Cerence Inc. · NASDAQ:CRNC
Cerence — Q1 FY2023 Earnings Presentation
25 slides from Cerence's earnings presentation, Feb 8, 2023
Slide 1: Cerence Q1FY23 Earnings Presentation
Cerence Q1FY23 Earnings Presentation Stefan Ortmanns, CEO Tom Beaudoin, CFO Rich Yerganian, SVP of Investor Relations February 8, 2023 Destination Next Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation regarding: Cerence’s future performance, results and financial condition; expected growth; multi-year targets; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backl
Slide 3: Q1 FY23 Business Highlights
Strong Core Business drives revenue and profitability Introduced strategy “Destination Next” and long-term model at our investor day in November Strong market position delivers two win-backs and two new logos Macro environment incrementally better but risks persist Continued confidence in FY23 busin
Slide 4: Q1 FY23 Product Highlights
Cerence Co-Pilot (CA 2.0) – 4 design wins in Auto: 3 in Europe, 1 in China Cerence Ride – 3 new design wins, including a Japanese motorcycle company Cerence Link – 2nd design win in India Cerence Car Knowledge – Expanded Assistant at marquee North American OEM went live Q1 FY23 Product Highlights St
Slide 5: Deeply Focused on Innovation and Execution
Deeply Focused on Innovation and Execution New leadership team Established long-term growth strategy Efficiently managing costs Contained fixed contracts Winning new business with a strong pipeline Focused on long-term model and value creation Accomplished Continued Focus Strong bookings performance
Slide 6: Destination Next: Fueling Growth by Creating an Immersive Cabin Experience
© 2023 Cerence Inc. Evolving from a voice-only, driver-centric solution to an immersive companion experience Moved from a component supplier to a trusted innovation partner Participating in a significant and expanding served addressable market Significant growth opportunities after FY2023 transition
Slide 7: Q1FY23 Financial Details
Q1FY23 Financial Details Tom Beaudoin, CFO Destination Next
Slide 8: Cerence Delivers Strong Q1 Results
Cerence Delivers Strong Q1 Results Q1FY23 Q1FY23 Guidance Revenue $83.7M $75M - $79M GAAP Gross Margin 68.7% 67% - 68% Non-GAAP Gross Margin 70.4% 69% - 71% GAAP Net (Loss) Income ($2.2M) ($19M) – ($16M) AEBITDA $19.7M $11M - $14M Non-GAAP Net Income $14.2M $3M – $4M GAAP EPS – diluted ($0.05) ($0.4
Slide 9: Revenue by Type, Q1FY22 to Q1FY23
In millions Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Total License: $46.8 $46.3 $46.4 $19.0 $45.4 Variable(a) $21.5 $20.2 $22.3 $19.0 $26.3 Total Fixed(b) $20.1 $25.6 $23.3 $0 $19.1 Prepaid (cash upfront) - $5.7 $13.2 -- $18.0 Minimum Commitment (no cash upfront) $20.1 $19.9 $10.1 -- $1.1 Other Markets(c)
Slide 10: License Business Remains Strong
In millions FY2021 Fiscal Year 2021 FY2022 FY2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Fixed Contracts $10.1 $17.3 $18.2 $25.4 $20.1 $25.6 $23.3 $0 $19.1 Pro Forma Royalties(a) $48.6 $47.4 $42.9 $34.0 $39.6 $39.7 $41.5 $39.1 $41.7 Consumption of Fixed Contracts(b) ($12.3) ($10.3) ($11.1) ($13.2) ($18.0) ($19.
Slide 11: Strong KPI Performance
Strong KPI Performance 52% Global Auto Penetration (TTM), up from 51% 11.5M units with Cerence technology, up 4% QoQ including 2.2M connected units, up 5% QoQ (2%) Decline in Billings per Car (TTM YoY) 19% Increase in Monthly Active Users (YoY) 6.8 Years Average Contract Duration (TTM) High Level of
Slide 12: Fiscal Q2 and Full Year 2023 Guidance
Fiscal Q2 and Full Year 2023 Guidance Q2 FY23 Guidance FY23 Guidance In millions except per share amounts Low High Low High Revenue $64 $68 $275 $290 GAAP Gross Margin 60% 62% 63% 65% Non-GAAP Gross Margin (a) 62% 64% 65% 67% GAAP Operating Margin (37%) (30%) (18%) (15%) Non-GAAP Operating Margin (a
Slide 13: Best Positioned to Maintain and Expand our Category Leadership in Mobility AI
Strengthen and differentiate their brands Secure their end-user data and data privacy Monetize digital services and create new revenue streams Know and embrace their customers Collect insights to learn and improve Differentiate from their competition Improve the end-user experience and excitement Of
Slide 14: Q&A
Q&A Destination Next
Slide 15: Appendix
Appendix @cerence
Slide 16: License Business Revenue Recognition
License Business Revenue Recognition Type of Contract Description GAAP Revenue Recognition Cash Receipt Variable License applied at production Quarter car is produced. Based on volume Quarter following GAAP revenue recognition Fixed (Pre-Pay) Bulk inventory purchase ($ based) Full value of contract
Slide 17: Connected and Professional Services Revenue Recognition
Connected and Professional Services Revenue Recognition Connected Services Typical Period GAAP Revenue Recognition Cash Receipt Subscription Term 1 – 5 years Amortized evenly over subscription period Billed/collected full amount at start of subscription period (value added to deferred revenue) Usage
Slide 18: KPI Measures – Definitions
KPI Measures – Definitions Key performance indicators We believe that providing key performance indicators (“KPIs”), allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand informatio
Slide 19: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Discussion of Non-GAAP Financial Measures We believe that providing the non-GAAP information 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 provi
Slide 20: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Restructuring and other costs, net. Restructuring and other charges, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as emp
Slide 21: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions 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 a
Slide 22: Q1 FY23 Reconciliations of GAAP to Non-GAAP Results
Q1 FY23 Reconciliations of GAAP to Non-GAAP Results Free cash flow is net cash provided by operating activities determined in accordance with GAAP less capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures. Q1 FY23 Reconciliations of GAAP to Non-GAAP
Slide 23: Reconciliations of GAAP Financial Measures to non-GAAP Financial Measures
Reconciliations of GAAP Financial Measures to non-GAAP Financial Measures (unaudited - in thousands) Q1FY23 Q4FY22 Q3FY22 Q2FY22 GAAP revenues $83,658 $58,144 $89,041 $86,280 Less: Professional services revenue 19,847 21,048 22,599 20,646 Non-GAAP Repeatable revenues $63,811 $37,096 $66,442 $65,634
Slide 24: Q2 FY23 and Full Year FY23 Reconciliations of GAAP to non-GAAP Guidance
Q2 FY23 and Full Year FY23 Reconciliations of GAAP to non-GAAP Guidance (unaudited - in thousands) Q2 2023 FY2023 Low High Low High GAAP revenue $64,000 $68,000 $275,000 $290,000 GAAP gross profit $38,200 $42,200 $172,300 $187,300 Stock-based compensation 1,300 1,300 5,400 5,400 Amortization of inta
Slide 25: Q2 FY23 and FY23 Reconciliations of GAAP to Non-GAAP Guidance
(unaudited - in thousands) Q2 FY23 and FY23 Reconciliations of GAAP to Non-GAAP Guidance Q2 2023 FY2023 Low High Low High GAAP net loss $(32,300) $(28,800) $(69,700) $(62,700) Stock-based compensation 12,400 12,400 49,500 49,500 Amortization of intangibles 2,500 2,500 6,100 6,100 Restructuring and o