, Inc. | |||||||||||||||||||||||||
| Supplemental Financial Information – GAAP to Non-GAAP Reconciliations, continued | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||
|
Perpetual Product and Licensing Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $584.1 | $578.1 | $123.3 | $121.1 | $116.7 | $135.5 | $496.6 | $117.0 | $121.3 | $108.1 | $115.9 | $462.1 | |||||||||||||
| Adjustment | $73.9 | $45.7 | $7.8 | $4.3 | $2.9 | $6.7 | $21.7 | $2.2 | $4.6 | $3.6 | $2.4 | $13.0 | |||||||||||||
| Non-GAAP Revenue | $658.0 | $623.8 | $131.1 | $125.4 | $119.6 | $142.2 | $518.3 | $119.2 | $125.9 | $111.7 | $118.3 | $475.2 | |||||||||||||
|
Recurring Product and Licensing Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $156.6 | $175.6 | $55.2 | $53.7 | $51.5 | $54.0 | $214.4 | $52.7 | $53.2 | $54.7 | $73.5 | $234.1 | |||||||||||||
| Adjustment | $0.0 | $24.4 | $3.7 | $3.0 | $2.7 | $6.2 | $15.6 | $8.4 | $4.6 | $3.5 | $3.6 | $20.1 | |||||||||||||
| Non-GAAP Revenue | $156.6 | $200.0 | $58.9 | $56.7 | $54.2 | $60.2 | $230.0 | $61.1 | $57.8 | $58.2 | $76.9 | $254.0 | |||||||||||||
|
Professional Services Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $183.1 | $208.1 | $50.8 | $55.4 | $56.3 | $58.3 | $220.7 | $54.8 | $51.2 | $51.2 | $52.9 | $210.0 | |||||||||||||
| Adjustment | $0.7 | $17.9 | $3.4 | $2.3 | $1.5 | $0.3 | $7.5 | $0.4 | $0.4 | $0.4 | $0.3 | $1.5 | |||||||||||||
| Non-GAAP Revenue | $183.8 | $226.0 | $54.2 | $57.7 | $57.8 | $58.6 | $228.2 | $55.2 | $51.6 | $51.6 | $53.2 | $211.5 | |||||||||||||
|
Hosting Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $490.9 | $624.3 | $167.3 | $172.2 | $175.4 | $175.3 | $690.2 | $171.4 | $173.3 | $183.1 | $181.7 | $709.5 | |||||||||||||
| Adjustment | $5.3 | $9.3 | $4.3 | $3.9 | $3.4 | $4.0 | $15.6 | $3.4 | $2.9 | $2.8 | $2.4 | $11.5 | |||||||||||||
| Non-GAAP Revenue | $496.2 | $633.6 | $171.6 | $176.1 | $178.8 | $179.3 | $705.8 | $174.8 | $176.2 | $185.9 | $184.2 | $721.2 | |||||||||||||
|
Maintenance and Support Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $236.8 | $269.2 | $73.4 | $73.3 | $75.6 | $79.2 | $301.6 | $78.2 | $76.1 | $80.9 | $80.2 | $315.4 | |||||||||||||
| Adjustment | $6.7 | $5.1 | $0.9 | $0.8 | $0.8 | $0.7 | $3.2 | $0.6 | $0.5 | $0.4 | $0.3 | $1.8 | |||||||||||||
| Non-GAAP Revenue | $243.5 | $274.3 | $74.3 | $74.1 | $76.4 | $80.0 | $304.8 | $78.8 | $76.6 | $81.3 | $80.6 | $317.1 | |||||||||||||
|
Total Recurring Revenue |
FY | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| 2012 | 2013 | 2014 | 2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||
| GAAP Revenue | $896.7 | $1,087.4 | $300.5 | $305.7 | $307.3 | $314.8 | $1,228.4 | $308.9 | $307.5 | $323.6 | $340.5 | $1,280.5 | |||||||||||||
| Adjustment | $12.2 | $40.2 | $9.2 | $8.0 | $7.0 | $10.9 | $34.9 | $12.7 | $8.1 | $6.8 | $6.5 | $34.1 | |||||||||||||
| Non-GAAP Revenue | $908.8 | $1,127.6 | $309.6 | $313.7 | $314.3 | $325.7 | $1,263.3 | $321.7 | $315.6 | $330.4 | $347.0 | $1,314.7 | |||||||||||||
| Schedules may not add due to rounding. | |||||||||||||||||||||||||
