Slide 1: Cerence Q4 FY24 Earnings Presentation
Cerence Q4 FY24 Earnings Presentation Brian Krzanich, Chief Executive Officer Tony Rodriquez, Interim Chief Financial Officer November 21, 2024 © 2024 Cerence Inc.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation regarding: Cerence’s future performance, results and financial condition; expected growth and profitability; outlook; fiscal year 2025 framework; transformation plans and cost efficiency initiatives, including estimated net cost savings; str
Slide 3: High-Level Q4 and FY24 Results
High-Level Q4 and FY24 Results 3
Slide 4: Q4 FY2024 Results and FY2025 Outlook
Q4 FY2024 Results and FY2025 Outlook • Q4 revenue and GAAP profitability metrics exceeded the high end of guidance • Initial FY2025 revenue guidance of $236 to $247 million, with net cash provided by operating activities in the range of $34 to $40 million • Transformation plan delivers $35-40 millio
Slide 5: Q4 & FY24 Financial Details
@) cerence Q4 & FY24 Financial Details
Slide 6: Cerence Q4FY24 Results
Cerence Q4FY24 Results Q4FY23 Q4FY24 Q4FY24 Guidance Total Revenue $80.8M(a) $54.8M $44M - $50M Gross Margin 71.5% 63.7% 55% - 60% Net Loss ($11.6M) ($20.4M) ($32M) – ($28M) EPS – diluted ($0.29) ($0.49) ($0.77) – ($0.67) Adjusted EBITDA(b,c) $16.6M ($1.9M) ($19M) – ($13M) Cash Flow From Operations
Slide 7: Cerence FY24 Results
Cerence FY24 Results FY23 FY24 FY24 Guidance Total Revenue $294.5M $331.5M $321M - $327M Gross Margin 67.7% 73.7% 73% Net Loss ($56.3M) ($588.1M) (a) ($600M) – ($596M) EPS – diluted ($1.40) ($14.12) ($14.42) – ($14.32) Adjusted EBITDA(b,c) $41.5M $80.6M $64M – $70M Cash Flow From Operations $7.5M $1
Slide 8: Detailed Revenue Breakdown
Detailed Revenue Breakdown Q1FY23 Q2FY23 Q3FY23 Q4FY23 FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 FY24 In millions Total License: $45.4 $30.8 $25.9 $43.1 $145.2 $20.8 $35.5 $43.1 $25.3 $124.8 Variable(a) $26.3 $26.2 $25.8 $30.3 $108.6 $20.8 $25.1 $23.1 $25.3 $94.4 Total Fixed(b) $19.1 $4.6 $ ̶ $12.8 $36.5 $ ̶
Slide 9: Operational Metrics and Variable License Revenue
Operational Metrics and Variable License Revenue In millions FY23 FY24 Operational Metrics: Q1 Q2 Q3 Q4 FY23 Q1 Q2 Q3 Q4 FY24 Pro Forma $41.7 $43.1 $44.5 $42.6 $171.9 $35.3 $39.6 $39.6 $41.9 $156.4 Royalties(a) Consumption of $15.4 $16.9 $18.7 $15.5 $66.5 $14.5 $14.5 $16.5 $16.6 $62.1 Fixed Contract
Slide 10: Q4FY24 KPI Performance
• Percent of worldwide auto production with Cerence Technology declined slightly to 52% (TTM)(a) Q4FY24 KPI(d) • Approximately 10.6 million units shipped with Cerence technology in Q4 • Down 14% YoY (IHS down 5% YoY) Performance • Down 11% QoQ (IHS down 3% QoQ) • Change in number of Cerence connecte
Slide 11: Fiscal Q1 and FY25 Guidance
Fiscal Q1 and FY25 Guidance Q1FY25 FY25 Guidance Guidance In millions except per share Low High Low High • No fixed contracts expected during the amounts first quarter and $20 million projected for Revenue $47 $50 $236 $247 FY2025 at the mid-point of Guidance. Gross Margin 58% 60% 67% 69% • Q1 and F
Slide 12: Appendix
@) cerence’ Appendix
Slide 13: License Business Revenue Recognition
License Business Revenue Recognition GAAP Revenue Type of Contract Description Cash Receipt Recognition Quarter car is produced. Based Quarter following GAAP Variable License applied at production on volume revenue recognition Bulk inventory purchase Full value of contract at signing. Standard payme
Slide 14: Connected and Professional Services Revenue Recognition
Connected and Professional Services Revenue Recognition Connected Services Typical Period GAAP Revenue Recognition Cash Receipt Billed/collected full amount at start of Amortized evenly over subscription Subscription Term 1 – 5 years subscription period (value added to period deferred revenue) Recog
Slide 15: KPI Measures – Definitions
KPI Measures – Definitions 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 information used by management to eva
Slide 16: 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 17: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Adjusted EBITDA Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization
Slide 18: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Non-cash expenses. We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follow: • (i)Stock-based compensation. Because of varying valuation
Slide 19: Q4 FY24 Reconciliations of GAAP to Non-GAAP Results
Q4 FY24 Reconciliations of GAAP to Non-GAAP Results (unaudited - in thousands) (unaudited - in thousands) Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, 2024 2023 2024 2023 2024 2023 2024 2023 GAAP revenue $ 54,80
Slide 20: Q1 FY25 and Full Year FY25 Reconciliations of GAAP to non-GAAP Guidance
Q1 FY25 and Full Year FY25 Reconciliations of GAAP to non-GAAP Guidance (unaudited - in thousands) Q1 2025 FY2025 Low High Low High GAAP revenue $ 47,000 $ 50,000 $ 236,000 $ 247,000 GAAP gross profit $ 27,200 $ 30,200 $ 158,400 $ 169,400 Stock-based compensation 700 700 2,500 2,500 Amortization of
Slide 21: Q1 FY25 and FY25 Reconciliations of GAAP to Non-GAAP Guidance
Q1 FY25 and FY25 Reconciliations of GAAP to Non-GAAP Guidance (unaudited - in thousands) Q1 2025 FY2025 Low High Low High GAAP net loss $ (26,400) $ (23,400) $ (39,600) $ (28,600) Stock-based compensation 6,100 6,100 22,500 22,500 Amortization of intangible assets 500 500 1,600 1,600 Restructuring a