NEW YORK--(BUSINESS WIRE)--Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, reminds investors that a class action lawsuit has been filed against Cerence Inc. (“Cerence” or the “Company”) (NASDAQ: CRNC) in the United States District Court for the District of Massachusetts on behalf of all persons and entities who purchased or otherwise acquired Cerence securities between February 8, 2021 and February 4, 2022, both dates inclusive (the “Class Period”). Investors have until April 26, 2022, to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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Cerence is a Burlington, Massachusetts-based company that focuses on building artificial intelligence-powered virtual assistants primarily for the automotive market. Despite the ongoing COVID-19 pandemic, supply-chain issues, and the semiconductor shortage, which reduced the global production of automobiles, Cerence continued to report growing revenues and strong demand for software licenses for its products. Cerence even touted its “visibility” into demand for its products by providing revenue guidance for fiscal year 2024, guidance that was a focus of securities analysts and that the Company raised significantly during the Class Period.
The Class Action alleges that, during the Class Period, Defendants made materially false and misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects in violation of the Exchange Act and SEC Rule 10b-5. Specifically, Defendants failed to disclose: (1) that the global semiconductor shortage had a materially negative impact on demand for Cerence’s software licenses; (2) that Defendants masked the impact of the semiconductor shortage on demand for the Company’s software licenses by pulling forward sales; and (3) that, as a result of the above, Defendants’ statements about Cerence’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis.
The truth began to emerge during Cerence’s earnings call on November 22, 2021 for the fiscal fourth quarter of 2021 ended on September 30, 2021, causing Cerence’s stock price to fall and investors to suffer substantial losses. On that call, Cerence announced revenue guidance for fiscal year 2022 that was well below analysts’ expectations. In response to this revelation, Cerence’s stock price fell more than 20 percent from a closing price of $104.06 the prior trading day, to a close of $82.59 on November 22, 2021. The Company’s stock price continued to fall another 5% the following day to close at $78.27 on November 23, 2021.
Then, approximately three weeks later, Cerence’s Chief Executive Officer (“CEO”) Sanjay Dhawan abruptly resigned. On this news, Cerence’s stock price fell an additional 11% from a closing price of $78.08 on December 14, 2021 to a closing price of $69.20 on December 15, 2021.
Finally, on February 7, 2022, the Company announced results for its fiscal first quarter of 2022 ended on December 31, 2021 and shocked the market with three disclosures. First, the Company announced that Chief Financial Officer Mark Gallenberger would be retiring, effective March 11, 2022. Next, during its earnings conference call, new CEO Stefan Ortmanns announced he had conducted a review of each of the Cerence business units’ plans, forecasts, and assumptions, and determined the “conversion from bookings to revenue will take longer than expected.” As a result, Cerence was forced to lower its fiscal year 2022 guidance, only a few months after providing disappointing guidance for the same period. Finally, Cerence completely withdrew the closely watched fiscal year 2024 guidance. On this news, Cerence’s stock price fell an additional 30%, from a closing price of $63.58 on the prior trading day of February 4, 2022, to close at $43.61 on February 7, 2022.
If you purchased or otherwise acquired Cerence shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Alexandra Raymond by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
